3 Questions That Will Change the Way You Look at Money
Your Money or Your Life by Vicki Robin is a unique personal finance book. It does not focus so much on strategies to make and manage your money. Instead, it preaches a philosophy about how to look at money and your job.
If I were to condense the book into two sentences it would be this; When you consider the cost of buying something, don’t think about it in terms of dollars, think of it in terms of time. Specifically, think of the cost of something as the number of hours you had to work to get the money to buy it.
For example, if you made $20 per hour (after tax) and you were considering buying a fancy blender for $500, don’t think of the blender as costing you $500. Think of that blender as costing you 25 hours of your life.
This shift in mindset is especially powerful if you have a job that does not fulfill you. If instead of having to fork over $500 to bring that blender home, you were forced to do something you don’t like for 25 hours would you still want to buy it?
When we go to work, we are trading a chunk of our lives in for money. That is a sacrifice we gladly make to provide for our families. However, it is something we lose sight of far too often. If we thought of our purchases in hours of our life rather than dollars and cents, we would think much harder before we buy things.
The 3 Questions
In the book, the author challenges us to ask three questions about how we spend our money. When asking yourself these questions, remember to think of the true cost of expenditures as hours of your life rather than dollars.
- Did I receive fulfillment, satisfaction, and value in proportion to the energy spent?
- Is this expenditure of life energy in alignment with my values and life purpose?
- How might this expenditure change if I didn’t have to work for a living?
Did I receive fulfillment, satisfaction, and value in proportion to the energy spent?
One of the exercises in the book is to review your current spending history and give a grade for each item you spent money on.
- Place the “+” symbol next to an expenditure if it brought you significant fulfillment
- Place the “-“ symbol next to an expenditure if it brought you no fulfillment
- Place a “0” next to an expenditure if the expenditure was about worth the amount of time you sacrificed to pay for it.
Here’s a hypothetical example of how I might grade certain purchases.
- $11 on Daily latte and a breakfast sandwich on my way to work “- “
- $20 for drinks while out catching up with good friends “+”
- $90 for my monthly electricity bill “0”
I would challenge you to go through the last 3 months of credit card and bank statements and provide a grade for each expenditure. If your comfortable sharing, let us know by posting in the comments how many “+”,”- “, and “0” you gave out.
This is a powerful exercise to evaluate if the expenditures you are sacrificing your time for are providing you fulfillment. If you spend 40+ hours a week doing work that does not fulfill you, why would you use that sacrifice of time to buy things that also don’t provide you with fulfillment? What’s the point?
Is this expenditure of life energy in alignment with my values and life purpose goals?
I’m going to replace “life purpose” with goals. It’s a bit easier to internalize in my opinion.
One of the things I value most is time with family and friends. This is especially true since I have moved so far away from home and only get to see my family and closest friends a few times each year.
Two of my life goals are to reach financial independence and maintain my health and mobility well into old age.
Let’s go back and evaluate $20 spent on drinks while out on the town catching up with old friends. I gave that a “+” on my fulfillment grade, but is it in alignment with my values and life goals? That is a bit trickier.
On the one hand, spending time with friends in a social atmosphere is in alignment with my values. On the other hand, spending money on an unhealthy activity like drinking isn’t helping me achieve my “goals”. Is this activity still worthwhile?
Yes. While going out to a bar is unhealthy and expensive, it is not something I do often. The fulfillment and enjoyment of spending that time with close friends that I rarely get to see is well worth the one-time setback to my wallet and my health. If I was out at a bar every night or every weekend, that would no longer be a worthwhile expenditure because it would be a consistent setback to my life goals of financial independence and enjoying a long healthy life.
How might this expenditure change if I didn’t have to work for a living?
This question helps us understand how much money we spend on “convenience” because we spend so much time working. Let’s look at the $11 I spent on a latte and a breakfast sandwich on my way to work. If I did not have to work, would I have spent that $11?
No. The only reason I spent this money was that I was in such a rush to get to work, I didn’t have time to make my own breakfast. If I did not work, I would have brewed my own coffee and cooked my own breakfast at home for a fraction of the cost.
Two other major expenditures that we spend money on because we work are transportation and childcare.
· Would you need to be a 2-car family if you didn’t work?
· Would you need to spend money on childcare if you could stay at home with your child?
It’s a powerful exercise to take stock of all the money we spend on convenience because we spend 50–60 hours per week working and commuting to work.
Final thoughts
I challenge you to review every expenditure you’ve made over the past 3 months and ask yourself each of these three questions for each expenditure. It really is a mind-opening experience to consider how much of our time and our life we trade for things that provide us little fulfillment and are not aligned with our values or life goals.
I’d love to hear your feedback, have you read “Your Money or Your Life?” How often do you consider any of the three questions when making purchases? Let me know in the comments below.
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