ON MONEY

Why I Want to Die With 0$ In My Bank Account: How to Turn Money Into Happiness

On how much money we really need and the myth of financial freedom

I open up my online Broker and my heart is in my boots. My portfolio lost 25% over a single day. Suddenly my inner doubter starts: It was a stupid idea, it is too risky. What if I lose all of it? Shit, this way I will never become financially free.

“Financially Free”. This term is so loaded with the romantic vision of a future, in which we have no more worries. Where we have enough money, to finally be “free”.

But money does not solve the problem of unhappiness.

What we need, is enough money to rent a flat or buy a house, bring food to the table and buy warm clothes. Once the essential, natural needs are fit, everything else is optional. If you can’t feel happy now, more money won’t fix the underlying problem.

But once you have enough to sustain these needs, there is no need to worry anymore. Chasing more and more to be “Financially Free”, meanwhile deteriorating our health and relationship with our partners and children, is contradictory.

We should see money as a tool and not a means in itself. A tool to experience more of this beautiful world and not accumulate more stuff.

That was the point when I stumbled over the works of Bill Perkins and his bestseller “Die With Zero”.

Invest in Experiences

We always think that we need to have a lot of money for our retirement and assets that pay dividends, so we will always have enough money.

However, Bill Perkins states that we do not only retire on money but also on memories and experiences we made during our lifetime.

We should therefore use our capital to invest in these experiences, which will compound over time, leaving us with good and warm memories and stories to think back on.

We all get one ride on this roller coaster of life. Let‘s start thinking about how to make it the most exciting, exhilarating, and satisfying ride it can be.

Why die with Zero?

We retire on our memories and the stories we can tell and think back on. That is the reason we should aim to die with zero dollars in our bank accounts. Otherwise, you will have worked precious hours in your life for free if you leave behind a big sum, that could have been turned into experiences.

But what about the kids?

This is the question that was in my head when I first read the concept of dying with zero. Shouldn‘t I leave something behind for my kids?

The author has a clear opinion on that:

Yes, of course, you should provide for your kids!

But you should give your children their inheritance before you die, because if you wait to give your money to your children after your death, they will very likely be in their 50s or 60s, already having worked for 20–30 years, building up their wealth. They don‘t need the money at this age anymore.

The time in life when we need a lot of money but have not worked enough yet, is between 25 and 35 years. It is in this period when we start to build our homes, raise children and just need enough money. It is also a time, when our health is at a peak and at which we can still experience a lot of different adventures that we might not have the health for, once we are 50, having built up enough wealth for them.

The most important inheritance we can give our children however is common experiences and time spent together. It is worth way more than any amount of money can ever be.

It is therefore fair to die with zero if we give our children their inheritance before we die. (The same applies to organisations and foundations. If you want to donate money, do it now, not in 60 years. They need your money now!)

Balance your life

We should regularly balance out our lives and do a check-in, to avoid living on autopilot. Question why you do things the way you do them.

Three things are important when balancing your life:

Health, Time and Money

Health is the fundament of this balance. Without health, it does not matter how much leisure time or money you have. The latter two will be worth nothing. It is also important to note, that our health declines over time and that there is nothing we will be able to do against it. We should therefore think about which experiences we want to have in our lives and if they require a certain amount of health.

What good is wealth, without health?

Time bucketing your life

Taking these three fundamentals, we can create buckets of our lives, where we have different amounts of these resources.

At a very young age, we have a lot of health and a lot of time, but we lack money. When we get older and start working, we start to have more money, a decent health, but our time is very limited. When we get even older and head for retirement, we have a lot of money and a lot of time, but very poor health.

Now we have these buckets, we can start to distribute the experiences we want to have into them and plan perfectly when to do what.

Running a marathon for example does not take a lot of money. However, the preparation and health required are very high. So you should do it rather early in life.

Going on a cruise takes quite an amount of money and time, but you don’t need to be in the best shape to chill on deck and sip a cocktail. So you can do this later in life.

By evaluating the things you want to do in life in this way, you can plan better and do as much as you can.

Know your peak

We should be aware of the point, where it becomes time to break up our nest egg and spend more than we make, slowly building down our wealth.

This idea is something that is never talked about in the FIRE community. It is always just about making more and having such a big amount, that it will last forever. However, that amount is way higher than what we need, if we aim to die with zero.

To check if we have already enough money to break up our nest egg and spend more than we save, there is an easy equation:

Survival Threshold = 0,7 x (cost of living for one year) x (years left to live)

If you have accumulated the amount of money of your survival threshold, you can start decumulating. The 0,7 results from the idea that most of your money is in assets, which gives a conservative yearly growth of about four per cent.

Be bold, not foolish

As long as you are young, taking risks means nothing. You will have enough time to recover from it. If you get older, however, the time for recovery is limited and your health is also not in its best form.

So take risks when you are young, as the potential win is much greater than the potential loss, from which we will recover anyway over time.

These ideas changed my relationship to “Financial Freedom” completely.

While reading, I started a Google spreadsheet and added up all the money and assets I had.

I then calculated how much money that would be each month, until I die. I have been positively surprised, that I already have enough money to buy myself a meal every day, until I am 90 years old.

This relieves me enormously, knowing that I have already reached the point of fitting my basic needs. For me, that is true “Financial Freedom”.

And so I took a deep breath and closed my online broker. Because even if I lose all of that money, it will still be okay. I will be okay.

What do you want to experience with your money?

Have a great day.

Matteo