I have to say that this post took me far too long to write. I am a fast writer, true, but this was hard. On the one hand, I have pledged that I’ll build a repository of book reviews that my readers can refer to – either to decide whether to read the book, or if they trust me, to take the messages I have synthesised away and ‘run with them’. On the other hand, this blog is about personal finance and the book should at least have something to do with it: but I already told you several times that in my opinion most personal finance books are a bit like conducting interviews: they start repeating themselves after the 11th or so.
A bit of a conundrum, eh?
Well, it is. But then, thinking a bit more about this, I realised that if the technical side of these books is very repetitive their philosophical foundations can be rather different. And this is the side of the books that I can get excited about.
So, today I’ll introduce to you a book that you may have come across; in fact you probably have come across it. It is Your Money or Your Life by Joe Dominguez and Vicky Robin. It is even likely that some of you have obeyed by the rules, good principles and techniques that it sets. This book pushes all the usual personal finance buttons and ticks all boxes: tracking your income and expenditure, frugality and frugal tips, case studies of success to prove credibility, the need to build passive income streams through investing, and even early retirement.
Furthermore, the book offers plenty of tools to do all this – tables, spreadsheets and graphs. One of my favourites is the tool mapping three graphs: your income from employment of different kinds, your expenditure and your income from investments. Reaching the cross over point between expenditure and income from investments is when you become financially independent. And you know what? This is usually achieved by doing both, increasing your passive income (investment income) and reducing your expenses.
Well, as is usual some of the technical tips and advice are probably a bit outmoded – I am not entirely convinced how wise it is at the moment to buy bonds, for instance. But this is not what this book is about.
I believe that this book is life changing not because of the technical advice it offers but because of three key messages.
- Your money is your life. When we think about money we tend to think about numbers. This masks the fact that money is ‘embodied labour’ or life. Thinking about money as numbers can skew our decisions: paying £10 on something we don’t particularly want or like doesn’t seem like a big deal. But thinking that this is the equivalent of 10 minutes of our lives which we spend labouring spending make us realise that life and money are a unity. Interestingly, Seth Godin recently published something similar arguing that to make decisions about money we have to compare things rather than think about numbers.
- You have to know your ‘enough’. There is an optimal point beyond which money doesn’t bring satisfaction and it is important to work this one out. Where your enough is, is not about numbers but about your desired lifestyle. I know there has been a lot written lately about lifestyle design and that it builds on a very similar premise – this book was the pioneer, though.
- Consumption is THE PROBLEM. Our problem generally in the ‘developed’ world is not that we don’t have enough but that we consume too much. I have been thinking about this one a lot any way; about all the websites where the ambition is to enable people to consume more for less.
Now, I would leave you with some of my favourite quotes from this book.
Frugality is enjoying the virtue of getting good value for every minute of your life energy and from everything you have the use of.
Waste lies not in the number of possessions but in the failure to enjoy them. Your success in being frugal is measured not by your penny pinching but by your degree of enjoyment of the material world.
Don’t think of a clogged toilet as a tragedy; think of it as an opportunity to work your pectoral muscles.
It is empowering to know that the major driving force behind our planetary plight is not the military-industrial complex or the federal budget or defence spending – things we usually feel powerless to do anything about. Rather it is our patterns of consumption here in North America, our demand. And that is something that we can do something about…
And last but not least
Life isn’t unduly stressful; you may, however, be unduly stressed by life.
So let’s get beyond the immediately obvious in personal finance and enjoy the more profound messages of this book.