Book Review: Your Money or Your Life

by Mark on April 20, 2010

There are relatively few books that have had a significant impact on the way I think, but Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence by Joe Dominguez and Vicki Robin was one of those books. When I first read this book, one thing that struck me was that it was unlike any personal finance book I had ever read. Most books about personal finance will talk about things like “paying yourself first,” setting up retirement accounts, or investing in mutual funds, but this book doesn’t do that. Dominguez and Robin tell us that “The purpose of this book is to transform your relationship with money,” and that’s what it does.

In a Nutshell

The main benefit of reading this book for me was that it raised my consciousness and awareness of things that I had never really thought much about before. We only have a limited amount of time and energy during our lifetimes. This book makes us question how much time and energy (or “life energy”) we trade for money. According to Dominguez and Robin, “money is something we choose to trade our life energy for.” Most of us don’t consciously think in terms of making a tradeoff between “your money or your life.” Are you on a consumerist treadmill where you have to work long hours in order to support your lifestyle? After you add up all the hours you spend working, commuting, buying work clothes, training, traveling, networking, and anything else related to your job, how much time do you have left to enjoy your life? Is it a good tradeoff for you?

“Hard work never killed anybody, but why take a chance?”
– Edgar Bergen (Charlie McCarthy) –

This book teaches you how to consciously live according to your values and make sure that it is worth it each time you trade your “life energy” for something. It really gets you to prioritize your spending according to how much fulfillment each expenditure brings you. When you really think about it, you will probably find that many things you spend money on just don’t bring enough fulfillment to justify spending your time working in order to get it. By eliminating things that bring you little fulfillment, you can save and invest to build up capital to generate enough income so you can escape the necessity of paid work. At this point, you will be financially independent and will be able to spend your time as you please. You could retire, or now that money is not an issue, you may even decide to work at something that you enjoy. This book could help you get to that point much sooner than you currently think possible. I don’t know about you, but I want to achieve that kind of financial freedom while I am still young enough to really take advantage of it.

Comments about the Book

Overall, I loved this book. It really makes you think. In the beginning of the book, there are two exercises. One exercise is to add up all the money you have made in your life. The other exercise is to see what you have to show for it by going through everything you own and add up the value. You will probably find that you have little to show for it compared to all the money you made, and you will probably kick yourself for trading so much of your life in order to buy so much junk that you rarely or never use. This is an example of why this book is so different from virtually any other personal finance book out there. It does a great job of opening our eyes and teaching us to view our life decisions and our finances as one integrated whole.

There were also some things that I didn’t like about the book. First of all, there is definitely a “New Age” feel throughout the book that just doesn’t resonate with me. I can understand their disillusionment with our increasingly materialist consumer society (and I definitely agree with them to a certain extent), but I think they take it a little too far. However, this is just a difference in values. They also recommend tracking every single cent that comes into and goes out of your life. This is an enlightening exercise if you do it for a little while, but I found it to be too excessive to maintain permanently. And lastly, I think their advice to only invest your money in long-term government bonds is ludicrous.

Despite the negatives, this book was very valuable in the development of my thinking about finances. My philosophy is to take whatever makes sense, try to integrate it with my other knowledge into a coherent whole, and reject the rest.

“Readers are plentiful; thinkers are rare.”
– Harriet Martineau –

The Nine Steps

Your Money or Your Life lays out 9 steps that are designed to change the way you think about money and lead you to financial independence and peace of mind.

Step 1: Making Peace with the Past

Step 2: Being in the Present – Tracking Your Life Energy

Step 3: Monthly Tabulation

Step 4: Three Questions That Will Transform Your Life

Step 5: Making Life Energy Visible

Step 6: Valuing Your Life Energy – Minimizing Spending

Step 7: Valuing Your Life Energy – Maximizing Income

Step 8: Capital and the Crossover Point

Step 9: Managing Your Finances

I’m not going to go into the details of all of the steps. That has already been done many times before in other reviews, so I have nothing to add. See the following reviews for more information. Or better yet, read the book!

[Note: My review is for the 1999 edition of the book. There is a newer edition of this classic book that has been “revised and updated for the 21st century,” but I have not read it.]

Other Reviews of Your Money or Your Life:

The Simple Dollar review – “I thoroughly enjoyed it. In fact, it changed my life. I think you will enjoy it, too.”

Zenhabits review – “[It] is absolutely one of my favorite books ever and perhaps the best book on personal finance ever written. It changed my life.”

It’s Your Money review – “When I consider everything I have read in the realm of personal finance, I cannot think of a more effective work than Your Money or Your Life.”

Frugal Dad review – “When I closed the book one thought came to mind – If I had only read this book ten years ago! I’m quite sure if I had I would have already experienced financial independence.”

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