Your Money or Your Life summary

Each of us has fewer than nine thousand hours a year – many of which are spent sleeping. It’s no question that time is our most precious resource. So when you get up and go to work in the morning, you’re giving more than just your time in exchange for a paycheck. You’re giving your life energy. In other words, when you spend money, you’re essentially trading your life energy.

If you want to transform your relationship with money, you’ll need to challenge your assumptions about what you earn and spend. That way, you can reserve your life energy for the things you truly care about. So step two of the program is to get in touch with your present situation by calculating your real hourly wage and tracking your money.

Now that you’ve collected the information about your financial history and real hourly wage, it’s time to begin taking a step toward implementing some changes. But don’t worry – you won’t need to put together a budget. While a budget can be a useful tool for planning, it leaves little room for nuance.

If a budget’s not the answer, what is? It’s simple: you need to understand exactly how you spend your money. Step three is to categorize your monthly spending. Group your expenses in ways that make the most sense to you.

Using a journal, take a moment to reflect on what you would do if you didn’t have to work. When you were growing up, what did you want to be? If you only had one more year to live, how would you spend your life? Did you always want to write a book but now find yourself copywriting for a living? 

Remember, no dream is too big. And by making minor adjustments to your spending, you’ll be on your way to realizing it. That takes us to the fourth step in the program: evaluating your spending by asking yourself three questions.

Congratulations! You’re halfway through the path to Financial Independence. But if you’ve followed any program in the past, you’ll know that a major part of the challenge is staying on track. To guarantee continued progress toward your financial goals, you’ll need to ensure that your new system is a habit rather than a choice.

A great way to instill a new habit is to make yourself accountable to someone else. You might consider sharing the results of financial progress with a friend or a family member. 

These days, the notion of being frugal might seem unappealing or dated. Modern consumer culture has conditioned us to believe that more is more. But from the ancient writings of Plato and Socrates to American historical figures such as Benjamin Franklin, Robert Frost, and Ralph Waldo Emerson, being frugal was considered a virtue. And if you want to become financially independent, you’ll need to get comfortable with the term.

In essence, frugality is about enjoying what you have. If you own ten dresses and enjoy wearing them over the years – great! But if you’re a compulsive shopper and are simply addicted to buying dresses that are hanging unworn in your closet, it might be time to lower that expense. While you’ve now gained awareness on your financial past and present, step six of the program is to consciously reduce your monthly spending.

The 40-hour workweek is a modern, Western concept.

During the Industrial Revolution, new manufacturing processes gave rise to a division between the workday and leisure time. Working conditions became so severe that workers eventually fought to establish a shorter workweek. But instead of being a time for rest, leisure became seen as a time to learn how to become a more productive worker.

For many people, the thought of retiring early seems like a privilege reserved for the 1 percent. But a growing movement called FIRE, or Financial Independence Retire Early, reveals otherwise. Supporters of the FIRE movement have gleaned some simple wisdom: if you invest your savings, your money will eventually start earning enough on its own for you to retire and focus on what you truly care about. The trick is to accrue enough monthly investment income.

Unlike the income you receive from your job, your monthly investment income is the income that you receive from your capital. This involves any income you didn’t have to work for – things like interest, dividends, rental checks, or business profits.

Now that you’ve calculated your crossover point and the reality of reaching Financial Independence has become tangible, you’ll need to become an expert in long-term, income-producing investing. Financial planners, unscrupulous brokers, and salespeople will try to influence your decisions on investing while taking a substantial commission. Avoid spending unnecessary fees with such middlemen by empowering yourself to make your own investment decisions!

Your investment income might include receiving rent from real estate or royalties from intellectual property, franchises, or natural resources. You could gain capital from selling an investment for an amount more than what you initially invested. But you’ll most likely want to focus on earning interest or dividends by investing in bonds, mutual funds, or the stock market.