Back in the 90s I read a book titled, Your Money or Your Life, and it made a big impression on me. It was published in 1992, and the authors are Joe Dominguez and Vicki Robin.
You may have even felt the premise of this book while you were out holiday shopping. The authors state that money is something we trade our life energy for (through work). So as you are spending, you are spending that life energy.
Heres something to think about. Lets say you have a net income (after taxes) of $2,000 per month, and you work 40 hours per week. That means you are earning (or exchanging an hour of your life for) $12.50, for each hour you are working (160 hours in a month).
But, what does it cost you to work? How much does it cost in transportation, clothing, child care, etc, etc? What is your true net income? For example, if you had no other expenses than to eat a $10 lunch out every day, that reduces your hourly net income to $11.25.
Every time you spend money, you are exchanging your time (hours worked) for that item.
Having an awareness of the value of your life energy can help you change how you spend.
Last year I was at a holiday party, and someone there said he heard me talking about this, and it gave him a new perspective on spending. He said, Now, I pack two peanut butter and jelly sandwiches for lunch, drive my car to a peaceful place and enjoy the quiet time.
Before, I was always going out to eat with people because I thought thats just what you did. Can he afford to eat lunch out every day? Yes. Does he want to spend his hard-earned money that way? No.
The book summarizes nine steps for creating a new financial road map. Here are the first four.
If you are interested in reading this book, it is available for purchase online for about $10, or you can probably check it out from your local library. Here are the first four steps:
1. Make peace with the past: Go to www.ssa.gov and log into My Social Security. This will allow you to see your total lifetime earnings. Next, ask yourself the question, What do I have to show for it?
2. Being in the Present -- Tracking Your Life Energy: Calculate your real hourly wage, include what it costs to work. Next, track every penny you spend, daily.
3. Where Is It All Going? Total monthly spending to see where your life energy is being spent, using your new, hourly wage.
4. Evaluate where your money is going, and how satisfied you are with the choices you are making.
This is an exercise that I go through every January, so I will begin tracking every penny I spend on that day.
I recommend this exercise to people for a number of reasons.
First, it lets you see what it really costs to run your household, which is a great thing to understand before you retire.
Second, it creates a new habit of awareness, which leads to better spending choices. My message is this: make sure that what you are spending money on is worthy of the time you spent earning it.
Sherri Goss is vice president of Rosenberg Financial Group Inc., with offices in Macon and Warner Robins. Contact her at 478-922-8100 or firstname.lastname@example.org.