Your Money or Your Life Summary

Take-Aways

• It’s important to figure out how money functions in your life.
• Without an accurate picture of how your money flows, you will not be able to foresee a time in the future when your dreams are affordable and attainable.
• "Consumerism" is a way to die, not a way to live.
• Everyone has beliefs and myths about money. Thoroughly question yours.
• Develop your "financial intelligence" to align your daily life with your life’s purpose.
• "Financial intelligence" relieves stress in other areas of your life.
• When financial security is not your overriding anxiety, you can spend your time addressing issues that are more engaging and important.
• Less debt and a larger nest egg will give you a greater ability to pursue happiness untethered to questions about finances.
• As your money worries decrease, your available time will increase.
• If you are frugal, you will find you have enough money to meet your needs.

Summary

"The Money Trap: The Old Road Map for Money"

Fiscal security rests on having certain knowledge of how you are spending your life, not just your dollars. Financial independence means creating an income apart from your job, but it also means independence from old ideas and beliefs about how money works. Like most people, you probably believe that what you do for money has little to do with who you really are. It’s just a way to pay the bills.

“Financial integrity is achieved by learning the true impact of your earning and spending, both on your immediate family and on the planet.”

Beyond depending on their jobs for income, people often derive their sense of self from their occupations. For many, work takes over, displacing time they once spent with their friends and family. Americans typically work more than 40 hours a week - add in commuting and job preparation time, and the week has few waking hours left for you to be a human being.

“It is knowing what is enough money and material goods to keep you at the peak of fulfillment - and what is just excess and clutter.”

Despite longer hours on the job, most Americans haven’t saved much money. In fact, people now save less and are more in debt than ever. This way of life is debilitating, stressful, and hard on your health, relationships and family. And what are you working so hard to get? Well, usually to get more than you need to have. Consumerism destroys the earth, individual lives and your peace of mind. The deepening gap between the haves and have-nots is a recipe for calamity, as is the planet’s slow, but massive, pending environmental crisis. Humans are hard-wired to react to imminent danger, but they find it hard to put such tremendous issues into perspective; that’s just not the kind of thing people are prepared to handle.

“We project onto money the capacity to fulfill our fantasies, allay our fears, soothe our pain and send us soaring to the heights...we moderns meet most of our needs, wants and desires through money.”

The belief that money can fix everything keeps humans striving for more wealth. If you believe "more is better," you will never be satisfied with what you have. On a macro-scale, this idea translates into society’s belief in relentless growth (draining the earth’s finite resources) and an ever-expanding marketplace. These ideas have transformed "citizens" into "consumers" who see consumption as a human "right." In fact, some say consuming is your economic and civic duty, even though consumables take raw resources, time and energy. In actuality, everyone is on a budget, and that has to impel personal action. To achieve financial reality, take these nine steps:

"Step 1: Making Peace with the Past"

The first step is to examine your attitudes about money and what it buys. Human nature likes to stick with comfortable routines, including routine thoughts. It doesn’t help that advertising constantly makes you feel as if you need more. Getting caught in the race for more stuff is so easy that you don’t even notice when you may have "enough," and you just continue accumulating. Once you pass the point of sufficiency, the things you amass just complicate and hamper your life. At some point, you have enough of what you need and want, and even enough of the luxuries you desire - maybe not so much that just managing it all is stressful, but enough. Figure out, in as much detail as possible, how much money has come into your life since you first began working and what you have done with it. Start by creating a balance sheet of assets and liabilities. Accuracy is important, so take the time to be thorough.

"Step 2: Being in the Present - Tracking Your Life Energy"

What is your impression of money? At the "pedestrian" level, money is an element in all exchanges; it jingles in your pocket and pays your bills. Your thinking encompasses all your basic understandings about money: budgeting, checking accounts, looking for bargains, investments and credit. Part of your perspective comes from your feelings and entrenched thoughts about money, including your family’s attitudes. Some believe money is security, but how secure would you feel walking through a city at night with wads of cash? How does the belief that money is power account for the power of the leaders of nonviolent movements? Do you believe that money is social approval, your ticket to happiness? Think about it. For many people, the concept of financial independence implies an endless supply of money. That is a fantasy. But having enough is a realistic goal. Once you decide for yourself how much "enough" is, you will have freedom when you attain enough, and a bit more.

“We buy everything from hope to happiness. We no longer live life. We consume it.”

To thoroughly examine all your beliefs about money - what it buys, how it makes you feel, how much time you allocate to earning it, spending it and trying to maintain an unsustainable quality of life - calculate the time and money you expend on your job each week. Start with the 40 hours plus that you work. Add the time you allocate for commuting, daycare, shopping for work clothes, and all the time and money you spend after work trying to make yourself feel better. Consider the "life energy" you spend "keeping up with the Joneses." By calculating your real hourly wage and meticulously charting every cent you spend, you are honoring the way you disperse your life energy and forming the habit of "financial integrity."

"Step 3: Monthly Tabulation"

Raising your money awareness is crucial. Like binge dieters, binge spenders are usually unconscious of what triggers their spending. To get an honest picture of your relationship to money, become aware of where it appears in your life. Spending can become addictive. What do you buy to treat yourself? What items are irresistible? As you track your income and expenses, you will see that your expenses generally fit certain categories. Tally your expenses into these categories and subcategories, and complete a monthly balance sheet to get a full financial profile. Be nonjudgmental. You’re aiming for truth, not guilt. As you accumulate this data, measure each purchase in terms of the amount of time it took to make the money to pay for it. Divide what you spend by your "real hourly wage" to ascertain the true cost in terms of life energy. Learn not just how you spend your money, but how you spend your life.

"Step 4: Three Questions That Will Transform Your Life"

First ask yourself about the measure of happiness and satisfaction each financial outlay gives you. Determine if this expenditure is something you’d be inclined to purchase based on the level of happiness it brings. Over time, you will see when you’ve hit your spending limit. Second, evaluate your expenses in terms of their relationship to your deep beliefs and goals. Do they add to or subtract from them? This requires you to meditate deeply about your values and life’s goals to measure their importance truthfully. Third, ask yourself how it would affect your expenses if you were financially satisfied? If all the time and energy you now expend became unnecessary, how much would you still spend on clothes or status symbols?

“The problems we face...constitute a call to a new understanding of what it means to be human.”

Use the insights you gain from this exercise to figure out a plan to bring more of your life into alignment with what truly motivates you. Seek the point of enough - where your basic needs are easily met, with plenty left over for "comfort" and even some luxury. To start, you must have a complete, accurate picture of how money comes into and out of your life. Other elements also matter. If you constantly compare what you have to what your neighbor has, you will never be content. Listen to the voice of your own experience to hold your sense of "life purpose" clearly in mind. Let that guide your choices. Part of this perspective includes understanding how your goals serve others. Unless you are thinking about helping others somewhere along the line, you will keep striving for more, yet you will never find enough.

"Step 5: Making Life Energy Visible"

After you carry out the previous steps for a few weeks, you will be able to plot your income and expenses, as a visual trend line. The vertical axis on your graph measures dollar increments and the horizontal axis represents time in months. Make enough room to keep track over five years, at a minimum. Using different color inks, plot your income and expenses. Connect the points and trends will emerge. Keep evaluating your expenses each month in light of the three questions in step four. Being aware of the meaning behind what you spend - in exchange for what you have - will let you slowly change your lifestyle.

"Step 6: Valuing Your Life Energy - Minimizing Spending"

To live a more "frugal" life, follow these tips:

• Give up caring about what others think of you. They’re self-absorbed anyway.
• Stop "shopping just to shop." It’s not a sport. Question and discourage acquisition for the sake of acquisition.
• Pursue the lifestyle you can afford. Get rid of credit card debt.
• Maintain what is already yours, especially your health. Take care of yourself physically, mentally and emotionally.
• Use things until they begin to fall apart before you replace them. Make repairs instead of automatically buying replacements.
• Learn valuable, practical skills so you can live a more self-reliant lifestyle.
• Try to look ahead and prepare for expenses you can see coming.
• Comparison shop, not just for price, but for quality.
• Find it for less. Shop sales, look for discounts and bargains. Buy second hand.
• Use rapid transit or walk.

"Step 7: Valuing Your Life Energy - Maximizing Income"

What does your work mean to you? In hunter-gatherer societies, people worked about 15 hours a week to take care of their needs, and spent the rest of the time playing, socializing and relaxing. Yet since the Depression and the institutionalization of the 40-hour workweek, people have come to believe that their jobs are their duty and they have little right to leisure. Sweeping economic policies are based on this assumption. For many, 40 hours are just the starting point. Work has become the substitute for seeking meaning in life, something you no longer have time to do anyway. But if you can mentally separate the things you love to do from the function of being paid, you can take the first step in "redefining work." In terms of paid employment, look for work that will give you the most amount of money in exchange for your life energy. The more you earn per hour, the less hours you’ll need to amass enough.

"Step 8: Capital and the Crossover Point"

If you follow the steps to fiscal responsibility, at a certain point, your savings will become "capital." Then, find ways to invest it, so it can work for you. If you divide your savings by the current interest rate, over the months of the year, you’ll get your "monthly investment income." One sunny day, your investment interest will exceed your monthly savings amount. At that "crossover point," you will have reached "financial independence."

“The very question, ’What do you want to be when you grow up?’...asks what you want to be, yet you are supposed to answer with what you want to do. Is it any wonder that so many of us suffer midlife crises as we face the fact that our doing doesn’t even come close to expressing our being?”

Soon, you will be able to predict pretty accurately when your crossover point will arrive. Realizing that savings from your salary eventually will let you invest and earn all the income you need is very motivating. When this crossroad comes, you will be free to decide whether to keep working for money. When your time is freed from having to make a living, it all belongs to you. Do with it what you wish.

"Step 9: Managing Your Finances"

Now develop a methodical investment plan for your savings, a plan you are comfortable with, not something devised by a professional that only insiders can understand. Take stock of any preconceptions you hold about investing. Most investment theories seem to be built on avarice and dread. Take inflation, for example: In many real, provable ways, the cost of living has actually dropped over the past few decades. The hype to buy disposable things with so-called disposable income keeps people on the treadmill for the inevitable upgrade. Being frugal neatly sidesteps some of the worst effects of this pressure. Remember, prices go down, too.

“The evidence of success is not whether others judge you to be successful. The only evidence is whether or not you did what you intended or attempted to do.”

Investing for financial independence has three components: 1) "Capital" is the amount you invest that will yield the money to cover your monthly expenses. When investing capital to earn income, the key consideration is keeping your savings and income safe. Bonds are usually a good starting point; 2) "Cushion" means your cash on hand for emergencies. Have enough to cover a half year’s worth of expenses, if necessary; and 3) "Cache" means you keep setting some part of your income aside for savings, so you have money for the unexpected financial demands that will crop up. Just as you became the expert on your own financial profile, you can also become the expert on your investments.

(Source of this summary: getAbstract)