Your Money Or Your Life
Joe Dominguez and Vicki Robin
Review
Your Money Or Your Life is a cornerstone of the personal finance genre despite its atrocious title. It was written in 1992 and has influenced millions of people since.
YMOYL is popular because it is frank and applicable. It encourages people to look at their finances without emotion and then direct their financial decisions towards their values.
It gives a 9-step process so readers can focus on distinct elements of their financial life independently from one another.
I like that YMOYL does not glorify the get-rich-quick schemes and early retirement goals so frequently lauded in other finance books.
Instead, the authors seem to be grounded in the real world. Having money is important, but only as a means to an end.
Dominguez and Robin know financial planning is as simple as looking at several key metrics, being strategic, and changing behaviors.
Anyone who wants to improve their finances would do well to read Your Money or Your Life. However, personal finance noobies will benefit more from reading it than veteran investors. I especially recommend YMOYL to young readers. Don’t let that recommendation discourage older readers though. There is plenty of insight for everyone.
Summary
I usually summarize useful books like YMOYL, but there’s already a wonderful summary at affordanything.com.
Anything I could write would just be reinventing the wheel.
Key concepts:
- Life energy – a combination of time and energy in one unit
- Enough – when one doesn’t need more
- Financial independence – when one has enough money for one’s needs
- Frugality – though being frugal can have a negative connotation, Dominguez and Robin urge us to consider frugality as a virtue. It is about enjoying one’s current material possessions instead of seeking other ones.
- Real-hourly wage – one’s salary minus work-related expenses (commute, clothing and cosmetics, status-oriented possessions, networking events, etc.)
- Chart your money – A dead-simple visual tool for charting your progress toward financial independence. One tracks monthly income, expenditures, debt, and investment income all in one place.
See here for an example.
- Crossover point – When one has achieved financial independence. Based on one’s regular and anticipated expenses.
Here are some other resources that could be useful while reading YMOYL:
In step 3 of YMOYL, the authors invite you to calculate how much life energy goes into your expenditures. See Vicki Robin’s blog to make the calculation easier.
Using money for one’s values and life purpose is a major theme of YMOYL. Yet the authors don’t help you identify these things.
That would probably be too much to ask of one book anyway.
See “7 Habits of Highly Effective People” by Stephen Covey or “Principals, Life and Work” by Ray Dalio to help you identify your own purpose and values if you don’t know them already.
Would you recommend other books to help readers identify their values and life purpose? If so, please comment below. This area is not my forte.
Investing is the 9th step of YMOYL, but again, the subject is hardly touched upon. And based on one’s country or economic environment, the best strategies may change. Do look elsewhere if you’re in need of investment advice.
Did you read Your Money or Your Life? What did you think? Was it useful or obvious?