A common refrain we trainers are hearing right now as we work with our clients on their financial goals is that the reopening of the world is expensive. With so many things off limits for so long, having the freedom to get out and resume something like a normal life has created a rupture in a lot of people’s financial plans and savings rates. We’re often asked for advice on how not to spend money, or how to stick to a budget when there is so much going on that just a few weeks ago seemed impossible.
There are a lot of answers to these questions, and if you’re a client or you follow us on social media, you can get a ton of trainer tips for saving money and stretching your dollars. But right now, I’m recommending you take some inspiration from a book that has inspired a lot of us trainers and our clients. Then, I challenge you to ask yourself 3 things every time you shop. But for now, let me give you some background.
Way back in the early 90s, Vicki Robin and Joe Dominguez wrote a book called Your Money or Your Life. The book proposes a new way of thinking about money and what it is, and then provides a program that readers can use to change their financial practices and transform their relationships with money. The ultimate goal of the book is to help people live according to their values, consume less in order to save more money and be kinder to the environment, and to ultimately have more time for the things they value, which is predicated on needing less time for working if the former challenges were met.
The book sets forth both a philosophy of how to view money and let go of money mindsets that don’t serve you, and also lays out action plans for figuring out the best ways to spend, save, and invest. While some of those methods were eventually outdated and the book got a major update in recent years, it is still considered an important starting point for those getting serious about personal finance.
One of the most important concepts in the book is a different way of conceiving of money. Robin and Dominguez think of money as life energy. Since most of us are involved in wage based labor, each dollar we earn equates to the amount of time that we spent earning that money — quite literally our life energy.
This concept alone can make people rethink their purchases. How many hours of my life did I spend working for clothes that were disposed of with tags on, just because I didn’t take the time to return them? How much of my life have I spent paying for mediocre dinners or food that went bad in the fridge. If I could add up all of those hours of my life (which eventually turn into days and weeks), how would I have spent them differently?
Your Money or Your Life takes it a step further and compels readers to look at a new, more realistic way of figuring how long you work for each dollar you make. To get to this number, the authors suggest starting with your gross income, and then deducting everything that has to come out of that before you actually have the money that’s left for you, and then dividing that by the hours that you work AND the hours that you spend getting ready for, getting to, or decompressing from work.
For instance, if you spend money driving or taking a train to get to work, deduct that from your wage. If you have a uniform or otherwise need to wear or dry clean specific outfits for your job, deduct that from what’s leftover. Then add up the hours you spend in addition to your workday, and divide by that number. When you use this calculation, which combines a real hourly wage with the concept of life energy, you’ll often see that you spent much more time than you thought making a living, and therefore spent much more money than you thought on each of your purchases. The calculation can be a game changer when you are evaluating your spending habits.
Robin and Dominguez give us some questions to ask ourselves once we’ve tracked our spending and we’re reflecting on where our money has gone, and ask us to code our purchases with whether they satisfy those questions or not. However, we’re suggesting that you think of these questions before you make a purchase so that when you are reflecting on your spending later, you’ll feel good about how you’ve spent your life energy.
Here are those questions:
Will I receive fulfillment, satisfaction and value in proportion to life energy spent?
Is this expenditure of life energy in alignment with my values and life purpose?
How might this expenditure change if I didn’t have to work for a living?
If you want to learn more and be as inspired as we are by this book, you can check out the summary of the book here. And if you aren’t satisfied with your answers to these questions, it might be time to give us a call.
3 Questions to Ask Yourself When Deciding What to Buy is written by Terri Bennett, A Certified Financial Trainer for financialgym.com