Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: By Vicki Robin

The alarm goes off at 7:00 in the morning. Check phone. Shower. Dress in a professional uniform. Breakfast, if there's time for it. Hop in the car and prepare for rush hour. Work from 9-5. Deal with the boss. Deal with a seemingly endless stream of emails. Deal with the intern to who you're trying to delegate work, but always end up doing it yourself. Hide mistakes, act busy, smile when you are handed near-impossible deadlines, argue with your consciousness but agree with your boss, watch the clock, smile again. 5 o’clock. Back to your car for the evening commute. Home again. Try to act human with your partner. Cook. Eat. Watch an episode on Netflix. Or two - after all, you’ve had a rough day. Answer one last e-mail and then, finally, bedtime. Eight hours of sacred oblivion, if you’re lucky. Do you recognize yourself? People living this life are not making a living, If someone points a gun to your head and asks, “Your money or your life?” you know that you'd instantly give up your wallet. Yet, This is how many people live. Whether intentionally or unintentionally, they are valuing their money higher than their life. This summary will teach you to think differently about money, which in turn will lead to a point where you no longer must choose. So the next time someone asks you: "Your money or your life?!", you'll be able to say "I'll take both, thank you".


This is the starting point. Enough is not too much, not too little, but just right. If you don't learn about yourself enough, you'll never be satisfied because more is a battle with an endless horizon. An interesting experiment made in the 1980s supports this theory. Participants from every income bracket were asked to rate their happiness on one to five scales. Moreover, they were asked about how much money would make them happy. The results? There was no significant difference between the top and bottom earnest on the happiness scale. Additionally, they all had similar answers to how much money would make them happy. They all started: "50% more than what I earned today" Researchers, who have investigated the subject of money versus happiness have concluded that beyond a certain level of sufficiency more money does not equal more happiness. Currently, this level is believed to be around $75,000 a year. Consider the so-called "Fulfillment Curve"

The graph correlates money spent to the fulfillment we feel from it. Before survival is secured, every penny seems to be shooting our satisfaction and fulfillment through the roof. Even when adding comfort and a few luxuries, fulfillment is increasing. It is important to notice when the curve starts to level out though. If you have ten suits, but you rarely use any of them, you are probably enjoying shopping more than having and using them. Most likely, you have ended up in the negative slope of the money fulfillment equation, where each additional new purchase only adds distress and distraction rather than satisfaction. It's important to notice when this starts to happen! At the top of the curve is the point of "Enough", and even though the amount of money that must be spent before reaching it differs from person to person, everyone has such a point. Remember that most of our needs up to a certain port can't be filled by new toys. People don't need new Lamborghinis. They need respect. They don't need a wardrobe filled with clothes from Dior, Gucci, and Prada. They need to feel attractive. Neither do they need the most recent entertainment system, they need something worthwhile to do with their time. 


It's time to make peace with the past. This exercise isn't about increasing your ego or depleting your confidence. It's about reviewing your earnings and spending habits of the past. Just remember no shame and no blame. There are two parts: 

01. Find out how much you've earned in total. This might seem like a Herculean task, I know, but there are a few tricks to make it simpler than it seems at a glance. 

A. Get online records from your bank. 

B. Review your old resume. 

C. Apply for a Social Security Statement from the Social Security Administration, if you are an American. 

02. Calculate your net worth. Your net worth is simply the sum of liquid and fixed assets minus your debt. Liquid assets could be - Cash, money in savings accounts, bonds, stocks, mutual or index funds. Fixed assets are major possessions such as your house car or boat, but let's not forget about electronics, furniture, wardrobe, jewelry, and the items you store in the attic. Remember to use the current market values for all assets and loans. This means what you can sell or pay them back for today. 

Why should you do this? Because it's a great way of reassessing your prior financial choices. Many persons live their financial lives without direction or consciousness. They are like someone driving around without a destination, spinning their wheels and burning gas, but they're not getting anywhere! This step gives you the opportunity to take conscious decisions about the future of your financial situation. Maybe you realize that you haven't got too much to show for in assets compared to your lifetime earnings. Good! Then use this as a motivation for turning that trend around. Or, on the other hand, maybe you realize that you have enough assets so that if you distribute them correctly, you can be financially independent immediately. Even better!


I'm going to give you a moment to think about the following question: What is work? According to the late economist Robert Theobald: Work is defined as something that people do not want to do and money as the reward that compensates for the unpleasantness of work. Maybe your definition of work isn't as depressive as this one, but consider these various purposes that work can be, and think about which ones apply to yours. Work is .... Earning money. A sense of security. Tradition - everyone works! Service - to contribute to society and the world. Learning - acquiring new useful skills, be stimulated and challenged. Power - influencing other people Socializing - feeling like a part of a larger community and enjoying connecting with others. Time structuring - give order and rhythm to life. How many of these apply to your job? The important point to notice here is that work has two separate functions: a financial function and a personal function. Paid work (which people usually refer to as work) on the other hand, only has one: Getting paid Why? Because all the personal functions listed here are equally available in unpaid work activities! We have too high expectations of our paid employment when we think that it's going to bring us all of these! This is supported by the fact that, according to a 2014 report, only 43% of Americans said that they like the jobs. With this in mind it does make a lot of sense to maximize how much money you get from each hour you spend at your paid work, as other activities are equally good, if not better, as personal functions. You do this, not out of greed or competition, but out of self-respect and appreciation for life. 

The median yearly wage for the Swedish population is approximately $30,000. Let's say that people work, on average, 40 hours a week, 45 weeks a year. This includes five weeks of paid vacation plus additional days off, such as Christmas Eve. Some people would say that the hourly wage for the median Swede is therefore 30,000 divided by 40 times 45, which is equal to $16.5, but this estimate is too generous. What about all the outer activities that you wouldn't have done if it wasn't for work? They often cost both money and time. Let's include a couple of those as well. 

Commuting: Going to your job back and forth every day. Let's say that this is another five hours of work each week at a cost of $80. Costuming: If the clothes that you wear to your job aren't the type that you'd normally use, this must be included too. One hour and $15 per week. 

Decompression: Do you feel full of energy when you come home or do you just want to sink into the sofa with a beer? Five hours and $20 per week. And let's not forget about, food, escape entertainment, timeout vacations, job-related illness, and other expenses such as babysitting and similar. When we add these hours to working hours and subtract the cost from yearly income, we find that the median Swede is earning ... $6.1 per hour. And this is pre-tax even! After taxes, it would be even lower, around $4.5. With this number in mind, we can move on to the next takeaway ... 


After this, there is no turning back. You take the blue pill, the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland, and I show you how deep the rabbit-hole goes. Remember all I'm offering is the truth, nothing more. You are one and only asset, and the only true currency is your life energy. This is also a currency that you can never get back. As you are trading your hours for money every day at your job, you Can easily calculate how much each of your expenses costs in the form of life energy. For instance, if you earn $4.5 per hour, as in our previous example, here's how much a few items truly costs. A brand-new Volvo v60: 772 working days! Your Spotify account: 1/4 of a working day per month. A night at the club: 2 working days. A restaurant visit: 1 working day. Track your expenses over a month to see where you spend your life energy. Also, ask these three questions about every expense: 

1. Did I receive fulfillment, satisfaction, and value in proportion to life energy spent? 

2. Is this expenditure of life energy in alignment with my values and life purpose? 

3. How might this expenditure change if I didn't have to work for money? 

Mark each of the questions with a plus, an OK, or a minus. Or plus, 0, minus in the case of the third question. 

This is a very important step! Do you see any patterns? Perhaps you realize that you spend too much energy trying to impress others with expensive luxuries or too much energy on impulse shopping. Or that you spend too little energy on your relationships and keeping yourself in shape. No matter which conclusion you draw, It's a powerful tool to see each expense as you depleting your only non-refundable asset.


Now that we realize that paid work and expenses are life energy consumed, It's time we find a way to conserve this one important asset. Tracking your income and expenses each month is the starting point on this journey. Put up a large piece of paper on a wall where you can see it daily. Along the x-axis, you track months, and along the y-axis, you track dollars earned/dollars spent. The plot, for each month, your income and expenses. Use different colors for the two categories. Connect each month with a line. 

There are 2 keys to making this process work for you: 1. Start 2. Keep going It is common wisdom that a journey of a thousand miles starts with a single step. What we don't hear as often though, is that you only arrive at your destination, if your first step is followed by hundreds of thousands of additional small steps. Getting it past the three-month mark with this chart method most often results in people naturally and painlessly dropping their expenses by about 20%. Awww The Healthy Mind - Think Big, my income is never higher than my expenses because I have so many unforeseen expenses! This is a common problem. One month's tax payment, is another month's insurance payment, is another month "I just got myself a brand-new Volvo!" You must realize that these expenses are nothing unusual. With that said, always try to minimize them. For the sake of your wall chart, you may choose to split the larger extraordinary expenses over 12 months. 

What's important about this chart is that it will increase the gap between income and expenses for you naturally. That is, it will increase your savings. Before you started to think about financial independence, this gap would have meant more spending money. We are now going to introduce what it is to a person who cares about his or her personal finance. It's capital. Capital is money that makes money. 

This will introduce a new line on your wall chart: 

Investment Income - This income can come from sources such as Interest - which is periodical payments from, for instance, bonds or savings accounts. 

Dividends - which is a share of profits for owners of companies. 

Capital gains - which is the difference between the procurement price and the selling price of an asset. 

Rents - which is cash for owning and leasing real estate. 

Royalties - which are payments to owners of intellectual property, franchises, natural properties, and so on. 

The important part is that if you keep that gap between income and expenses, your capital will increase, and so will your investment income! Investment income is wonderful in that it will put money in your pocket without you having to trade your life energy for it. Therefore, once your monthly investment income equals your monthly expenses, you no longer need to work for money. This point is called the "Crossover Point". You are then officially financially independent. I hope you see now that with a chart like this, work won't just be "Another day, another dollar". Rather, It will change into "Another day, one step closer to financial freedom." Repetition is key. 

So let's go over the takeaways one more time. Advice number 1 is that you must escape the endless race of more and decide when you've had enough. Enough differs from person to person, but we all have such a point. Takeaway number 2 is to make peace with the past by recognizing your spending habits from your earlier life. To do this, compare your net worth with the total amount of money that you've ever earned. In takeaway number 3, we talked about how you can decide your true hourly salary, and that paid work should be focused on maximizing this number. Number 4 is probably the most important takeaway in the book. And that is that money is life energy. Every expense that you have is depleting this energy. Finally, takeaway number 5 is that you should create a wall chart and start tracking your income and expenses monthly. 

Done right, this will increase your gap between income and expenses, which will allow you to generate more investment income. Investment income is what will make it possible for you to answer: "I'll take both, thank you" when someone asks you "Your money or your life?!" Thanks for reading! 

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