Your Money or Your Life is a classic personal finance book. Vicki Robin and the late Joe Dominguez wrote this book in 1992. Your Money or Your Life is not the first personal finance book. It was, however, one of the first personal finance books that started to explore the topic of Financial Independence. It is a book that introduced the concept of examining and ultimately transforming your relationship with money.
This post is part 3 in a series of posts by a group of popular personal finance bloggers who are reviewing each chapter of the completely revised and updated edition of Your Money or Your Life. The introduction to this series was launched on Rockstar Finance. The review of Chapter 1 was written by Aaron at Personal Finance for Beginners. That leads us up to this post. Below is my review of Chapter 2.
Rockstar Finance – Introduction
Personal Finance for Beginners – Chapter 1
Chapter 2 – MONEY AIN’t What It USED TO BE – AND NEVER WAS
As with many books, chapter 2 is where the author starts to get into the thick of things. The narrative of Chapter 2 follows that natural flow. In chapter 2, the reader is introduced to money. What does money mean to you? Do you have money problems? How do you earn it? How do you spend it? Do you save money? How should money be invested? Do you love money, or do you resent it? Is money good or evil? To better understand what money is, Vicki and Joe suggest that it needs to be looked at on the material level as well as the nonmaterial level.
THE FOUR PERSPECTIVES OF MONEY
In the first edition, there was a major section of chapter 2 that broke down the four perspectives of money. That was not included in the updated edition. The updated edition is more streamlined. It is rumored that Joe would get animated when presenting the four perspectives at their original seminars. I feel the four perspectives of money are still relevant and will break them down in case you have not read the original edition.
The Street-Level Perspective of Money – The Practical, Physical Realm
The street-level is where the day-to-day transactions occur. This is where people are introduced to money in their youth. The street-level is why people work to earn money and advance their education to earn more money. This is the level where the masses learn how to earn money, spend money, and hopefully save money.
The street level is also where many people get into trouble with money. This is the level where people fall victim to the concept of more. To buy more stuff, people go into debt. To pay off debt, more work is required. To make more money, more risk is taken. The street-level is where most people get off on the wrong footing.
The Neighborhood Perspective of Money – The Emotional/Psychological Realm
The neighborhood perspective is an examination of the emotional perspective of money. Were you born on the wrong side of the tracks? Did you grow up rich, poor, or somewhere in the middle? Do you base your security on money? Should you? Do you see money as power? Does having money enable you to get what you want from others? Does money truly make people more socially acceptable? Is money evil or does it just bring out shortcomings in people?
The Citywide Perspective of Money – The cultural Realm
The citywide perspective is a view from above. This is where individuals blend together. It is where different neighborhoods are connected by streets that flow from the rich to the poor part of town. The citywide perspective is the view where the individual and their own relationship with money is lost. General norms and assumptions are made on this level. This is the big picture perspective of money. It is rooted in history, economics, and sociology. This is the level where financial fear is distributed to the masses.
The Jet Plane Perspective of Money – Personal Responsibility and Transformation
The jet plane perspective is where the transformation occurs. This is where you let go of your old ideas about money. The jet plane view is where people become honest with themselves and start to accept the truth about money. This is where money and spirituality converge.
Money is life energy. We trade energy for money. People work for money, worry about money, spend money, and plan their whole life around money. Most people will not admit it, but money truly is the center of their universe. Once a person can accept that fact, they can decide how to better channel their energy and break away from the bondage that money has over them. The jet plane level is where people start to think about how they truly want to live when money is not the motivation.
A Simple Summary of What is – and is Not
The updated edition replaces the four perspectives of money with a simple summary of what money is and is not. Vicki briefly touches on the four perspectives and reflects on Joe’s past performances. In this edition, Vicki gets to the point quicker than Joe did in the previous editions.
Money = life energy, but having money is not a magic wand that changes your past relationship with money. Money flows in and out of our lives. Our relationship with money needs to be examined. Where does it improve our lives and where do we get the most pleasure or use from it?
Money is simply a reflection of who we are. Do we use it to buy things to display status? Do we spend it in an environmentally conscious way? Do we pay our bills on time? Do we have a healthy or unhealthy relationship with money?
There are people who want to take your money. Marketers have a job to market their products. Marketers are paid to make people believe whatever it takes to sell a product or service. I used to work in Marketing. That is 100% true.
To prevent them from taking your energy, just don’t buy what they are selling. To do that, a person needs to act. Chapter 2 breaks down a course of action to follow.
Your Life Energy
Vicki asks the reader “what does money = life energy mean to them”? The reader is free to decide how they want to spend their time. Do you want to spend your limited amount of time living or do you want to spend that time working to spend more on things that do not add meaning or happiness to your life?
The second half of chapter 2 is where the concept of financial independence is broken down. Vicki does not deviate much from the original edition but just freshens it up. The focus is still based on having limited time on this planet. Should we spend our energy making money or living and enjoying life? If a person decides that they want to live more and work less, they need to achieve financial independence.
Financial independence simply means that a person has enough. Enough does not mean that you are rich. Enough must be defined by the individual.
Financial and Psychological Freedom
Once an individual determines what enough is for them, they can change their relationship with money. This is where the bondage from your past relationship with money is broken. This is the level where you break free from the lies that surround your relationship with money.
Being in the Present – Tracking your Life Energy
To be successful, an inventory is needed. It is important to track your life energy. To better practice the art of living in the present, it is vital to take a deep dive into where all your energy is being exerted.
In this section of both editions, the authors get into actual costs. How much energy is spent on commuting, clothing, and meals? As the result of expending energy, a person needs to recharge. As people attempt to recharge, they just spend more energy trying to decompress with substances, spend money on entertainment, and take expensive vacations or buy toys. As the result of wasting energy on trying to gain energy people get ill and must spend more energy on getting well.
At this point, people start to realize that they are spending more energy than they are being compensated for. Their salary ends up being much lower than they ever realized. They are exerting far more in the untracked exertion of energy than they could ever be compensated for. Their real hourly wage is much lower than they ever could imagine.
The authors understand that this process is life changing. When people are faced with a change they tend to balk and not want to escape their emotional comfort zone. This is purely a spiritual process. There is no need or room for shame. There is no reason to look for someone to blame.
The next step is to take positive action. It will require some work. The final step requires a simple writing exercise. It is suggested to track energy spent vs salary earned. It is a writing exercise to gain perspective on what you are truly earning from your employment. In this step, the number of hours of energy that is put out is measured against actual earnings. I did it. It is an eye-opening exercise.
The authors also suggest that you track all of the money that comes into your life as well as the money that goes out of your life. They refer to it a spiritual discipline. This is much easier today with tools like Personal Capital. You no longer need to write down with pencil and paper like most people who followed this approach did back in 1992.
It was fun to read the updated edition of Your Money or Your Life. A few decades have passed since the first edition was published. It was nice to catch up on how she views money today compared to the early 1990’s. The updated edition of chapter 2 had a fresh feel to the narrative. Even though it was revised, it still contained the same spiritual principles of honesty, vigilance, and willingness to change that was in the original edition.
If you were a fan of the original edition, you are sure to enjoy the updated edition of Your Money or Your Life and the new website yourmoneyoryourlife.com.
This post might contain affiliate links.
Please be sure to read the Disclaimer page.