Table of Contents

The Book in Three Sentences

In this summary of Your Money or Your Life, you’ll learn a nine-step program that will change your relationship with money and help you achieve financial independence. Among other things, Your Money or Your Life will teach you to get out of debt, develop savings, declutter your life, and invest to create wealth. The first edition of the book came out in 1992, but this updated and revised edition features a new foreword and covers modern topics.

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Your Money or Your Life Summary

Chapter 1: The Money Trap: The Old Road for Money

What would you choose between your money and your life? In that extreme situation, most people would give up their money because they value their lives more. But in reality, people sacrifice a lot for money: their time, their dreams, their energy, and their well-being. The perfect worklife doesn’t exist and there are always tradeoffs, but what if there was a way to live a meaningful life and make a living while having enough energy? What if you could have both your money and your life?

According to Robin, we aren’t making a living, we’re making a dying. Our jobs drain our energy, take up most of our time, and demand so much from us that it’s literally killing us. But since it happens so gradually and we get rewards over time, we don’t notice this phenomenon. Something else that prevents us from leaving our jobs is that they’re part of our identity. We associate ourselves with a title and this gives us pride and self-worth. Despite their effort to look successful, most people don’t have that much money to show for it. To sum up, we’re unhappy and in debt. Those are the two things we have to show for our hard work, but that’s a big price to pay.

There’s always a constant pursuit of more (more money, more possessions, more prestige, and more respect) because we believe that more is better, but that’s not the case. This is an inability to determine what’s enough. Money is a way to buy anything, therefore we believe that it’ll buy us happiness too. Instead of living life, we consume it. To solve this conundrum, we need to develop a new relationship with money. Whenever we’re bored or unfulfilled, when we celebrate, or when we feel unloved, we buy something. This is a problem because we’re trying to solve internal problems with external solutions. But psychological and spiritual needs can’t be solved so easily. To illustrate this issue, the author shares the fulfillment curve.

When our lives start, more money means more fulfillment. This lets us meet our basic needs and survive. So we go from covering our essential necessities (food and shelter) to nice-to-haves (toys and a bike, for example) and we feel more fulfilled. At this point, our parents explain to us that things cost money, so we associate having money, with buying more stuff and therefore, being more fulfilled. As soon as we’re old enough and get money, we get luxuries (cars, technology, trips, and big apartments), but by this point, the curve has reached an apex and will soon drop rapidly. Soon, more money translates into worry, anxiety, responsibility, and demands because there are more bills and taxes, and we need more space.

To be happy, we must identify the peak of the graph; the moment when we have enough. This is the best position to be in life because at this point, the basic needs are covered, and you have niceties and some luxuries. The curve starts to drop as soon as you have clutter, these are the things we use less, but still take up space. Having enough gives you freedom and getting rid of clutter opens new opportunities. The rest of the book outlines nine steps to get rid of your clutter.

Step 1: Making peace with the past.

This is about reviewing your past earnings and spending activity so that you can increase your awareness. There are two parts to this step: first, you have to find out how much money you’ve made in your lifetime, and second, you have to find out your net worth (this includes your assets and liabilities). The idea is to have a rough estimate of how much money you’ve made in your lifetime and then ask yourself, “How much do I have to show for it?” The answer to this question is your net worth which includes your liquid assets (cash and the market value of your possessions) minus your liabilities (debts, loans, and unpaid bills).

Chapter 2: Money Ain’t What It Used to Be – And Never Was

We think we know what money is, but we never stop to think about it. Money is a lot of things: paper, a means of exchange, and a symbol of status and power. But the only universal truth about money is that it’s “something you trade your life energy for”. The only asset you have is the time and we exchange it for money. Everything you own translates into a certain number of hours you had to work for to get it. Thinking of money as your life energy transforms your relationship with money. Society sees money as a game and to win the game, you have to have the most toys. But what if you could change the rules so that you win when you have enough? The concept of life energy lets you optimize your most precious asset: your time.

Your goal should be to achieve Financial Independence. To do so, you need to have enough and this lies at the top of the fulfillment curve.

Step 2: Being Present – Tracking Your Life Energy

There are two parts to this step as well. First, you need to determine the time and money costs required to maintain your job and then you need to establish your hourly wage. Second, you need to keep track of the money you get and spend. Money is something you get by providing your life energy.

So how much money do you make for the time you work? The cost of work comes in the form of time, but also spending money on activities you could do yourself if you didn’t have to work, buying things you don’t need. To work, you must commute, wear clothes that are specific to your job, buy meals, decompress from work when you get home, use entertainment to escape, and go on vacations. Each of those things costs you money and you should combine those figures and subtract your salary. This is your real hourly wage.

Now it’s time to track the money you get and the money you spend, using a notebook, your computer, or your smartphone. The point of this step is to be more mindful about your expenses.

Chapter 3: Monthly Tabulation

Now that you’ve collected a lot of information about the money you made and spent throughout your life, what do you do? While budgeting sounds like a great idea, you need to determine what’s enough. With that in mind, here’s what you should do.

Step 3: Monthly Tabulation

This is all about setting up the categories where you spend money and are unique to your life. While you can have basic categories like food, shelter, transportation, and clothing, the idea is to have subcategories that accurately represent how you spend your money and your time. Here are some examples:

Food: family, guests, restaurants, special occasions, snacks
Housing: rent, utilities, mortgage deduction
Clothing: utility, fashion, shoes
Transportation: car, bus, cab fares, bicycle, walking, insurance
Technology: phone, internet, cable, tablet, smartwatches
Entertainment: movies, games, app subscriptions, streaming services
Health: medicine, vitamins, gym membership, checkups, health insurance, prescriptions

These are but some examples and you can add as many subcategories as you want as long as they accurately reflect how much money you spend and the life energy every item costs.

Chapter 4: How Much Is Enough? The Quest for Happiness

What fills you with happiness? This is the thing that will change how you use your money. Before you can reach that state of fulfillment, you have to find the thing you’re looking for. The thing in question must give you joy in the long term. But achieving our dream is sometimes not possible due to money.

Step 4: Three Questions that will transform your life

For everything you buy, ask yourself these questions:

Did I receive fulfillment, satisfaction, and value in proportion to the 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 money?

What does “enough” look like? Enough has four components:

Accountability (this is knowing how much money you make and how much money you spend)
Determining what fulfillment looks like to you
A purpose that goes beyond your wants and desires
Responsibility

Chapter 5: Getting It Out in the Open

Step 5: Making Life Energy Visible

So far, you’ve tracked and evaluated your expenses, you’ve become more mindful of your expenses and you’ve saved more than you thought possible. How can you maintain this from now on?

You make it a habit by developing a system that works for you
You commit to other people or have an accountability partner
Use external resources such as a to-do list

This step is about creating a chart that features three to five years of data. This is called the Wall Chart and as long as you start and keep going, the process will work for you. Additionally, the questions from the previous step can help you out. To achieve Financial Independence, the most important factor to consider is your savings rate.

Chapter 6: The American Dream – On a Shoestring

The concept of having enough can be summed up in the word frugality. This is the key to fulfillment because it refers to enjoying what we have. The opposite of frugality is materialism, the idea that more is better. By definition, materialism can never lead to enough.

Step 6: Valuing Your Life Energy – Minimizing Spending

In this step, we eliminate some expenses to use your life energy (money) more intelligently.

How to save money:

Don’t go shopping: Shop online instead of physically going to a store. Also, don’t shop to reward or entertain yourself.
Live within your means: This refers to buying what you can afford. In some cases, you might have to wait before buying something.
Take care of what you have: By taking care of what you have, you’ll spend less life energy on things you have to replace further down the line. As a consequence, you’ll be preserving one of your most precious resources: your health.
Wear it out: If you buy quality products, it’ll be years before they wear out. You can also reuse old items instead of throwing them out. Replace things when making them work is more expensive or time-consuming than getting a new one.
Do it yourself: When something involves basic skills you can learn in a few minutes, do it yourself.
Anticipate your needs: Buy items on sale before you need them.
Research value, quality, durability, multiple use, and price: research an item before you buy it
Buy it for less: When possible, buy an item at the cheapest price by comparing prices, bargaining, or buying it used.
Meet your needs differently: Look for alternatives before buying something, so identify the core values behind your needs and see how you can meet them. For instance, “freedom” might mean traveling to a person, but you can achieve the same thing by exercising. Substituting doesn’t mean limiting yourself, but liberating yourself.
Follow the nine steps in this program

Other ways to save money include getting an efficient and reliable car that you can keep as long as you want, using a bicycle when possible, maintaining a healthy lifestyle, cooking at home, quitting alcohol, buying an older phone model, and cutting the cord.

Chapter 7: For Love or Money: Valuing Your Life Energy – Work and Income

What’s work? Everyone has a slightly different definition of work. While some see it as a blessing, others see it as a curse. Hunter-gatherers worked around three hours every day and this was the norm for thousands of years. When the Industrial Revolution happened, our concept of work changed radically and people started working more. Then, the Depression happened and free time meant unemployment, so the New Deal sanctioned the forty-hour workweek. Working meant more growth, expansion, money, progress, and disposable income. Suddenly, work was more valuable than leisure. Our job is supposed to give us status, meaning, respect, power, challenges, and rewards.

The concept of work has changed tremendously since our ancestors’ days when they spent their days hunting and gathering for three hours and then socializing, celebrating, and playing games. Was this worth it? A lot of people feel overworked, stressed, unchallenged, insecure, or depressed, so the answer is a resounding no. What’s the purpose of getting paid for our jobs? We do it for money, security, service, to learn, to be admired, and to socialize. At this point, the author argues that separating work from wages is important because once you do, you start valuing time more.

Redefining work increases choices: This is telling people who you are and what you do by explaining how you spend your time rather than what career path you took.
Redefining work allows you to work from the inside out: Instead of working according to someone else’s values, you can do your job while maintaining your own values.
Redefining work makes us life designers, not just wage learners: Despite having a job, you can learn new skills or have side hustles.
Redefining your work adds life to your retirement: You can continue working after you retire, the only thing that changes is that you don’t have to do it for the money.
Redefining work honors unpaid activity: This involves looking at how you spend your free time to see if your actions align with your goals.
Redefining work reunites work and play: What if working and playing were the same?
Redefining work allows you to enjoy your leisure more: Leisure is freedom, a time when you can focus on self-development or personal pursuits.
Redefining work sheds new light on “right livelihood”: “Right livelihood” refers to work that’s also your vocation, but they can be two separate things and that’s ok.

Step 7: Valuing Your Life Energy-Maximizing Income

In this step, you maximize income by exchanging the life energy that goes to your job for your health and integrity. Life is meaningless if you don’t value your life energy, so start doing that and look for the highest pay. The idea is to get as much money as you can in order to be free. You can do this by working part-time, asking for a raise, or changing jobs, for example. Your attitude is important when trying to maximize your income, so don’t adopt a victim mentality.

Chapter 8: Catching Fire: The Crossover Point

By this point, you’ve minimized your expenses, paid off your debt, and made some extra money. Now that you’ve increased your savings, you don’t have to spend that on vacations, technology, or a bigger house because you know that money is life energy. You should spend your money on the things that bring you joy, but first, you should consider investing that money so that it works for you. This is called capital and if you invest it well, it can become a source of passive income.

Step 8: Capital and the Crossover Point

Once your monthly investment income “crosses over” your expenses, you achieve Financial Independence. The idea is to keep investing more so that you get higher returns and eventually, your employment is optional. When you start saving, you want enough cash to cover three to six months of expenses in case something happens. This is called a “cushion” or “emergency fund”. Once that’s covered, you want to invest in index funds and retirement plans like a 401(k).

In addition to your capital or cushion, you might also want a cache, these are additional savings in case something bad happens. Since you won’t be working, you can get extra money from side hustles, part-time work, gifts, or inheritances. The three pillars of Financial Independence are Capital, Cushion, and Cache. The three pillars of wealth are Abilities (your skills and knowledge), Belonging (the people who are part of your life), and your Community (the people who surround you, as well as nature).

Congratulations, you’ve achieved Financial Independence. Now you just have to figure out what to do with your time.

Chapter 9: Where to Stach Your Cash for Long-Term Financial Freedom

Step 9: Investing for FI

This step is about producing enough income through investing so that you can cover your needs. There are different ways to invest, but the best ones are bonds, your IRA or 401(k), or real estate. Index funds are one of the best ways to invest money because once you set it up, you can forget about it. They are a flexible, low-cost, and reliable tool.

Book Summary: Your Money or Your Life by Vicki Robin