Co-authored by Joseph R. Dominguez and Vicki Robin, Your Money or Your Life is more a philosophical text than a book on personal finance. Of course, it’s chock-full of money tips and tricks, but the emphasis here is on mindset; what money is, what people think about it, and how to live a more complete and fulfilling life. So are the insights offered up in Your Money or Your Life genuinely helpful? Or is it just another by-the-numbers self-help book with advice you’ll forget the moment you put it down?
The long and short of it:
Domiguez and Robin champion the importance of FI, which stands for financial intelligence, financial integrity, and financial independence simultaneously. In broad strokes, financial intelligence is maximizing your happiness to dollars ratio, financial integrity is keeping a level head when commercials and social pressure tempt you to buy, and financial independence is not needing to work for money. Domiguez and Robin argue that by following their 9 Step Program, you will have a more fulfilling life and achieve financial independence.
Here are the key points of Dominguez and Robin’s philosophy:
Money is life energy
Money, by common definition, is a fungible socially agreed-upon unit of value that can be exchanged for goods and services. The value of money is derived from demand. Oil is not inherently valuable, it is only that people want it and are willing to put enormous effort into obtaining it that it becomes valuable. The amount of effort someone is willing to put into getting something translates to how much that thing is worth. In other words, the more time and skill that people are willing to exchange for something, the more that thing will cost.
The time, energy, skill, and knowledge that goes into earning money is converted into money. The sacrifices you made to make money at your job are ultimately returned to you in the form of a paycheck, to be saved or spent at your discretion.
Know how much is enough
Money might make you happy but more money won’t make you more happy. Money is like water. We all need water, whether for drinking, washing, or swimming in. There is, however, such a thing as too much water. If I asked you to calculate the total number of gallons of water you will need in your life, it would be a large but finite number. Money is the same, we need it to live and we need it to be happy, but after a certain amount, aka “enough,” we start to experience diminishing returns. We have the odd notion that infinite money will make us infinitely happy, but just as with water, at some point, enough is enough.
Rising cost of living has more to do with rising standard of living than inflation
Inflation: the boogeyman hiding under our beds, whispering in our ears that “in 10 years your money will be worthless” and “the Fed is printing money to pay for government debt.” And yes, inflation is certainly something to be wary of, especially regarding retirement, but Dominguez and Robin argue that more often than not, it’s more exaggerated scaremongering and less tangible threat. Stuff feels expensive now because stuff is better. The people of years back didn’t consider things like toasters or 30″ flat-screen TVs to be household essentials because these things were absurdly pricey or not-yet-invented. Today, everyone from the middle class to the millionaire is expected to have such “essentials.” Houses are more expensive today, yes because of the housing market and inflation, but also because they’re larger and better. Big money can be saved if you’re willing to settle for things that perhaps are not-that-good but are perfectly functional.
Money is also the Earth’s life energy
It’s no secret that economists are notoriously bad at anticipating costs that don’t directly translate to GDP. This means that for decades, the pollution and waste generated by the economy were simply seen as an irrelevant consequence of progress and profit. As Your Money or Your Life points out, money represents more than the value of an individual’s time and skill, but the value of the Earth as well. The economy extracts value from the Earth, converting it into money and trash that refuses to decompose. Given that from 1992 to 2023, global temperatures rose by another 0.4 ºC (NASA), the fact that money is the Earth’s life energy is a truth we can’t go on neglecting. This means the importance of saving money goes beyond saving your own life energy, it also very much means saving the life energy of our planet.
No shame no blame
The mantra of Your Money or Your Life. Money is an emotional topic and there is a strong tendency for people to value themselves in accordance with the amount of money they are able to obtain. When we talk about the total amount of money someone possesses, we say they are worth 2 million dollars not that they have 2 million dollars. When we talk about someone’s job, we say they are a lawyer, not that they do lawyering. No wonder it’s so emotionally taxing to examine our finances. However, unless we face our finances with unflinching honesty, we won’t have a clear picture of our spending and we won’t know how to embark on the path of improvement. No one is here to condemn you for your spending habits. Spent $2,000 this month on shoes? No shame, no blame. Didn’t realize the restaurant bill totaled $300 this week? No shame, no blame.
Decoupling “work” from paid employment
Domiguez and Robin point out that there are many worthwhile things we do in life that are unpaid. Taking care of our children, going to church, chores at home, our hobbies, and many more. The only thing that differentiates these activities from “work” is that we do them for free. As a society, we devalue unpaid labor. The things we do outside of our jobs are obstacles to be overcome instead of worthwhile occupations. Any occupation becomes less important when compared to our money-earning profession. Should you be compensated for being a good friend? A good parent? A caring neighbor? No. And in fact, these things can be equally as, if not more, fulfilling as a life-long career. We must rewire our thinking and understand that unpaid work is every bit as worthwhile as paid employment, sometimes even moreso.
So let’s say you’re intrigued by Dominguez and Robin’s philosophy and want to implement practices in your life that are in line with their thinking. This is where the 9 Step Program comes in.
Step 1: Laying the groundwork
1.1) Go through your financial records and count up your gross total income (after tax) that you’ve earned in your life. This means salary, but it also means gifts, tips, inheritance, and tax rebate. When you do this, you understand your true earning power and you’ll have a better sense for how much money you can make in the future.
1.2) Now rummage through your living space and note down everything you own. Figure out how much you can sell these things for, if you put them on craigslist today. Add up everything, from your house, to your car, to your bedsheets. Also count up all your liabilities, your credit card debt, your unpaid mortgage, your car loan, your college debt. Before we can make progress, we must first know our starting point. Whether you have a high net worth or a negative net worth, you need to be honest with yourself. No shame, no blame.
Step 2: Track your money
2.1) What’s your real hourly wage? It might be less than you think. Establish the actual cost in time and money required to maintain your job after accounting for commute, de-stressing expenditures, hired childcare, and costuming, and compute the actual dollar value you’re trading for your life energy.
2.2) Keep track of every cent that comes into and out of your life. This sounds difficult and unnecessary, but it’s an important piece of the puzzle. Does it really need to be every cent? Yes. Keeping clear and accurate records is the first step to developing automatic financial discipline. Be honest about your spending, and only then will you see results.
Step 3: Break down your spending
Start a monthly tabulation of your spending. This isn’t a budget, it’s just a chart to keep track of the places your money goes. The categories should be unique to you. By looking at your monthly tabulation, you should see a mirror reflecting your spending habits back to you.
Step 4: Quantify your spending habits
On your monthly tabulation, ask three questions of each of your category totals expressed as hours of life energy (in other words, cost divided by your real hourly wage) and record your responses:
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- Did I receive fulfillment, satisfaction and value in proportion to life energy spent?
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- Is this expenditure of life energy in alignment with my values and life purpose?
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- How might this expenditure change if I didn’t have to work for a living?
For each category and each question, make one of the following marks:
[ – ] for “decrease spending”
[ + ] for “increase spending”
[ 0 ] for “good the way it is”
By asking these questions every month and evaluating how you personally feel about them for each category, the amount of hours you’re putting in to have things you don’t really want becomes startlingly clear. Consider, are you spending more life energy to pay for a babysitter than you are spending directly on your child? Is this something you’re okay with?
Example (real hourly wage is $5):
| $$$ | Life energy | In proportion to life energy? | Aligned with my values and life purpose? | Change if I didn’t work? | |
| clothes | 26.28 | 5.26 hrs | + | 0 | + |
| eating out | 183.50 | 36.7 hrs | – | 0 | – |
| gas | 233.14 | 46.63 hrs | – | – | – |
| babysitter | 400 | 80 hrs | – | – | – |
| child | 272.55 | 54.51 hrs | + | + | + |
Step 5: Visualize your life energy
Create a large Wall Chart on graphing paper. On the y-axis, make notches for values all the way to double your current monthly income. On the x-axis, make notches for every month of the year for one year. Plot your total monthly income and total monthly expenses from your monthly tabulation. Connect these dots with a line as you go along. Put it where you will see it every day.
By asking your monthly questions and keeping track of your expenditure, you will slowly wake up to all the unconscious ways you have been spending your money. And as you plot your progress on the Wall Chart, you will be motivated to make and maintain changes so your expenses better reflect your values.
Step 6: Value your life energy – Minimize Spending
Gradually minimize your spending where you don’t feel it is proportionate to your life spending, and aligned with your values and purpose. At this point of Your Money or Your Life, Dominguez and Robin offer several pages worth of frugal tips, to be adopted or discarded at your discretion.
Step 7: Value your life energy – Maximize Income
This step is probably the most difficult of the bunch, as it requires forces external to you. Everything else you can do on your own, but a good job and higher income still calls for good employment. Therefore, this step centers more on mindset than practicable advice. Be active in your job search, don’t settle for “good enough” and know your value.
Step 8: The Crossover Point
You’ll have noticed on the Wall Chart that your expenses have been staying relatively low while your income stays high (and is hopefully getting higher). The gap between your income and expenses is your savings. Dominguez and Robin recommend investing in US Treasury bonds, but that’s because in 1992, these bonds offered a return of 7%, something that is not the case in the current-day, and a return that can’t be reliably counted upon, depending on the year. For the 2023 iteration, this would be the time to learn about investing so you can get your money to work for you. With the effect of compounding, you’ll soon notice your passive income (mainly capital appreciation with supplementary real estate income, dividends, bond coupons) growing, slowly gaining on your expenses. Once your passive income overtakes your expenditures, you’ll have reached the crossover point. You have achieved financial independence.
Step 9: What will you do now with your life and your money?
Financial independence, the final frontier of the FIRE movement, means different things for different people. For some, this is their cue to quit their job and start doing things on an entirely volunteer basis. For others, this means staying at their job, but negotiating more favorable terms of work (choosing projects they enjoy, their preferred work hours, etc). The important thing is that you are effectively retired from paid labor, and you’re now free to do work that is fully in line with your value and passion.
What makes Your Money or Your Life unique?
As you’ve probably pieced together by now, most of Your Money or Your Life is unique in its concern with mindfulness and introspection. Steps 1 through 5 of Domiguez and Robin’s 9 Step Program are all about mindful spending, learning the true worth of money, and the true cost of paid employment. These insights will lead to more happiness and fulfillment per dollar and generally more conscientious spending. This book is not really about making more money through saving and investing, nor is it about saving as much money as possible so you can retire as soon as possible. Your Money or Your Life is a holistic, integrative approach that goes beyond money. It is very much a book about “Your Money,” but I would argue that it’s even more a book about “Your Life.”
Final thoughts:
Your Money or Your Life isn’t really a book to be read alone. It doesn’t provide a roadmap to happiness and fulfillment. Instead, it informs you why you may not be happy and fulfilled and asks you to figure out a better path for yourself. Fair enough. What this means though, is that you have to do some homework. Domiguez and Robin are adamant that in order for the 9 Step Program to have any effect, you must follow every step to the letter, which is a tall order. Your Money or Your Life also suggests many additional avenues of skill development, such as vehicle upkeep, which you’ll of course need additional reading material and guidance to pull off. Not to mention, that at a respectable 304 pages, Your Money or Your Life is rather dense. The participatory aspect of this book in particular might make for a time-consuming read.
Is Your Money or Your Life worth the hassle?
It depends.
If you’re just looking for step-by-step instructions on achieving money mindfulness, the 9 Step Program is laid out in clear and condensed fashion in the last chapter of the book. It can also be found, alongside a book summary, through this link. If you’re looking for inspiration, something to set you on the path of financial liberation, Your Money or Your Life is also an excellent choice. However, if you’re looking for investment advice and tangible rules-of-thumb to use as financial guidelines, this book may not be for you. Your Money or Your Life is very much a book of its time, when treasury bonds had returns of 7% and a person with median income could feasibly pay off their mortgage in less than a decade (source). What little investment advice Domiguez and Robin offer must first be adapted to 2023 before it can be of any use to modern readers.
Ultimately, I found Your Money or Your Life to be an enlightening read. Although I did not follow through on the 9 Step Program, I can certainly see the value in doing so. Just as Domiguez and Robin would have you ask yourself, “Is this expenditure of life energy in alignment with my values and life purpose?” in your monthly tabulation, I would have you do the same regarding this book. If reading the book in full is in alignment with your values and purpose, then it’s well worth it. If not, then a summary will serve your purposes just fine.
