One question I see on personal finance sites a lot is this:
If you could go back in time and tell your 18 year old self one thing, what would you tell him/her?
While there are plenty of things I could think of to tell 18 year old me (a prominent one being “DON’T START SMOKING!!!), one thing I could give my 18 year old self stands out:
A copy of Your Money or Your Life.
I know books are seemingly on their way out, but please, if you read one book, read this one. Buy it from Amazon, rent it from the library – whatever it takes.
I didn’t read this book until I was 27. Fortunately I was not in terrible shape financially – I had been budgeting for the last year, was consistently paying down debt and saving for retirement, living below my means, and eschewing traditional consumer patterns for a frugal and self-reliant lifestyle. And even though I had seen a lot of the concepts and ideas presented in the book on various blogs and websites, it never stuck together like it did after I read the book.
For starters, Your Money or Your Life was published in 1992 (it has since been updated) by Vicki Robin and Joe Dominguez and became a New York Times bestseller the same year. 25 years later the concepts are more relevant and applicable than ever.
Robin and Dominguez establish the concept of money as something we trade our life energy for – you work X hours for X dollars. They go further by exploring how our jobs take up more of our time, energy, and money than they appear to – expenses like transportation and food, activities needed to unwind and relieve stress from working, time spent getting ready in the morning and commuting – and we are presented with the concept of our Real Hourly Wage.
It is this wage that we can truly begin to accurately value how much money we’re trading our life energy for.
The next great revelation is the introduction of Financial Independence – when your assets produce income that is more than your expenses, eliminating your reliance on a job to survive. The steps to Financial Independence – examining spending in relation to happiness, learning how to save and manage your money, and tracking your progress – are all detailed with examples and suggestions. Some are outdated, with obviously newer ones missing (the last update was in 2008).
Very few of us will have the luxury of becoming multi-millionaires in our 20’s, with decades to enjoy private jets, mansions, and vast riches. But we can learn how to take control of our money, and eventually our lives, through the techniques and ideas presented in this book.
I feel extremely lucky that I found this book when I did – and even though I wasn’t in a terrible financial situation, it still changed the way I think about work, money, and life. I’m sure 18 year old me would do a few things differently after reading this book, but who knows. I like to think it finds you when you’re ready to find it – for some people that may be never. But if you’re reading this site, I’m willing to bet this book could change your life, and your money, too.
Readers: Have you read Your Money or Your Life? What was your experience after reading it?