reviews
february book review: your money or your life
WSA adsense code -->Second Friday of the month? Must be book review Friday. This month’s choice is the seminal American personal finance book Your Money or Your Life by Joe Dominguez and Vicki Robin.
Pretty much every personal finance dude has read Your Money or Your Life. For many people, it’s a life changing book. It promises to transform your relationship with money and achieve financial independence. But how does it shape up? And, given that it’s not easy to find in the UK, is it useful for a non-American audience?
what happens in the book?
The book explains a nine step program to financial freedom. These steps are as follows:
- Making Peace with the Past
- Being in the Present - Tracking Your Life Energy
- Where Is It All Going?
- Three Questions That Will Transform Your Life
- Making Life Energy Visible
- Valuing Your Life Energy - Minimizing Spending
- Valuing Your Life Energy - Maximizing Income
- Capital and the Crossover Point
- Managing Your Finances
Several key concepts are introduced in the book. The most important of these is that money is really life energy - you trade your life in exchange for money. The other is that a fulfilling life is more important than money and that your goal should be to get to the point where you no longer need to work for money (financial independence).
If you join in with the program, you will evaluate where you are financially (the first three steps), whether that’s really what you want (the fourth step), how to get to financial independence (steps five to seven), and finally what it looks like when you reach it (steps eight and nine).
is it any good?
Yes. It’s really a self-help book, and the idea is that if you focus on the bigger picture of really evaluating what you want from life, you will be able to spend less, maybe earn more and generally make better choices. As with many self-help books, it is slightly new age-y in style, I didn’t have a problem with it at all.
Although the basic ideas are common to many personal finance sites, it actually takes them a step further. The book really encourages you to push to get off the treadmill and out of the rat race, rather than just do the same things that you’re already doing, but better.
Your Money or Your Life is slightly dated, the *new* edition that I have is from 1999, but it is relatively unchanged from its original publication in 1992 and a fair amount of it has a very early nineties feeling. This made it seem like it was a little inapplicable to me.
Along with other people, I’m not a fan of its dismissal of inflation - it is argued that you can overcome inflation by simply being more frugal and not succumbing to lifestyle inflation. Whilst these are both excellent practices, I’m not sure that they can hold inflation at bay for more than a few years.
The other main criticism of the book centres around the inflation strategy - they suggest using long term US treasury bonds. Readers of moolanomy will know that I don’t really know much about bonds, but I have discovered that the equivalent in the UK are conventional gilts from the UK Debt Management Office. Conventional wisdom is that bonds are just too conservative to be your entire holding for the long term.
should i buy it?
Probably. Overall, it’s actually a good book, and well worth a read. Certainly if you’re caught in a money or debt trap you should definitely check it out. And if you have any interest in personal finance at all you should at least consider it.
Although it’s an American book, it actually translates really well to the rest of us, so you can’t use that as an excuse.
If you’ve read Your Money or Your Life, let me know what you think in the comments.
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11 comments for “february book review: your money or your life”
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I’ve read it a couple of times and enjoyed it more as a general call-to-arms and a statement that ot everyone is living like I am, than with enthusiasm for implementing all the steps.
I actually enjoyed the follow up a lot more - “Getting a Life” by David Heitmiller & Jacqueline Blix - which had a whole bunch of case studies and examples of how people had used the program in their lives. I found that book quite inspiring indeed, and it did speak to various peoples difficulty with the inflation message and the bonds message and what they did differently.
I just read and reviewed this book myself a couple weeks ago. I also found it to be a good read, and the concept of replacing your wage income with investment income seems very appealing. In practical terms, it would take a lot of savings to generate that kind of a investment income if placed in solid, low-risk savings vehicles. Still, the concept is something worth shooting for.
I’m reading it right now…no I still haven’t finished…and I like it so far.
This has been on the fence for me for awhile.
It looks good, but I guess not good enough to pick up yet!
Nice review…thanks!
Excellent review - this is one book that is really loved in the PF world.
I haven’t read it yet but from your review I suspect I too will be lukewarm on it.
Mike
I haven’t read this yet. I think my feelings on it are mixed, as I am embroiled in getting my blog running, and focused on that.
The reason I’m writing is that your final comment: “Although it’s an American book, it actually translates really well to the rest of us, so you can’t use that as an excuse.” really hit home for me.
I feel suddenly very provincial. Thanks for bringing this point up. It dawned on me how uninformed I can be about what goes on outside of my own country (USA). I mean, I have the International BBC feed on my home page, but I don’t think I actually open it that much.
I’m going to work towards being more sensitive to the world view in the future.
Thanks for bringing me some “light dawns on marblehead” perspective (that is a Massachusetts expression used here because of a town called Marblehead).
Lisa
@Lisa:
Don’t feel bad. One of the things that is noticeable in personal finance books is they tend to use country specific terminology and loop holes. This means that a lot of them are really only suitable for people from the country. YMOYL suffers less from this.
On the other hand, it’s always a good idea to broaden your mind outside your home country, and I’m sure that I could do more myself.
Oh, that is SO true about the Americanisms in PF books. I have such a hard time justifying buying even the ones that look really good because so much of them is irrelevant for me (I’m Canadian). The Roth IRA. The 401K. The list goes on and on and it’s like reading Greek, but Canadian PF books tend to be really, really bad. I guess that’s why I read blogs.
I probably read this book sometime in the mid-90’s when I was in my late 20’s to early 30’s. It literally changed my way of thinking about money. I became less of a materialistic person and began saving money in order to get my time back (i.e., early retirement). After my living needs were satisfied, my “wants” just melted away. It was weird. It is hard to explain to people who are still programmed into the “want want” mode of thinking but I still try!
This book deeply affected me when I read it in the mid-90s. It focused my financial goals on financial independence, which is something I had never known was even a possibility before then. Like another reviewer, I found the followup, Getting A Life to be very useful with the case histories and the practical details people confronted while looking clearly and with that particular goal at their finances.