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Home » Early Retirement, Reviews

A Review of the Personal Finance Classic: Your Money or Your Life

Last updated by on 4 Comments

I recently read the personal finance classic book, Your Money or Your Life, and wanted to write up a little review with some thoughts.

This book, first published in 1992, is still very popular to this date. I waited on hold from the library for two months, and they had 6 copies!

Your Money or Your Life is often cited by personal finance bloggers (affectionately abbreviated as YMOYL) and writers as influential and life-changing. Many highlight it as the best personal finance book they’ve read and one that has shaped a lot of their philosophy.

To have read this book over 4 years of starting a personal finance blog? Blasphemy, I know!

The interesting thing about Your Money or Your Life is that it’s not so much a personal finance book as it is a philosophy book, as I’ll explain.

Onward with the review.

The Basic Premise in Your Money or Your Life

Your Money or Your Life ReviewAll of the material in Your Money or Your Life revolves around one central concept:

money = life energy

It’s true. We give our time, or life energy, in exchange for money.

Once you absorb this, it allows you to view everything in your world a bit differently. For example:

  • What is your real wage, given the amount of time it takes to commute, the cost of work clothes, the cost of eating out for lunch, the cost of child care, etc.? When that $20 per hour becomes $10 in real wage, is that job worth your life energy?
  • When you spend $50 a month on video games, how much life energy are you trading for those video games?
  • How much life energy are your trading to take a vacation? for a mortgage? for dining out?

When you start viewing money in terms of life you are giving up, suddenly that money takes on a whole different meaning and value.

This is a very solid fundamental concept and I think this world would be better off if everyone realized the importance of this.

Your Money or Your Life goes through 9 fundamental steps that are recommended to follow. I’ll summarize each and give my thoughts:

Step 1: Making Peace with the Past

This step asks you to calculate your total life earnings and then ask yourself what you have to show for your life’s work.

Kind of a depressing exercise, if you don’t have mounds of cash. Is that the intent? Absolutely.

Step 2: Being in the Present – Tracking your Life Energy

Here, the money=life energy concept arises, which is repeated throughout the rest of the book. The authors also emphasize the importance of calculating your real wage and tracking every single cent that you are spending. A very valuable practice that I also recommend.

Step 3: Where is all of your Money Going?

After tracking all of your monthly expenditures, divide the amount you spent on each category by your real wage. This equals the number of hours of life energy you spent for that particular item. Similarly, document all sources of income.

The authors recommend documenting everything and being as granular as possible with the category breakdown so you can find out the true purposes for why you are spending.

Step 4: Three Questions that will Transform your Life

With your spending activity outlined, the authors urge you to ask yourself the following three questions:

  1. Did I receive fulfillment, satisfaction, and value in proportion to life energy spent?
  2. Is this expenditure of life energy in alignment with my values and life purpose?
  3. How might this expenditure change if I didn’t have to work for a living?

Go through each category and assess by marking a +, -, or 0 (neutral).

I’m not sure how effective this step is at accomplishing anything, but it can help you re-evaluate your values.

Step 5: Making Life Energy Visible

It is recommended that you chart out your total monthly expenses and income (y-axis), over time (x-axis) to see the results.

Yes, step 5 could literally take you years to complete. If you can stick with it, this is a highly valuable exercise.

Step 6: Valuing your Life Energy: Minimizing Expenses

This step comes down to taking pleasure in frugality and the simple things in life. It’s also about throwing out the “Joneses” envy and why you should stop trying to impress others. It also discusses the cost to the planet of every purchase we make.

Step 7: Valuing your Life Energy: Maximizing Income

This chapter, to put it simply, asks you to re-consider your relationship with work. Why do we feel like we need to work full-time or we are useless? It’s a great question.

It also urges you to disassociate your job with your identity.

One concept I really like in this chapter is around all of the possible purposes of work. Getting paid is the obvious, but others include success, socializing, power, prestige, personal growth, success, learning, security, etc. Often times, our dissatisfaction with work comes from these needs not being fulfilled. However, all of these needs can be much more easily fulfilled by unpaid activities, so don’t get down on your job if it isn’t meeting those purposes.

In the end, the authors recommend that you value the life energy that you invest in your job and exchange it for the highest pay consistent with your health and integrity.

Step 8: The Crossover Point

The “Crossover Point” is the point in time when your income from investments surpasses your expenses. At this point, you will reach financial independence. You no longer need to work for money. Hooray!

Step 9: Managing your Finances

In this step, the authors highlight the final step of financial independence – investing for the long-term.

This was probably the weakest chapter in the book, as it simply gave definitions of mutual funds, treasury bonds, index funds, and stocks and talked about some of the risk/reward of each.

The reality is that this step is much harder to do than when the authors originally wrote the book. Treasury bonds, CD’s, and other stable forms of investment had much higher return rates than they do today. It can be done, but it takes much more risk these days than previously.

My Overall Thoughts on Your Money or Your Life

Overall, Your Money or Your Life is definitely worth reading. There is a lot of hype around the book in the personal finance world which gave me pretty high expectations coming in. It did not exceed my high expectations, but it did meet them.

Eventually, I came to many of the same conclusions that were found in the book on my own, and I believe the path set forward in the book is fundamentally strong. It took me a lot longer to get there than it would have had I read the book earlier in life. If you’re at an earlier stage in your personal finance development, the book is a must read.

I really liked the money=life energy concept and I think the book is a good blend of life philosophy and strategy technique. Values are emphasized repeatedly. It is not so much a book about personal finance as it is a book on guiding your relationship with money and personal values.

I also think the practice of documenting all of your expenses over time and placing values on each is very effective. It takes a lot of discipline, but it is worth the effort.

A few things I did not like about the book or thought could be improved:

  • At times, it was very self-promotional, particularly when talking about the success of participants in their financial seminars.
  • It was 303 pages, but probably had about 100 pages of good content. Some of the material took way to long to walk through and was repeated more than necessary.
  • Documenting, by its own, is not enough. It’s one thing to talk about the virtues of decreasing your expenses through documenting them, it’s another to talk about the tactics to actually decrease them. This was not covered at all in the book.
  • Some of the personal stories were great, but there were too many, and some were very weak and hollow. Had the authors focused repeatedly on the same folks throughout the entire book and their progress in life, it may have had more impact.

Constructive feedback aside, Your Money or Your Life is definitely worth picking up from your library and giving a read.

Your Money or Your Life Discussion:

  • What did you think about Your Money or Your Life? Did it live up to your expectations? Was it life changing for you?
  • What is your favorite personal finance book?

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About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 7,500+ others by getting FREE email updates. You'll also find every post by category & every post in order.


4 Comments »
  • Natalie H says:

    I also recently read YMOYL for the first time. It seems like you can’t go a week in the personal finance world without someone mentioning this cult classic. I found the concept of “real wage” to be the most valuable idea in the book. I also really liked the idea that instead of taking a dollar amount budget and deciding how to cut back, build your budget from the ground up by deciding if you are getting your money/time’s worth in each area. I also found their insistence on investing only in US securities to be laughable and dated.

    Since this book has been so popular for so long, I had heard nearly everything within from somewhere else, but seeing the whole package together was still nice. I took a few days and worked through most of the exercises. Although I keep excellent records and I could tell you where every dollar was spent for the last 8 years, I did gain some insight by converting those dollars into hours. It helped me to see that an area where I feel guilty (video games) was a very tiny amount of my time and gives me an enormous amount of joy comparatively. I no longer feel guilty about my “guilty pleasure.”

    • G.E. Miller says:

      That’s a really great point on not feeling guilty. There are certain things in life that aren’t cheap on the surface, but the amount of reward you get from it is very high. For me, that is cycling. When you evaluate the amount of satisfaction you get from something and determine it’s worth the expense, it does take a lot of the guilt away.

  • Long says:

    Thanks for reviewing this book. I’ve seen the acronym YMOYL floating around different forums and never knew what people were referring to. I think I’ll pick it up at the library at some point and see what it has to offer. I always take personal finance/self-help books with a grain of salt anyways, as they usually do promote something else (as you mentioned).

  • Ron Ablang says:

    Correct me if I’m wrong, but I believe there’s also a DVD version available at most public libraries. I think I ran into it months ago.

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