I read 'Your Money or Your Life' 20 years ago and it's changed the way I've worked and earned ever since

  • When I first read “Your Money or Your Life” in the late 1990s, it changed how I work and earn.
  • Over the years, I have carried the book’s principles of financial integrity (FI) with me.
  • Revisiting it now has led me to contemplate something I never had: living simply and retiring early.

I don’t remember who recommended Vicky Robin and Joe Dominguez’s book to me, but I owe them a huge debt of gratitude. “Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence” lived up to its title. It changed the way I thought about money and earning and started changing my life almost immediately.

I have bought and given away this book many times over the years. It had a significant influence on my financial life. And, with an update in 2018, it is more relevant than ever.

A brief history of ‘Your Money or Your Life’

The story of the book’s authors was one of the things that hooked me. Joe Dominguez worked on Wall Street for ten years during his 20s, saved as much of his salary as he could ($75,000 in 1969 or $225,000 in 2018 dollars), invested it in treasury bonds, and retired, living off the returns from his investments until he died in 1997. His co-author, Vicky Robin, joined him on this journey.

Many people follow a similar path now, through the Financial Independence Retire Early (FIRE) movement, but “Your Money or Your Life” laid the groundwork. The book outlines a program of financial intelligence, integrity, independence, and interdependence (the four FIs). It also explains the why for each principle and includes formulas to do your own calculations.

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I learned to value my ‘life energy’

The first thing I did as I read “Your Money or Your Life” was to start tracking my expenses. I wrote everything I spent in a tiny notebook. Over time, that became an essential tool as I evaluated where my money was going and tried to align my expenses with my values.

However, the section of the book with the most significant initial impact on me was Step 7 of the 9-step plan: “Valuing Your Life Energy — Maximizing Income.” It opened my eyes to these life-changing ideas:

  • I only have so many hours to live on this planet – my “life energy.”
  • I trade some of that life energy to employers in exchange for money.
  • It is logical and sensible to trade my limited stock of life energy for the highest amount of money while doing work that I care about, which matches my values.

When I first read the book, I worked at various part-time jobs to supplement my crafts business income. I viewed my hourly wage as a validation of my self-worth (or lack thereof), not as a business transaction where I traded my life energy for money. That new perspective changed my approach to work right away when I went looking for my next job.

I interviewed for a part-time job at a design firm where they asked me to name the hourly wage I expected. I felt brave asking for $16 an hour. That was $1/hour more than my previous part-time job, and I just wasn’t sure I was worth it.

However, I continued to interview and found a temp agency that would pay me $20/hour. When the design firm offered me the job at $16 the next week, I put the principles I learned in “Your Money or Your Life” to work. I set aside my low self-esteem and negotiated for my life energy.

I told the design firm that I would prefer steady work in their office but that the temp agency would pay me more. I told them the offer from the temp agency and asked what they could do. My internal calculation was that if the design firm could split the difference and pay me $18/hour, that would tip the scales in their favor. For the first time in my life, however, I didn’t negotiate against myself and simply asked my prospective employer an open-ended question. To my surprise, the design firm agreed to match the temp firm wage and pay me $20 an hour.

I didn’t stay at that job long, but that negotiation set me on a path that has led to higher wages in almost every position I’ve held since. I’ve earned substantially more over time than I would have if I hadn’t learned to value my life energy.

I learned to calculate my real hourly wage

One other vital lesson I took from “Your Money or Your Life” was to figure out my real hourly wage. That’s my net hourly pay after deducting the time and expenses that relate to my work.

For example, if I get paid for an 8-hour day but commute an hour each way, I’m actually working a 10-hour day. At $30 an hour, my $240 per day is $24 an hour once I factor in the commute. If work stresses me out, I might reward myself with a weekly $60 spa visit. That’s on top of the money I spend on lunches out, commuting, buying work clothes, etc. When I add it all up, that $30 an hour might be $15 or even $10. By calculating the external costs of working, I make better decisions about saying yes or no to employment.

For example, when I lived in San Francisco, I routinely said no to temp assignments that would have required commuting across the Golden Gate Bridge. Instead of a couple of bucks to take the train to work, I would have to drive and pay a hefty bridge toll, plus gas and the extra time on the commute. The additional time and money reduced the real hourly wage below what I was willing to accept for my life energy.

“Your Money or Your Life” has helped me navigate the work world more successfully. Even today, running my own business again, I use these principles to evaluate my client work to ensure that hidden costs aren’t an undue drain on my life energy.

The next chapter: Can I aspire to FIRE?

When I first read “Your Money or Your Life,” I was intrigued by Dominguez’s story of retiring early and living a simple life, but I wasn’t ready to embrace that part of the 9-step program.

Waiting paid off. Vicky Robin updated the book in 2018, and the investment advice is more relevant for today’s financial market. Plus, I’m ready to reconsider the balance of work, life energy, and money in my life.

I’ve been on a mad hamster wheel for several years, striving to grow my business and increase my income. However, the pandemic has made me re-evaluate my goals. Maybe the relentless pressure I put on myself is doing me more harm than good. Perhaps earning enough to pay my bills and save for retirement is adequate.

At this point in my life, early retirement would mean stopping my 60s instead of working, at least part-time, well into my 70s. Rereading “Your Money or Your Life” today, I feel motivated to re-evaluate my FI and see if I can make that happen. I love my career, but the idea of a life of financial freedom without work pressures is even more appealing.

“Your Money or Your Life” has shaped how I view money and work for over 20 years and it continues to give me gifts. I think the book is as relevant today as when it was first written, and it’s a great place to start if you want to change your relationship with money.

Laura McCamy is a freelance writer based in the San Francisco Bay Area who has written about tax filing, saving money, cutting expenses, and retirement savings.

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