9 Steps to Financial Freedom: Insights from ‘Your Money or Your Life’

Your Money or Your Life is a book about how to achieve financial freedom, whatever that means to you.

I recently finished reading it for the first time and it was not what I expected.

This book is not just about how to build wealth. It is fundamentally about changing your relationship with money and building your dream life.

In this post I will outline the 9 steps as described in the book, then comment on each one as it pertains to my situation.

Make no mistake. This post, like many of my posts, is for my clarity. You may or may not find it interesting, and it may or may not give you ideas for your own situation.

The biggest takeaway you will get is this:

‘Your Money or Your Life’ is definitely a keeper for my list of top 24 books to re-read, and you should definitely read it.

This step has two parts.

In part one, you will calculate how much money you have made in your life until now. This is to prove your earning power to yourself.

Depending on your age and work experience, this is no small feat. Luckily, you don’t have to complete it before moving onto step two.

Part two of step one is to calculate your net worth, because, as stated in the book, “you can never know what is enough if you don’t know what you have.”

I decided to skip step 1A, although throughout the book it does repeatedly tell you to follow the steps. Perhaps I will do it someday when I feel I have the time.

For part two, I’ve been doing this each year for a number of years.

In this step you calculate your real hourly wage. This is your gross income minus all the expenditures it costs you to keep the job. For example, if you didn’t have to work, you might not need a car.

This step was very easy for me since I work from home and pay myself.

Part 2 of this step is to track your money. You record everything you spend and earn to the cent.

I did this for years when I was younger, and for some reason just stopped. Now I have restarted it using a simple google sheet. Every day I record my income and expenses. The difference is that now I put each item into a category in preparation for the next step. These categories depend on your unique spending patterns. For example, I have health, travel, groceries, supplements, eating out, and others.

Each month, create a table of all your income and expenses within each category, then convert ‘dollars’ spent in each category to ‘hours of life energy’ using your real hourly wage.

I haven’t started this step yet, but I will definitely do it as it is integral to the rest of the steps.

Ask each of the following three questions of each of the category totals expressed as hours of life energy.

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?

Then you will grade each category positive, negative, or neutral.

By doing this you start to fundamentally change your relationship with money. You discover what the meaning of ‘enough’ is for you, as opposed to just aiming for more, more, more.

Create a graph to represent your income and expenses from your monthly tabulation.

After a few months this will show your financial progress which is great for motivation.

This chapter gives a bunch of tips on cost cutting, but more importantly, it teaches you the true meaning of frugality and what it means to have enough.

I think I am good at being frugal, though it will be interesting to see where I spend my money after a couple of months of monthly tabulations, and whether I feel that is money well spent or not.

The fundamental lesson here is to break the link between work and wages. By working with purpose you will naturally increase your earning power.

I don’t earn money in the standard paid employment manner, but I still got a lot of wisdom from this chapter. It has made me really rethink about how I want to shape my life over the next couple of years.

This was the most impactful step for me. In previous steps you figure out how much you need to earn each month in order to live a life of ‘having enough’ depending on your personal values and desires.

In this step you make a plan to invest extra money with the aim of having the earnings from investments be enough to cover your living expenses and then some.

As you move towards this goal, your investment income is recorded on your graph. At some stage your investment income line will crossover with your expenditure line. Once that happens, you can quit your job and do what you want.

I regularly invest spare money. What I lack is knowing what I actually want.

This is essentially about ongoing maintenance and finance management for building ongoing wealth.

I wasn’t exactly starting from scratch when I started reading this book. Back in the day I decided I needed about $50 a day to live a life of travel, so I started writing books in the hope that I could make that amount in royalties.

That plan worked.

Now, 10-ish years later, I’ve come to a stage where I’d like to settle in one spot. I still like to travel, but I feel the urge to change my way of life, including how I make money and, more importantly, how I spend my time.

Then once I figure that out, I can figure out how much I need to earn per month to live that life and work towards it following the steps from this book.

Get ‘Your Money or Your Life’ here: https://amzn.to/4gqQj94