Since the 1960s, this 9-step Financial Integrity program has helped thousands change their relationship with money, get out of debt, and achieve financial independence. Microsoft Office blogger Holly Thomas talks with Vicki Robin, co-author of the bestselling book Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Independence, about the 2 key questions to ask of your finances and the 9 steps the book outlines. Watch now, or read the transcript below.
Transcript: “I buy my freedom with my frugal living”
Holly: I’m Holly Thomas from Microsoft Office. I’m here today talking with Vicki Robin, co-author of the best-seller, Your Money or Your Life: 9 Steps to Transforming your Relationship with Money and Achieving Financial Independence. Vicki, thanks for being here. Let’s dive right in.
I’m in financial trouble and I need to get a grip on my finances.”
Let’s say I’m in financial trouble and I need to get a grip on my finances really quickly, what are the steps I need to follow?
Vicki: We ask people to ask the question of their expenses, “Does this make me happy in proportion to the hours of my life I invested in it?” Not just, “Does it make me happy in general,” because every little shopping moment is a thrill until you get to the car. “Does this bring me lasting satisfaction?” For example, you might say, “Yeah, I want the SUV.” But then if you do the calculation you realize that that car could cost your 3-1/2 years of your life in hours. What are you doing? You’re driving it back and forth to work so that you can pay for the SUV. So you become a aware of that process. In asking that question you might say, “Look, I already have a car. It’s a perfectly fine car, and I don’t want the SUV. It’s not we’re saying SUV’s are wrong, we’re simply saying, “Do the calculation and if that works for you, then go ahead and buy it.”
“Is my money buying me a life I love?”
The second question is, “Is this expense of my hours of my life taking me towards my dreams, goals and values?” As I said, this brings in the wholeness of life. It’s like asking, “Is my money buying me a life I love?” If my dream is to travel around the country, then maybe the SUV works because I can pull my trailer. If my dream is to have a wonderful family life and spend time with my children, those 3-1/2 years of your job actually might be time that you’re not spending with your children. So that “values” question really makes a difference.
Your time is finite. It’s the life energy you can spend.
Holly: It sounds as if what you’re really saying is, to think in terms of how you’re spending money as, “How are you spending your time? How are you spending your life?” Because that’s the equation. Is that right?
Vicki: Yes! How are you spending your one wild and precious life? When you think about your life, let’s say you have 80 years, that’s it; those are the hours. You’re going to spend 1/3 of them sleeping, probably 1/3 of them working, and so your disposable life, the life you have to express everything … Your love for your family, your friends and your relationships, and time and nature … Everything else that matters to you in life has to fit in those hours. So some of your hours are devoted to money, you want to make sure that the hours devoted to money are contributing to a life you love. It is a step-by-step program. The first step is getting clear with your past, and doing the balance sheet. Any financial planner would tell you to do that.
The second step is tracking your money, because you need some data to find out, “Actually, how am I spending my life energy?” The third step is simply tabulating your expenses in categories that make sense for your life and translating every expense from dollars to hours. The fourth step is simply asking those questions; the fulfillment and values question. The fifth step is simply charting your expenses over time so you can see where you are. You can start to see your expenses going down and your income perhaps being steady or going up. Once you realize the money is your life energy, valuing your life energy means spending less of it for every ounce of pleasure that you get. Once you value your life energy, realize this is a dead end job. If I’m going to sell my time for money, I’m going to sell it for more money.
It has a lot of suggestions about how to lower your expenses and how to increase your income. If you keep this charting and this process going over time, points out to you that some point in the future, the income from your investments, from the money that you’re saving, could actually crossover with expenses. You have an opportunity at that moment to have this realization that, “I do not have to work for all my born days, for money. I could liberate some of my time or all of my time for doing other things that matter to me.” The final 9th step is, once you have your nest-egg, just some very sane practical ways to invest your nest-egg, so that you can have a steady income and you can liberate your life.
“I buy my freedom with my frugal living.”
I say, “I buy my freedom with my frugality,” every day because by not wasting money I have more time for what I love; what I love.
Holly: Thanks very much, Vicki. I need to follow-up on some of these steps myself.
Vicki: Yeah. Thank you!
Holly: Appreciate your time.
Footnotes and Credits:
This video was produced by The Office Channel and published April 28, 2009 on YouTube. They produced and own the copyright. They have given me permission to embed this via Standard YouTube license onto this educational website.