This is the fifth part of Money360 Book Club reading of Your Money or Your Life. Want to know more?
Each chapter in Your Money or Your Life finishes up with a project of some sort that illustrates a point about one’s personal finances. Most of these seem rather pointless at first, but once you actually move through the exercise, it almost always ends up being a real eye opener.
The exercise here in this first chapter is no different. It breaks down into two parts.
Find out how much money you have earned in your lifetime – the sum total of your gross income, from the first penny you ever earned to your most recent paycheck. I read this at first and shrugged it off, thinking to myself that there really wasn’t much of a point to it. Well, there is – and it’s a big one. Actually sit down and total it up using old tax returns and such. Look at that number for a bit, then move on to the other half.
Calculate your net worth. This is a much more common calculation, one that everyone should do once in a while to look at their current financial state.
What’s often really shocking is when you compare everything you’ve ever made to your current net worth and ask yourself where did all that money go? It’s a question that, if you begin to ponder it, really makes you question your wasteful spending habits. The thing is, it doesn’t matter how frugal and careful you are, you’re going to still have a fairly low percentage here – what’s scary, though, is that some people will have made significant money in their life and yet still have a very low (even negative) net worth.
Five Questions From Chapter 1
As this step ended the first chapter, I thought I’d summarize the five questions that the first chapter put into my mind that really made me think about the relationship between my money and my life. Hopefully, they’ll give you something to reflect on as well.
1. Does the argument of simple living for the greater good of the world have any weight? I find that it does for me personally, but it’s easy to see how this factor wouldn’t matter to others. It’s interesting to think of the day-to-day choices we make in the context of a global perspective, but is that realization enough to bring about behavior change – or is it just easier to write it off as “I’m one person, what difference does it make?”
2. When I buy something, do I buy it just as a “balm” for some greater issue? Take my Nintendo Wii, for example. Did I buy that to cover up some sort of greater issue in my life? I used to buy things as a balm quite often, but once I started spending serious time reflecting on my purchases, buying as a “balm” became much less of a factor.
3. What aspects of my life are cluttered, and how can I de-clutter them? I’ve really been focused on cleaning out my physical, temporal, and social clutter over the last few years, yet there are still aspects of my life that I feel could be better. I find I’m happiest, for instance, when I stick with GTD and don’t let it slide because I’ve been successful at cleaning my plate.
4. Does my professional life leave me unfulfilled? It doesn’t. If it did, I think I would have resigned from the job once I found other sources of income from my side businesses. However, I know a lot of people whose job leaves them feeling completely empty at the end of the day – is that really a life worth living? For some, it may seem like there’s not a choice in the matter – but is that lack of a choice actually just framed by consumerism?
5. What does it really mean to realize that I’ve only retained about 4% of what I’ve earned in my lifetime? I found that percentage very upsetting when I first calculated it and it made me question a lot about my choices, both past and present. If you tried this calculation, did it upset you as well?
Tomorrow, we’ll jump onwards into the second chapter, “Money Ain’t What It Used To Be – And Never Was,” focusing on the first half of the chapter up to the start of “Step 2.” That section is on pages 40 through 59 in my paperback version of the book.