Vicki Robin’s classic book “Your Money or Your Life” sold more than one million copies.
First released in 1992, it was different from most personal finance books, because it focused on the concept of financial independence, versus tactical advice like “How to make money in the stock market.”
One of the key ideas in the book is to not give up “life” in exchange for money. That it’s possible to lead a fulfilling life by managing our money and desires well. A life true to our values, instead of some hollow Instagram template of how society expects you to be.
Today, “Your Money or Your Life” is often quoted as an inspiration, especially in the Financial Independence, Retire Early (FIRE) community.
The easiest, almost natural way to think about money is it’s good, and you need as much of it as possible. But as wise people have figured out, actually, money is merely a tool. A very useful tool yes. Arguably the most useful tool of all.
However, money is not a tool you need unlimited quantities of. Even if you’re far from a millionaire, thinking about and using money wisely can greatly improve your quality of life.
In this article, I explore non-obvious ideas I’ve learned about money and life.
Money and Compounding Growth
One of the greatest surprises in my life happened when I was 24 years old.
“Did you know that by working here, one day you’ll be a millionaire?” my mentor asked. I didn’t believe him so he showed me the math. This was back in 2007 when my monthly salary was RM 2,510 (RM 1 = US$ 0.23) and I was working with PETRONAS, the national oil company of Malaysia. Assuming 3% salary raises a year, and 6% returns — after 34 years my retirement funds would cross the RM 1 million1 mark.
Of course, there’re a few optimistic assumptions here: Consistent 3% salary raises and 6% returns. I never touch my retirement funds, take a career break, or get fired. Inflation hasn’t been considered. On the other hand, the calculations are also conservative. They assume I never get a promotion or large salary bump over 34 years, and I’d still reach a million.
One million is nice, but I’m not as interested in the number as the idea.
In Malaysia, retirement funds are deducted automatically and employers need to contribute at least 12% of your salary. You don’t have to lift a finger, and you’d still accumulate a nice figure for retirement.
It blew my mind then, and it still blows my mind today. Most of us have some understanding of how money in your bank gets a small amount of interest every month. But most of us can’t imagine how compounding reaches huge numbers if you consistently save and give it long enough.
The underrated idea of compounding has non-monetary lessons.
James Clear — author of bestselling “Atomic Habits,” one of the most popular books of the last few years — wrote about how good habits can also compound over time.
Improving 1% at anything doesn’t feel like progress. But if you improve 1% for 365 days, after one year, you’ll be 37x better than when you started.
There’s an old Malay proverb: “Sikit sikit, lama lama jadi bukit.” It means: Bit by bit, eventually you’ll have a mountain.
Money and the Purpose of Money
At 22 years old, the Internet entrepreneur Derek Sivers quit his job and found freedom:
In his own words:
My cost of living was about $1000/month, and I was earning $1800/month. I did this for two years, and saved up $12,000…
Once I had $12,000 I could quit my job and become a full-time musician. I knew I could get a few gigs per month to pay my cost of living. So I was free. I quit my job a month later, and never had a job again.
Obviously this is a spartan life, and not for everyone. Some people much prefer the stability and predictability of a traditional job.
But asking, “What am I really working for?” is a powerful question.
The instinctive thought is that we’re all working for money. Get as much of it as possible. Get to 5-figures. 6-figures. Millions. Okay, but what’s the money actually for?
For some, it’s status. Especially when you’re younger, you might feel the need to project an image that others envy.
For Derek Sivers, it was freedom — flexibility to focus on his passions and interests.
Most people discover it’s actually for providing a good life for your family. For helping the next generation.
We’re not really working for money. What we’re really working for is the things money can buy.
When it comes to happiness, there’s a common fallacy: “If I get X, then I can finally be happy.”
We’re often like this with money too: “If I get to a million, then I can finally take care of my family.” But we end up focusing on the million and forget about the family.
Don’t focus too much on the money, till you forget what the money’s really for.
Money and Talking Big
Several big things happened in crypto in 2021: Crypto prices reached all-time highs. Bitcoin breached US$ 69,000 while the entire market capitalization of crypto crossed 3 trillion. Public companies like Tesla and Square bought Bitcoin as an asset for the future.
One popular saying on Crypto Twitter was “Have fun staying poor.” Commonly used to diss anyone who dared criticize anything about crypto. It was arrogant. Childish.
Several prominent figures within the crypto industry were just as loud. Prime example:
Fast forward to 2023, many of these outsized figures have fallen from grace. Do Kwon, founder of failed Terra-Luna is wanted by South Korean prosecutors. Authorities say he’s hiding in Serbia. Perhaps the most well-known of them — founder of unregulated crypto exchange FTX Sam Bankman-Fried — is facing criminal charges in the USA.
The obvious lesson our justice-seeking selves might think of: Pride comes before a fall.
A related lesson my boss taught me is to be careful of leaders who crave the spotlight. Maybe this is a necessary evil in politics, because you need people’s support.
But if you’re a business leader? Someone who’s already rich and supposedly has made it? Shouldn’t you be working on your business instead of spending all your time peacocking on social media?
Or are you showing off because you actually have something to hide?
Money and Trade-Offs
Money is often quoted as the #1 reason for fights in marriage.
It sounds obvious. You need money to buy a home, pay for baby formula, and go out for date night. Struggle with money, and there’ll be incredible stress. No parent wants to see their kids go hungry because they can’t afford milk.
But even astoundingly rich people have marriage problems.
In November 2022, author Ben Carlson looked at the richest 10 billionaires and their marital history. Quoting him: “The 10 richest men in the world have a combined 12 divorces between them2.”
Easy to fall in love. Hard to stay married.
Marc Randolph, co-founder of Netflix, and its first CEO recently wrote this about success:
“I’ve worked hard, for my entire career, to keep my life balanced with my job…
In fact, the thing I’m most proud of in my life is not the companies I started, it’s the fact that I was able to start them while staying married to the same woman; having my kids grow up knowing me and (best as I can tell) liking me, and being able to spend time pursuing the other passions in my life.
That’s my definition of success.”
What I love most about his quote is how he had to work hard at achieving balance. It’s not easy.
What trade-offs did Marc Randolph have to make to keep balance in his life? He’s still worth hundreds of millions today, but maybe in a parallel universe where he focused purely on work — he’s the richest man in the world.
Scott Adams, the creator of “Dilbert” once wrote: “If you want to be successful, find out what the price is and then pay it.”
Most of us instinctively think “money” when it comes to success, and “how much money?” when it comes to price.
But depending on your definition of success, the price could even be something like “less money.”
Money and the Game Beyond the Game
Back at one of my previous employers, I sat roughly 12 feet away from a senior manager’s office. One of his team members would frequently visit him in the mornings — with a cup of coffee and a smile.
It happened so often that another colleague started keeping time on the morning visits:
“One and a half hours.”
“Three hours man! Three hours!”
My timekeeper friend would say, equal parts pain and incredulity.
To this day, I have no idea what they were discussing in the senior manager’s office. Maybe they were talking work strategies. Maybe fixing operational issues. Maybe football. However, if you’ve worked in a large corporation before, you might gossip that he was kissing the boss’ ass. Trying to grab as much face time as possible. You might say it was “politics.”
People play different games all the time. You might think work is about achieving KPIs. But in certain places, especially if the culture isn’t based on merit, some people focus on the “who does the boss like more?” game.
Here’s a business example: A company’s objective is to make profits as soon as possible, right? Amazon spent more than 20 years keeping its net profit hovering around zero. Jeff Bezos was playing a different game: growth over profitability.
Another one: Is a doctor’s job to heal their patients at low cost? Or is it to prescribe the most expensive treatment that’ll help the patient, but also pay for the doctor’s next trip to Bali?
I’m not here to judge whatever games people choose to play. Rather, the lesson here is that the most obvious game isn’t the one you need to play. You’re free to choose. Choose a game you can win.
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We grow up thinking the game is making as much money as possible.
I think, a better game is making enough money to reach a reasonable standard of living. And then to stop worrying about money, and focus on life.
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1. If you don’t believe me, you can check out my calculations here. (Use: PV=0, t=34, R=6%, m=1, PMT=$7,000, G=3%, q=1)
2. Of course, correlation is not causation. You can’t just look at the list and declare: Being a multi-billionaire means you’re likely to get divorced. Marriage is tough under any circumstances.
Pic from Pexels: David Alberto Carmona Coto