Saturday, December 15, 2012

Your Money Your Life

This book is tauted as an American financial classic and was on my list of books to read. I had no real expectations, and I generally maintain if you can take one good thing from a book, then it was worth your time to read it.

Myself, I am an avid goal setter and financially reliable, and one of the recent goals has been to start rebuilding my share portfolio managed by myself and not the financial advisor. The author had been a stock broker who retired in his early 30's, although there is no reference to him retiring with millions based on his success.

The prologue is fairly catchy and commences with a few questions for the reader, such as "Do you have enough money?, Are you spending enough time with your family and friends? Is your life whole? Do all the pieces - your job, your expenditures, your relationship, your values - fit together?" After reading questions like these, I was interested to see how the book unfolded.

You will learn about the "evolution of the fulfillment curve" and the differences between survival, comfort, luxury and over consumption. The chapters will take you through a 9 step program, which looks at where you are now, where you could have been, and how to change where you want to go.

Step 1, net worth fairly simple. Step 2 starting looking at how old you are and how many hours you have left to live, and I was wondering where this book was starting to go! Then we started to work on tying our income to life hours, and working out the real costs of life/hour.

Step 3 - now with any finance book, you will be asked to make a budget, and this one is no exception. Although the twists on what you do with that budget are fantastic. So now you are looking at a budget configuration that tracks what your net worth position against your life energy, and you end up with a method that will assist you in assessing the real value of potential career moves.

Step 4 works through your life goals, or the need to start considering them if you don't have any! Your budget changes are then linked to how much life energy value you receive from the expenditure, and allows the individual to tailor their programs based on their own values.

Step 5 is commencing to graph you income through the use of a wall chart. I myself embraced the electronic age and used Excel, as graph paper is almost a distant memory! After tracking your monthly income, you then add in your monthly expenses, and commence a program to spend less than you earn. In today's society this will be a challenge for most. Our materialistic world is now in the grips of learning a valuable lesson, a global financial crisis.

In Step 8 the addition of monthly investments are added to your wall chart, and you start to learn about the "Crossover Point". This is the magical point in which you no longer NEED to work. Now the book has some ideas on what you could do with your time, and their suggestions were geared to saving the planet, charity work etc.

Now for me, I love the challenge of work and love my job. However, do I need to work full time? After working our my crossover point, I have gone back to the 65 year plan and made some adjustments. At my crossover point I will be moving to working part time, and using my life energy to do some of those things on the my life to do list.

The book explored life balance, it addressed the emotional and physical well being, matching your life energy and goals to provide a path to "Financial Independence", and well worth the read!

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