Your Money AND Your Life

This article is going to start out pretty far astray from money issues, so bear with me for a bit. Don’t worry, we’ll come back to dollars and cents.

Think about a time in your life where you did something that you quickly realized was the wrong thing to do. Perhaps it really hurt someone else. Perhaps it was something that just feels wrong to you to think about it. Maybe you did it just to impress someone that you shouldn’t have bothered to try to impress (at least not in that way), or maybe it was just a bad choice in the moment.

You probably felt awful about it afterwards, probably for quite a while. You likely regret it even now.

Now, on the other hand, think about a moment in your life where you did something that was just dead-on the right thing to do. It was completely in line with your values, it made things better, it was just the best thing to do in that moment. Maybe you really helped someone out. Maybe it was a culmination of a lot of positive effort on your part that resulted in just a great outcome for a lot of people.

Whatever it was, you probably felt great in that moment and shortly thereafter, and you probably still feel good about it to this day.

The big picture here is simple: it feels really good to live as close as possible to our ideals, and it feels pretty awful to live in opposition to those ideals.

Want an easy recipe for a good life? Try to frequently do the things that leave you feeling good both in the moment and perhaps even more importantly when you look back on with good feelings and pride, while trying to do things that leave you feeling bad and perhaps even more importantly that you look back on with regret and shape as infrequently as possible.

Do that and you’ll wind up with a pretty good life.

Great, so what does that have to do with finances?

The above recipe for a good life comes down to how you’re using your time and energy and focus, but the same idea applies when it comes to how you’re using your money.

In other words, if you want a recipe for a financially successful life, try to frequently do things with your money that are in line with your values and build to the big thing you want in life, and try to avoid doing things with your money that aren’t in line with your values and move you away from the big things you want in life. Better yet, figure out things on the “good side” of that equation that are also personally enjoyable for you in the moment.

Let’s jump into how that works in practice, using some small and some big examples.

Example 1 – Books

I’m an avid reader and have been since I was a little kid. I pretty much constantly had my nose in a book back then and you’ll still find me doing the same, even today, when I get a chance. Few things seem like a more pleasant use of a lazy Saturday afternoon than digging into a really good thought provoking book or getting lost in the pages of a suitably rich fictitious world.

Why do I read, though?

Do I enjoy getting lost in the pages of a good book as a way to escape? Do I use it as a way to learn about the world? Do I use it to explore scenarios and ideas and to develop a sense of right and wrong?

Even more to the point, am I a book collector? Do I value having a ton of books jammed in my house? Or am I more of a book reader who values having a long list of books that I’ve read?

What gives me value out of those things? What do I really care about? Furthermore, which of those things, done now, will I care about in ten or twenty years?

I think I’ll value having read most of the books I read, as long as they made me think and made me question the world. I’ll value having a few of my most-loved books on my shelf, but the rest that were more forgettable? I’ll be glad to not own them and not have to deal with them taking up space.

So, in the moment, I enjoy reading, but in the long run, I’ll value having read things that make me grow. So, I try to choose to read books that I believe will make me think and grow that simultaneously encourage me to turn the page.

I think I’ll value having a long healthy list of books I’ve read, but I can tell you I won’t value having a ton of books on my shelf that I have to deal with if I move or that my kids will have to deal with if I die. I just want to have a few favorites around that I’m sure to reread.

All of that ends up informing how I spend my book money. I basically only buy books if I’m going to reread them. For a first read, I almost always turn to the library; it’s only if that first read really strikes a chord with me that I’ll consider buying it. Some books are fun to read but forgettable; other books have one or two memorable scenes or good ideas but I won’t need to revisit them. It’s the latter group, the ones that really click with me and I know I’ll reread in the future, that I want on my shelf, and that’s honestly not that big of a shelf.

So, basically, reading challenging books from the library and occasionally buying ones that really resonate with me is the path forward that really reflects how I want to spend my time, energy, focus, and money. The closer I live to that principle in all dimensions, the better.

Example 2 – Housing

Right now, I live in a family house on the edge of a small town in Iowa. I like living here, for the most part. I have good relationships with all of my neighbors, have some of them over for dinner and cookouts on occasion, and my children are friends with several children that live nearby. I like our house for the most part, though I wish the kitchen was a bit larger and arranged differently.

Am I happy living here? Sure. It has plenty of space for our family and is nice enough that we often have people over for all kinds of events, plus it’s comfortable in the evenings with a really nice family room. I like it.

Do I want to live here in ten years? Probably, with a few changes. I want to redo the kitchen as several aspects of it frustrate me as someone who often prepares meals at home. Other than that… I think I’m pretty happy here.

What do I conclude from that?

One, there’s real value in me putting time, money, and energy into doing quality maintenance on this house, as I intend to live here for quite a few more years. It’s far easier and much more cost-effective to maintain the house and the large appliances in it than to just not bother and have disaster strike. You can get away with ignoring it for a little while, but then you’ll suddenly be hit with a conflux of expensive and time-consuming problems that could have been easily prevented.

Two, it’s going to be worthwhile to eventually redo the kitchen. We just need to decide how we want to redo it and how much of the labor we want to do ourselves. The sooner we start thinking about it, the longer we’ll have to enjoy the finished product.

So, it appears as though a continued focus on home maintenance and gradual planning for a kitchen renovation is the path forward that really reflects how I want to spend my time, energy, focus, and money with regards to housing going forward. The closer I live to that ideal in all dimensions, the better.

Example 3 – Parenting

While it is certainly enjoyable to do fun things with my family, the most important thing I can be doing as a parent is to teach them how to be successfully independent. What skills do they need to have so that they can survive and thrive on their own without the constant support of mom and dad?

That’s pretty much the constant thread in my parenting style. I try to consistently offer them advice on how to handle a lot of common things that I know they’re facing in life or that I know they’ll be facing in the near future. I ask them what ideas are on their mind and encourage them to talk about them in a general sense, so that I can talk through the issues without them having to feel that they’re going to self-incriminate a bad decision or snitch on a sibling.

I try to aim for unconditional love and if there does need to be some sort of penalty for a bad choice, I try to make that as clear as I can. They’re not perfect, but they can be good.

So, what does that translate into in terms of action, particularly regarding money?

Sarah and I are very careful with the money we buy our children and the things we buy them outside of holidays. We use an allowance system, but the allowance is small. We occasionally reward exceptional performance in schoolwork, but we don’t reward most of their good moves with anything financial.

For gift giving occasions, we try to aim for a very small number of nicer gifts rather than a lot of inexpensive stuff.

We talk a lot about our financial decisions with them. We discuss financial decisions pretty openly in front of them and we also involve them in spending decisions, even sometimes including their input. We aim to not have them feeling like money is mysterious, and we’re extremely clear about the dangers of debt and how it restricts your choices.

We’re also open already about how we’re saving for them for college and they know quite clearly what their responsibilities will be for paying for college.

These specific actions define the path forward that really reflects how I want to spend my time, energy, focus, and money with my children. The closer I live to those principles in all dimensions, the better.

The Overall Picture

All of these ideas boil down to one core principle.

We aim to spend our money, time, and other resources toward building the life we want to live while also enjoying today, but not spend those resources excessively.

In other words, we know where we want to go, so what’s the most efficient path to get there so that we have money left over for our other goals and our other areas of life.

I love to visit bookstores and buy books, but I’ve learned that buying books beyond what’s actually in line with what I want from my life (meaning anything beyond stuff I intend to re-read and usually stuff I’ve already read) doesn’t really add value to my life and in fact detracts from it.

I love living in a nice house and I intend to live here for a while, and I’ve learned that the best way to keep living here at minimal cost in the way that I like it is to keep doing maintenance on it and to plan for a low cost kitchen refresh.

I love being a parent and I want to raise kids that are functionally independent, and I’ve learned that the best way to do that is to not buy them everything they want along the way and be thoughtful about how we save for their future.

In each of those cases, that’s how we use money to achieve what we want today and what we want in the long term while minimizing our spending so that we have space for the other things we want in our life.

It’s your money AND your life.

The thing is, when you consistently make money and time and energy choices along with what you actually value, your life feels pretty good. If you make efficient money and time and energy choices along those lines, you have plenty of space for the other things you want out of life.

Making Mistakes

The thing is, we all make mistakes, usually because some goal or value we have in our life comes in conflict with another goal or value and we have to choose one or the other on the spur of the moment. We don’t always choose correctly and that often results in mixed or even negative feelings about the outcome.

Another way to look at this is “opportunity cost” – every time you choose to spend your money or time or energy on something, you’re also choosing NOT to use it on all of the things you could be using it for.

How can you solve that? You can’t.

As far as I’ve been able to tell, the best thing you can do to avoid such mistakes is to give some of your spare thoughts to thinking about such choices. Think about what you value, and how it ranks in comparison to other things you value. Envision situations where they might come into conflict, think about the best way to resolve them, and then visualize yourself doing just that.

You still won’t be perfect. You’ll still make mistakes. However, over time, you’ll find yourself hewing closer and closer to what it is you really want out of life, and if you seek to do that with minimal use of your resources, all the better.

Final Thoughts

One of the few things I don’t like about the book Your Money or Your Life is how the title makes it seem like it has to be a choice of some kind. You either have to choose “your money” or you have to choose “your life.”

I think a better title would be “your money and your life.” The core idea in the book is to spend your money in line with your values as efficiently as you can, a good idea that expands to all of life’s resources. However, that’s not a choice between your money and your life, it’s a path to having both.

If you’re unsure, trust in what feels right, not in the moment, but in terms of decisions you once made that resonate as being moments where you made the right decision or where you clearly made the wrong decision, and let that guide you. While it might not be perfect with numbers, your gut will often guide you to the right place if you listen to it beyond the heat of the moment and live by the principles and values that actually matter to you.

Good luck!

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.