Hello friends, in today’s article we see the new book summary ” Your Money or Your Life “. so let’s see one by one book summary.
The Almanack of Naval Ravikant Book Summary
Your Money or Your Life Book Summary:-
The alarm goes off at 7:00 in the morning check the phone shower and dress in professional uniform. Breakfast if there’s time for it. Hop in the car and prepare for rush hour.
Work from 9-5 deal with the boss. Deal with a seemingly endless stream of emails.
Deal with the intern who you’re trying to delegate work, but always end up doing it yourself. Hide mistakes at busy.
Smile when you are handed near-impossible deadlines argue with your consciousness but agree with your boss, watch the clock smile again.
5’O clock back to your car for the evening commute home again. Try to act human with your partner. cook eat watch an episode on Netflix or two, after all, you’ve had a rough day.
Answer one last email and then finally bedtime, eight hours of sacred oblivion. If you’re lucky. do you recognize yourself? people living this life are not making a living.
If someone points a gun to your head and asks ” Your money or Your Life? ”
You know that you’d instantly give up your wallet yet, this is how many people live whether intentionally or unintentionally. They are valuing their money higher than their life.
This summary will teach you to think differently about money, which in turn will lead to a point where you no longer must choose.
So the next time someone asks you ” your money or your life ” You’ll be able to say ” I’ll take both thank you ”
1) Decide Your Own Enough:-
This is the starting point. Enough is not too much not too little but, just right, if you don’t learn about yourself enough.
You’ll never be satisfied because more is a battle with an endless horizon an interesting experiment made in 1980 supports this theory.
Participants from every income bracket were asked to rate their happiness on a one to five scale. Moreover, they were asked how much money would make them happy with the results.
There was no significant difference between the top and bottom earnest happiness scales. Additionally, they all had similar answers to how much money would make them happy with the results.
They all started, ” 50% more than what I earned today ” Researchers who have investigated the subject of money versus happiness have concluded that beyond a certain level of sufficiency, more money does not equal more happiness.
Currently, this level is believed to be around $75,000 a year. Consider that so-called ‘ Fulfillment curve’. The graph correlates money spent to fulfilment.
We feel from before survival is secured every penny seems to be shooting our satisfaction and fulfilment through the roof.
Even when adding comfort and a few luxuries fulfilment is increasing. it is important to notice when the curve starts to level out though.
if you have ten suits, but rarely use any of them you are probably enjoying shopping more than having and using them. most likely you have ended up in the negative slope of the money fulfilment equation.
Where each additional new purchase only adds distress and distraction rather than satisfaction. It’s important to notice when this starts to happen! at the top of the curve is the point of ” enough ”
and though the amount of money that must be spent before reaching it. differ from person to person, everyone has such a point.
Remember that most of our needs up to a certain part can’t be filled by new toys. people don’t need new Lamborghinis they need respect. they don’t need a wardrobe filled with clothes from Dior Gucci and Prada. they need to feel attractive.
Neither do they need the most recent entertainment system, they need something worthwhile to do with their time.
2) Compare your lifetime Income to your Net worth:-
It’s time to make peace with the past. this exercise isn’t about increasing your ego or depleting your confidence. it’s about reviewing your earnings and spending habits of the past.
Just remember no shame and no blame. there are two parts; 1. find out how much you’ve earned in total
this might seem like a herculean task, I know, but there are a few tricks to make it simpler than it seems at a glance.
A. Get online records from your bank.
B. Review your old resume.
C. Apply for a social security statement from the social security Administration. if you are an American
2. Calculate your net worth:- Your net worth is simply the sum of liquid and fixed assets minus your debt. Liquid assets could be cash, money in savings accounts, bonds, stocks, mutual or index funds.
Fixed assets are major possessions such as your house car or boat, but let’s not forget about electronics, furniture, wardrobe, jewellery and the items you store in the attic.
Remember to use the current market values for all assets and Loans.
this means what you can sell or pay them back for today. why should you do this? Because it’s a great way of reassessing your prior financial choices.
Many people live their financial lives without direction or consciousness. They are like someone driving around without a destination, spinning their wheels and burning gas, but they are not getting anywhere!
This step gives you the opportunity to take conscious decisions about the future of your financial situation.
Maybe you realize that you haven’t got too much to show for in assets compared to your lifetime earnings. good!
then use this as a motivation for turning that trend around, or on the other hand, maybe you realize that you have enough assets.
so that if you distribute them correctly you can be financially independent immediately and even better.
3) Calculate Your time hourly wage:-
I’m going to give you a moment to think about the following question, what is work?
According to the late economist Robert Theobald, work is defined as something that people do not want to do and money is the reward that compensates for the unpleasantness of work.
Maybe your definition of work isn’t as depressive as this one. but consider these various purposes that work can be is think about which ones apply to yours.
Work is earning money. a sense of security. traction- everyone works! service to contribute to society and the world. Learning – acquiring new useful skills to be stimulating and challenging. power influencing other people.
Socializing Feeling like a part of a larger community and enjoying connecting with others.
Time Structuring:- Give order and rhythm to life
How many of these apply to your job? the important point to notice here is that work has two separate functions.
A financial function and a personal function paid work ( which people usually refer to as work ) on the other hand, only have one Getting paid.
Why? Because all the personal functions listed here are equally available in unpaid work activities!
We have had high expectations of our paid employment when we think that it’s going to bring us all of these!
This is supported by the fact that, According to a 2014 report, only 43% of Americans said that they like the jobs.
With this in mind, it does make a lot of sense to maximize how much money you get from each hour you spend at your paid work.
As other activities are equally good, if not better as personal functions.
You do this, not out of greed or competition, but out of self-respect and appreciation for life.
the median yearly wage for the Indian population is approximately $30,000. let’s say that people work on average 40 hours a week, 45 weeks a year.
this includes five needs of paid vacation plus additional days off, such as Christmas eve.
Some people would say that the hourly wage for the median Indian is there for $30,000 divided by 40 times 45 which is equal to $16.5, but this estimate is too generous.
what about all the outer activities that you wouldn’t have done if it wasn’t for work?
They often cost both money and time. let’s include a couple of those as well.
Commuting:- going to your job back and forth every day. let’s say that this is another 5 hours of work each week at a cost of $80.
Costuming:- if the clothes that you wear to your job aren’t the type that you’d normally use, this must be included too
one hour and $15 per week.
Decompression:- do you feel full of energy when you come home or do you just want to sink into the sofa with a beer?
Five hours and $20 per week and let’s not forget about, food, escape entertainment, timeout vacations job-related illness and other expenses such as babysitting and similar when we add these hours to working hours and subtract the cost from yearly income. (Your Money Or Your Life )
We find that the median Indian is earning $6.1 per hour and this is pre-tax even! after taxes.
It would be even lower, around $4.5 with this number in mind, we can move on to the next takeaway.
4) Money isn’t dollars, euros or rupees, or crowns even, its life energy.
After this, there is no turning back you take the blue pill. the story ends, you wake up in your bed and believe whatever you want to believe.
you take the red pill- you stay in Wonderland and I show you how deep the rabbit hole goes.
Remember all I’m offering is the truth nothing more.
your one and only asset, and the only true currency is your life energy. This is also a currency that you can never get back.
As you are trading your hours for money every day at your job, you can easily calculate how much each of your expenses costs in the form of life energy.
Ask these three questions about every expense:-
- did I receive fulfilment, satisfaction and value in proportion to life energy spent?
- is this expenditure of life energy in alignment with my values and life purpose?
- How might this expenditure change if I didn’t have to work for money?
Mark each of the questions with a plus an Ok or a minus, or plus or minus, in the use of the third question.
This is a very important step! do you see any patterns?
Perhaps you realize that you spend too much energy trying to impress others with expensive luxuries or too much energy on your relationships and keeping yourself in shape no matter which conclusion you draw.
It’s a powerful tool to see each expense as you deplete your only non-refundable asset.
5) Create a wall Chart of Income and Expenses:-
Now that we realize that paid work and expenses are life energy consumed. It’s time we find a way to conserve this one important asset tracking your income and expenses.
Each month is the starting point on this journey. put up a large piece of paper on a wall.
Where you can see it daily along the X-axis you track, months, and along the Y-axis you track dollars earned/dollars spent. (Your Money Or Your Life )
The plot, for each month, your income and expense. use different colours for the two categories to connect each month with a line.
There are 2 keys to making this process work for you:-
- Keep going
It is common wisdom that a journey of a thousand miles starts with a single step, what we don’t hear as often though is that you only drive to your destination if your first step is followed by hundreds of thousands of additional small steps.
Getting it past the three-month mark with this chart method most often results in people naturally and painlessly dropping their expenses by about 20%.
this is a common problem. one month’s tax payment is another month’s insurance payment is another month’s, I just got myself a brand new Volvo!
You must realize that these expenses are nothing unusual, with that said, always try to minimize them. for the sake of your wall chart, you may choose to split the larger extraordinary expenses over 12 months.
What important about his chart is that it will increase the gap between income and expenses for you naturally.
that is it will increase your savings. before you started to think about financial independence this gap would have meant more spending money!
We are now going to introduce what it is to a person who cares about this or her personal finance and its capital.
Capital is money that makes money this will introduce a new line on your wall chart: Investment income, this income can come from sources such as.
Interest, which is periodical payments from, for instance, bonds or savings accounts.
Dividends:- Which is a share of profits for owners of companies.
Capital gains:- which is the difference between the procurement price and the selling price of an asset.
Rents:- This is cash for owning and leasing real estate.
Royalties:- Which is payments to owners of intellectual property, franchises, natural properties, and so on
the important part is that if you keep that gap between income and expenses your capital will increase and so will your investment income!
Investment income is wonderful in that it will put money in your pocket without you having to trade your life energy for it.
Therefore once your monthly investment income equals your, monthly expenses, you no longer need to work for money. this point is called the ” crossover point ” you are then officially financially independent.
I hope you see how that with a chart like this work won’t just be ” another day another dollar ”
Rather it will change into ” Another day one step closer to financial freedom”
Read More Books
[…] Your Money or Your Life […]
[…] Your Money Your Life […]