đ Can you believe itâs already December? The year has flown by, especially for those of us in the middle of our careers or running businesses. As the year wraps up, itâs easy to feel like weâre just working to get by, rather than truly living.
But this yearâs end is the perfect time to pause and reflect. How are we spending our "Life Energy"âour most precious resource? Are we using it to create a life we love, or are we just working to keep up? Letâs make sure that in the hustle of it all, we donât lose sight of the bigger picture.
Iâve been thinking a lot about this concept lately as I work on my book and reflect on my own life choices. Recently, I bought a car, which got me thinking about the true cost of thingsânot just money, but the time and energy we trade to afford them.
The idea of "Life Energy" comes from the book Your Money or Your Life by Vicki Robin and Joe Dominguez. They argue that our time, energy, and life itself are our most precious resourcesâway more valuable than just money. When we earn income, weâre not just âmaking moneyââweâre trading our Life Energy for it.
For example, think about your paycheck. It feels good when it hits your bank account, but when you factor in taxes, commuting, meals, and stress relief, and the like, you might realize that your paycheck isnât as much as you thought. And youâre giving up your Life Energy to earn it.
They also created a calculator to help you visualize your own situation: https://yourmoneyoryourlife.com/life-energy-calculator/
I used to think that making a six-figure salary meant I was rolling in the cash. But when I crunched the numbers, I realized that my actual hourly rate was much lower than I thought.
Take the job I retired from for example, with a salary of $160,000 a year, working 38 hours a week, and factoring in taxes (federal and state) and all the hidden costs, my real hourly rate ended up being 40% of what I thought it wasâaround $32 an hour. Yikes! So, in reality, I was spending 1.5 times more Life Energy than I realized for everything I bought. đ
This brings me to my recent car purchase. I had planned to buy a ten-year old car for under $20,000, but my husband convinced me to buy a newer model. So, we compromised and bought a 2022 CRV for $27,000. Crazy how inflation made everything so expensive! Sounds like I didn't save much, right? But when you look at it through the lens of Life Energy, the cost becomes a bit more clear.
Hereâs the breakdown:
New Car: $35,000; Life Energy: 5.3 months
Used Car: $27,000; Life Energy: 4.1 months
So, the extra $8,000 for the new car translates to an extra month of work. Plus, there are higher insurance and registration costs, meaning weâll be spending even more Life Energy.
Hereâs the reflection: Even though that extra month of work seems manageable, why waste it away if you donât have to? For me, a used car brings the same comfort and joy as a new one!
And hereâs another thing to think about: where you live also affects how much Life Energy you spend. For example, in states like California or New York, your salary may be high, but after taxes and the high cost of living, you might end up spending way more life energy just to make ends meet.
Using the same set of assumptions as before, a similar house in California might consume 21 years of Life Energy (instead of 7.6 years if you were in Arizona)!
You might argue, âBut you make more in California.â True, but even if your salary triples, youâd still be spending at least a decade just to pay off your house.
On the flip side, living in a low-tax state like Washington can help you stretch your Life Energy further, giving you more financial freedom to live the life you wantâif your salary is high enough.
The point is, Life Energy goes beyond your paycheck. Itâs about how you spend your time, energy, and resources to create the life you want. Itâs about making choices that help you enjoy what matters most, without feeling like youâre constantly working just to keep up.
So, before you make your next big purchase or decision, ask yourself: How much Life Energy am I really spending on this? Will it improve my life, or am I just trying to keep up with the Joneses?
And hereâs a fun question for you: Whatâs something youâve bought that youâve realized took more of your Life Energy than you expected? Iâd love to hear your thoughts! đ
#LifeEnergy #FinancialFreedom #SmartSpending #WealthBuilding #WorkSmartLiveSmart
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