Welcome and congratulations on making it to part 5 of Panzer’s book review of “Your Money or Your Life”. Many less committed readers would have dropped out by now because the 9 step program is methodical, systematic and requires effort on your part to put into practice all the 9 steps in this program that helps you achieve financial intelligence, financial integrity and financial independence.

The steps are not difficult in concept. The steps are difficult in practising them day by day, month by month and year by year. The authors describe step 5 as:

Step 5: Making Life Energy Visible

Create a large Wall Chart plotting your total monthly income and total monthly expenses from your monthly tabulation. Put it where you will see it every day.

If this is the first time you are reading this series, you may want to start at part 1.

What is Step 5 about?

Step 5 essentially asks you to take the earlier steps of tracking your monthly income and expenses and plot these two items in a graph. If you are familiar with spreadsheet software such as Excel, you can make use of the in-built charting features to graph your expenses automatically as you key in your daily and monthly income and expenditure figures into the spreadsheet.

Why do you need to chart it out?

The key reason is that it serves as both a motivator and reminder of how we are progressing in our efforts towards financial independence. “Your Money or Your Life” advocates recording all the financial information pertaining to your income and expenditure representing flows of money or life energy. You become aware of what and how much of your life energy is spent. This knowledge further helps you modify your behaviour when you chart is on a graph and read it everyday.

I am a believer in this method because I also have set life goals and put them up in an Excel worksheet that I read everyday when I am at work. If you read Napolean Hill’s “Think and Grow Rich”, the power of thoughts and your control over your mind has significant impact upon what you achieve in life. One of the reasons why I managed to clear my housing loan early was to focus on it by delaying present consumption and using bonuses, windfalls from investment gains to pay it off early. I have also been charting my investment returns since 2003 and it has helped me become aware of my strengths as well as weaknesses in investment decisions over the last 5 years or so.

Key Takeaway

Charting your monthly income and expenditure forces you to face the results of your own decision up front in an obvious way. You cannot escape from your own decisions that bring you closer or further from your goal of financial freedom. If you are increasing your income and maintaining or reducing expenses, you can see the income line going up while the expenditure line is going down or flat. This is a tangible way of seeing your own progress as the results will be less debt or more savings for investments since you are living way below your means.

The more I read “Your Money or Your Life”, the more I realise that following the steps is about gaining more knowledge about yourself, your values and attitudes towards money and how you see the entire time-money tradeoff in your life. It has opened up myself to more possibilities and I realise my efforts in growing my means, whilst modest, are the seeds for my future lifestyle that I want to pursue beyond a 9-5 job.

Even as you prepare to start the week ahead, do consider to allocate some time and effort in minding your own “business” or financial life because, it’s “Your Money or Your Life”.

Be well and prosper.

Related Articles:

1. Your Money or Your Life - Panzer’s Book Review - Part 1
2. Your Money or Your Life - Panzer’s Book Review - Part 2
3. Your Money or Your Life - Panzer’s Book Review - Part 3
4. Your Money or Your Life - Panzer’s Book Review - Part 4