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Step 2: Being In The Present — Tracking Your Life Energy

If you are new to this series, read Part 1 here.

Chapter 2 discusses the 2nd step in the 9 step program which essentially is a novel way of looking at money. The authors ask you to consider how money is affecting your life by taking a very different approach to most personal finance authors.

They ask you to find out your real hourly wage and to track every cent that comes into your life by recording all your income and expenses from this day forth.

Your real hourly wage

Computing your hourly wage is not just taking your monthly salary and dividing it by the number of hours you work a month. Instead, you are to deduct the costs associated with your job e.g. commuting costs of driving, lunches at work, clothes that you buy for that is required for your career, holiday costs to destress and recharge from work etc. These are all the hidden costs of your job and should be deducted from your salary. In terms of the hours you work, you need to add time taken for the daily commute, the hours you need to unwind, the hours of lost personal time due to job related illness etc.

By doing these adjustments, you have a more refined figure of the actual $/hr you are trading your life energy for money through your job.

Accounting for every cent flowing in and out of your life

Tracking each cent that flows in and out of your life provides you with critical statistics about where your money goes. While I have done one on a monthly basis, I realise the program requires you to be more detailed by doing a daily log so as to be as complete as you possibly can.

Key Takeaways

I realised when computing the hourly salary that our jobs do take a toll on our family and personal lives. In addition, if your job requires you to eat out a lot and to entertain and to look good, these are all the lifestyle costs that impact on your actual earnings as they are costs that are hard to avoid in your job. Computing the real hourly wage helps me reflect on the time costs on my life because of my job.

As a accountant by training, I understand the importance of keeping good financial records. This step actually made me realise that I was less careful of tracking my income and expenditure that what I had initially thought. This was because while I track my net worth, I didn’t track how I got there as closely i.e. did not keep a daily money log of where each cent came and went. Reading “Your Money or Your Life“ has made me more aware as I start to record my daily lunch expenses as well as other bills that come. It should be interesting to see how much I spend on my coffee habit (2 a day) in a month.

Step 2 of the program is quite practical but some of you may find it quite tedious to account for every single cent. Let me try this out for the next few months and report back as I venture into the 9 step program of “Your Money or Your Life“.

Be well and prosper.