Discover Your Money Values and Financial Demons

I am still reading Your Money or Your Life by Dominguez and Robin — this book is taking longer than I thought because it is not just a book, but a road map to financial independence. One idea that stuck with me was the step that told you to keep track of every pennies to answer the question: where is it all going?

gas budget
Photo by Gracey via MorgeFile

Frankly, I do not like to complicate things. I am happy as long as I have money to spend and my net worth continues to rise each month. However, I think this exercise is worth doing — as tedious as it is. The concept is to keep track of every pennies that you spent (or you and your family), then assign each expenditure to a category.

Money Values

Unlike standard budgeting, you have to come up with your own categories. This is where you discover your money values:

Do you consider beers food, entertainment, or drugs?
Do you consider a second car transportation, hobby, or ostentation?
Do you consider clothing vanity, utility, hobby, or work related?

These are just a few examples. This exercise forced you to think about how you view your expenses, and give you a glimpse into your financial self.

Financial Demons

After you do this for a while, you start to see patterns and abnormalities. If you have been honest with yourself, you might be able to discover your financial demons. For example:

Do you overspend on shoes? For instance, you have shoes for every occasion — e.g., dance, hiking, biking, roller blading, skiing, etc.
Do you overspend on eating out?
Do you overspend on booze, cigarette, drugs, clothing, etc.?
Do you have expensive hobbies?

With this discovery, you could begin to tackle your financial demons, stop the money leaks, and restore your financial balance. It is hard to do justice for this great book with a short post. If you have not read the book, I highly recommend it.

This article was featured in the Carnival of How to Solve Money Worries hosted by Widow’s Quest.

7 Comments

Lynnae @ Being Frugal
September 7, 2007, 8:08

Very good advice! I’m tracking my spending for the first time, and it really is eye-opening. I spend more on little trips to Walmart than I thought I did!
Matt
September 7, 2007, 9:26

I agree. It’s a great book. I recently read it and found it very inspiring in the book’s specific explanation of how to achieve financial freedom.
Pinyo
September 7, 2007, 11:09

Matt – thank you. I am hoping to finish the book in a week or so. Unfortunately, I am a slow reader (short attention span).
Eric
September 7, 2007, 17:19

I haven’t read the book yet, but have now added it to my list. My wife and I started tracking where all of our money went near the beginning of the year and it was pretty eye opening. We made a lot of changes based on what we learned in that process.
Pinyo
September 7, 2007, 17:27

I hope to achieve the same eye opening effect when I start doing this with my wife. Right now, I just want the delayed home renovation to be done and over with.
Thanks for your comment.
nomorespending
September 9, 2007, 1:30

I carry this book in my handbag. I think its the best personal finance money book ever. I dip into it daily.
Pinyo
September 9, 2007, 7:46

NoMoreSpending – Thank you for sharing. I think it’s a good book, but it’s also very heavy and transforming. If you can follow it, it is very beneficial. However, I don’t think everyone can.