Money Dials

Have you watched the Google Talk by Ramit Stethi? If not, you should definitely check it out here. What is so different about Ramit? Well, he has moved beyond the standard financial narrative of paying down your debt, building an emergency fund and automating your savings. These are the basics, the path to get to a life that is secure. Ramit also wants us to live a Rich Life, one in which we can spend on the things we love guilt free. It is the other part of the equation teaching us how to spend on what makes us happy, while we do the basics to accumulate wealth.

Before we move onto the exciting realm of spending. It is only fitting to assess how I am performing on the standard measures of financial responsibility:

  • Debt – I have zero debt.
  • Emergency Fund – I could finance my lifestyle for more than six months if I lost my job.
  • Automated Saving – I don’t automate my saving or invest in index funds . . . yet. This may be foolish, but I am waiting for the next economic crash to come.
  • Passive Income – I have a property paid off in full which generates $1000 per month.

Ok, if I were to assess my finances against the average 40-year-old. I would say they are in good shape, but I am not in a position of those in the F.I.R.E movement (financial independence, retire early). I don’t have 25x my income saved, and I certainly cannot retire early. However, if we look into the minutiae of the various definitions of F.I.R.E. I would broadly categorize myself as approaching coasting fire. If I invested my savings wisely (key point). In 25 years, I would have a comfortable retirement. Therefore, with no debt, I only have to consider my daily expenses. It is why, I am fortunate enough to be able to consider a meaningful life change at this point in my life. Part of that life change is being able to live a rich life and where our ‘Money Dial’ comes into play.

The concept of a ‘Money Dial’ is very simple, it is what we love to spend our money on and according to Ramit there are ten common money dials:

  1. Convenience
  2. Travel
  3. Health / Fitness
  4. Experiences
  5. Freedom
  6. Relationships
  7. Generosity
  8. Luxury
  9. Social status
  10. Self-improvement

Before seeing this list and going deeper into Ramit’s talk. Trying to answer the question on what I love to spend my money on. I came up with two responses ‘running shoes’ and ‘self-improvement’ books. Even as an engineer, I can see that these are rather narrow definitions, but they fit firmly within two of the money dial categories – health and self-improvement. This is how we can use our money dials to learn about our passions and lean into them. At the moment I am have defined the scope between the very narrow ‘shoes’ and the very broad ‘health’. What are the aspects of health I am particularly passionate about? Running, Yoga, Lifting Weights, Nutrition and Nature. How about self-improvement? Personal Mastery, Productivity, Mindset, Life Purpose and Self-Awareness. It should come as no surprise that these subjects are the ones that I want to focus my life change around and find my own lane in order to build a sustainable lifestyle. However, it was a logical deduction that I failed to make until now, what we like to spend our money are also the activities we enjoy doing. Therefore, in essence they are meaningful pursuits from which to base a life or business around.

Pulling back, how am I doing with regard to spending my money on these pursuits?

  • Running – $100 per month on running shoes.
  • Yoga – $35 per month until recently.
  • Lifting Weights – $0 for the past year.
  • Self-Improvement -$25 per month on books.

Looking at the list, it doesn’t take long to work out how I came up with my original money dials because they are actually what I spend my money on. Just as with my perspective, I have to now widen my spending habits. So how do this? Well rather than start from the perspective of how I would like to spend my money. I am going to start with how I would like to spend my time and also with these activities how can I educate myself to turn some of them into skills in order to sustain my lifestyle. Using the example of nature. Currently, I like to get out of my urban environment once a week for a trail run. However, I would like to spend more time hiking and enjoying the natural wonders of the USA. Building this into a sustainable lifestyle, I can develop my concept of ‘wellness hikes’ where using nature and movement as a tool to promote group discussion in order to promote wellbeing. Another example is to undertake a yoga teacher training program and combine it with my knowledge a running and lifting weights to develop a functional running course or app, which could also explore aspects of mindset and personal mastery to help people maximize their running potential. Finally, I could take a life-coaching course to learn more about personal change and use this to develop my writing to reach more people.

The concept of ‘Money Dials’ is exceptionally valuable. Evaluating where I am on this scale, there are some positives and a lot of potential. On the positive side, I am spending my money on activities I truly love doing and this should be first question we ask ourselves about our spending habits. The potential is that there is a lot of space to expand into to have richer experiences and to build a new lifestyle around. Knowing our money dials, we can discover what we love and from this we can build a rich life not just in our free time but also in developing a niche we find meaningful to build our career around.