Crunch the numbers to gauge their worth

Nima Abu Wardeh takes inspiration from the book 2008 book Your Money of Your Life - detailing the nine steps to truly evaluate what you are trading your life energy for.

Illustration by Gary Clement for The National

The unexamined life is not worth living, said Socrates.

There come many moments in everyone’s life when there is a tug – do I go or do I stay? When you’re a parent, it often happens when your child is bawling, or perhaps just begging you not to leave. I can still remember mine crying inconsolably when deposited at nursery for his own good. He had no siblings, his cousin was in the same class and I truly believed he’d enjoy socialising and integrating. He was not yet three.

If I had my time again, I’d keep him festooned snugly under my wing until he was five. OK, maybe three, or whenever he started actively asking for more company with little people. Those were the easy days. The really tough ones were when I had to go to work and leave him at home in someone’s care because he was ill.

That would only happen if there was a work commitment that needed me present – if I was chairing a conference or training people, I couldn’t let them down. Plus I had to earn a living.

Years on, my son still doesn’t want me to be out when he’s in. Long may it last. Travel is the biggest issue – for both of us. I’m too much the master of first plane in/last plane out, 20-hour days to be at home when he’d wake. When he asks me not to go, we sit with a cuppa and chat. I ask whether he’d rather I was like so-and-so’s mother – go to an office every day, come back after 5pm, but not travel – or like me. I work from home and free up my afternoons as much as possible.

He chooses the latter. And so do I.

Your money or your life? It’s a constant quest, juggle, struggle. For me at least.

Actually, that’s not true. I made my decision long ago – I choose making a life over making a living. So no mega-bucks corporate job for me – I’d rather climb a tree and teach my child how to cook, with the occasional foray into the corporate jungle.

One of the main questions we’re constantly asked in the UAE is what we do for a living.

Who you are is more than that. And every day you go to work, you are trading your precious, finite, life energy for money.

There’s a book titled Your Money or Your Life by Vicki Robin and Joe Dominguez that I’d never heard of before writing this – I don’t like how it’s written, but its nine steps are exactly what I believe:

1. Make peace with your past

Add up all the money you’ve ever earned, then add up your net worth today. How much have you managed to hold on to? For most people, the answer comes as a shock – but you are where you are.

2. Work out your real earnings and spending

The big message is thinking in terms of life energy. To be able to toggle between money and time, the best thing to do is use real wage as a measure. Add up the time you spend on having your job. Include things such as commuting, all hours at work and the time it takes you to wind down after.

Add to this the amount of money you have to spend to have the job – transport costs, wardrobe, nursery, maid, takeaways, professional fees, therapy. The idea here is that your real hourly wage is much lower than you think.

X is your monthly salary

Y is all work-related expenses

X-Y = Z: what you really earn.

Divide Z by your total work time (commuting, getting dressed, styling hair, clothes cleaning, unwinding) Say you are at work for eight hours, then it takes you an hour to get there and another back, another hour to get ready in the morning and one hour to wind down, which would be a dream for most at 12 hours a day. Multiply this by five days a week, and by 52 weeks a year, then divide by 12 months to get your monthly work related hours of 260.

Here’s the real wage for someone who earns Dh10,000 a month, spending Dh4,000 on work-related expenses, and puts in 12 hours a day in work-related time spent:

Dh10,000 - Dh4,000 = Dh6,000

Dh6,000 divided by 260 is Dh23 per hour.

I bet that’s a surprise. This person takes home Dh23 for each hour spent on activities related to their job. That’s the cost of a coffee in many restaurants. Would you burn off the equivalent of an hour of your life for a coffee? That’s an hour of life energy that will never ever come back.

3. Create monthly reports for yourself

Keep a table of all income and all spending for each month, break it into categories and convert the figures into hours of life energy spent. Restaurant meals: 20 hours. Shoes: 10 hours.

4. Answer these three questions:

• Did I receive fulfilment in proportion to the hours of life energy spent?

• Is this expenditure in alignment with my goals and life purpose?

• How might this expenditure change if I didn’t have to work for a living?

5. Keep a graph of income and expenses where you can see it every day

The bathroom mirror works. Do this for many months and don’t stop. You should see your income grow as expenses shrink, because you’re spending more consciously.

6. Value your life energy by minimising spending

Only spend on things that fulfil you.

7. Maximise your earnings

Adopt a positive attitude about work and view earnings as a tool. Reframing is an amazing thing – think of your wage as getting you the deposit for a house, not as dreary and dead end.

8. Watch for the crossover point

This is when your passive income from investments equals your expenses. When this happens, you are financially independent.

9. Managing your money

Learn how to invest your capital in a way that provides low-risk income that will cover your basic needs for life.

Do as Socrates states and examine what your life is about, and where your life energy is going. It’s the most valuable thing you’ll ever do.

What are you trading your life energy for?

Nima Abu Wardeh is the founder of the personal finance website cashy.me. You can reach her at [e-mail] and find her on Twitter at @nimaabuwardeh.

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