Life-Energy Number
Clients often hear me say, “The financial recovery process is about telling the truth and being honest and realistic about your money.” Do you ever wonder about how much things actually cost in terms of time and energy? I’m inviting you to think about the actual impact of your spending habits. Whether it’s a major money event: the holidays, moving, traveling, starting graduate school, buying property, or planning a wedding or a minor event: coffee, a taxi, a pedicure, or music on iTunes, this tool will enlighten you. Below, you will find a powerful exercise that will shed new light on future purchases, big and small.
How To Calculate Your Life-Energy Number (based on work by Mikelann Valterra)
1. Let’s assume you make a salary of $75,000 a year. That is your gross salary. But really, you don’t get to keep all of that. So what is your net? After taxes and deductions, what amount actually gets deposited in your account? Let’s say your net is $5,000 a month.
2. What other costs are associated with making that money? Do you have to maintain an expensive wardrobe or drive a nice car? Do you have to eat out for lunch a lot? Are you so tired at the end of the day that you eat dinner out more than you would like? Let’s say all of those costs add up to an extra $600/month. So really, your “net” of truly available money is $4400. $5,000-$600 = $4400. Still with me?
3. How many hours did you REALLY have to work for this $4,400? If you’re salaried, add up all your hours. I vote that you throw in your commute time as well. You wouldn’t be spending those 45 minutes commuting if you didn’t need to work for money, right? Some people even like to include the time they need to get ready in the morning. Let’s assume that you add up the time you commute and the hours you are at work or working at home and it equals 55 hours.
4. Take 55 hours and multiply by the four weeks in a month. That equals 220 hours a month. Technically, there are 4.2 weeks in a month, for those of you who are into being exact. So you’ve worked 220 hours to get that $4,400 you have available to spend. Now divide your truly available money by the amount of life-energy you had to expend to get it. $4,400 divided by 220 hours is 20. 20 is your life-energy number.
If this was my life-energy number, here’s how I would use it. Let’s say I’m in Nordstrom eyeing a pair of $100 shoes, I simply ask myself, “Are those shoes worth five hours of my life-energy?” If I’m contemplating an $800 weekend getaway to the Berkshires, I may ask myself, “Is this trip worth 40 hours of my life-energy?” Or perhaps I’m out shopping for Christmas gifts, I can ask myself, “Are these gifts for my eight nieces and nephews worth 20 hours of my life-energy?” I think you get the idea, your life-energy number allows you to practice discernment and experience guilt-free spending.
Sometimes the answer is yes, and sometimes it is no. But it puts a wonderfully different perspective on things. It serves as a reason to pause and really makes you stop and think. So consider taking a few minutes to calculate your own life-energy number. Then put it in your smartphone or write it on the back of a business card, “My life-energy number = …” Keep this with you at all times and pull it out when you’re not sure if you should buy something or when you’re feeling anxiety about any financial decision. How many hours of your life, life-energy, are you really expending on a given purchase? Try it and let me know what happens!