When was the last time you thought about a purchase in terms of cost of your life, instead of money?

Our digital banking world has completely removed us from the connection between earning our money and spending our money. We get our paychecks deposited, then we dwindle away the dollars via swiping our cards, clicking on the Amazon app, and auto-pay deductions.

The net effect of this process is that we see work as something separate from our money. The time required to work to earn money is not psychologically connected to us spending it. Our jobs are something we go to, and money is this stressful thing that we “manage” to spend.

But these two things are connected – earning money and spending money.

Your Life Is the Cost

Every dollar you spend needs to be earned by you. The more you spend, the more you need to earn.

A powerful way to look at purchases is by reflecting on their cost in terms of hours of your life you need to spend working in order to afford the purchase.

It’s a simple equation: Cost of item ÷ Your hourly rate = Hours of your life that an item costs.

An Example Transaction

So let’s take for example a car purchase. The average new car purchase in the United States is $36k. This number is stupid large, so we’re going to use $27k, to be a little bit more reasonable.

The average income in the United States is $59k. Broken down to an hourly rate of $28.36, which is done by taking your yearly total compensation and dividing by 2080 (number of working hours in a year).

If an average American buys a slightly less than average new car, what does it cost them?

$27,000/$28.36 = 952 hours, or 119 days.

So a person will spend about half of their year working for just one purchase? Of course, this cost is mixed in with their housing costs, insurance, food, etc., the rest of their budget. The net result is why so many items, like vehicles, are purchased with debt. You need to borrow even more of your future self’s working time in order to “afford” an item.

And it get’s worse… That is not your real hourly rate.

Your “net” hourly rate is a the amount of money you take home after taxes, insurance, and other deductions. That same person making $28.36/hr is probably making close to $23/hr take home pay. So really, it’ll take them about 147 working days to purchase that vehicle.

Every Item Has a Cost

Even if an item is less expensive, it still has a cost in your life. When you buy that $350 kitchen appliance, you are still spending a couple of days of work to purchase it. When you do the math, $350÷$23/hr=15.2 hours – is it worth it?

Pretty soon, it starts to all add up. 8 hours here for that tech gadget, 15 hours there for the kitchen appliance, and 11 hours for that clothing. At the end of the year, you bought away months of your life. Money that could have been spent on achieving your personal goals, paying down debt, or invested to reach financial independence.

I would not encourage you to break down your life’s working hour for every single transaction you make. However, I would encourage you to realize that you have a fixed amount of time in your life, and the cumulative cost of everything you buy adds up. You need to work away your life to purchase these things (or pay off debt from them).

Purchasing Your Life Back

Do you want to spend your life working to pay for things? Or do you want to only buy stuff you need, then spend the rest of your time following your passions, and spending time with friends and family?

Shift your mindset so that your money is your life. You earn it through the value you create. No longer is money just a number in your bank account, it’s the result of your ongoing efforts and production. Making a purchase means working more, and having less control of your time.

You can purchase back your life by learning to buy less stuff.


  1. mindwi.se
    August 22, 2018

    Your money or your life, literally. Thanks Joe Dominguez and Vicki Robin.

    This should be part of our education.

    • James
      August 23, 2018

      On my list of books to read! I’ve seen that book mentioned too many times lately to ignore.

  2. Erin
    August 22, 2018

    Have not read that. Recommended?

    • mindwi.se
      August 23, 2018

      Yes, you should really read it if you enjoy the basic principle of this article.


Leave a Reply