The Impact of 'Die with Zero' and 'Sapiens' on My Perspective on Money
Every once in a while, a book comes along that challenges your beliefs and forever alters the way you think about certain aspects of life. For me, two such books are 'Die with Zero' by Bill Perkins and 'Sapiens' by Yuval Noah Harari. Both these works have fundamentally shifted my perspectives on what money truly is and how we should handle it.
Die with Zero by Bill Perkins
Die with Zero, written by Bill Perkins, is a book primarily categorized in the personal finance genre but, as Perkins suggests, transcends this narrow classification. The core premise of the book is to treat your life like an optimization problem, with the goal of obtaining maximum enjoyment, rather than merely the maximum amount of money.
Perkins argues that obtaining maximum enjoyment from life requires strategic spending. Rather than focusing solely on amassing as much wealth as possible by the end of your life, the primary aim should be to spend your money sooner, ideally to zero, by the time you die. This shift in thinking is rooted in the understanding that certain experiences, such as travel, are more accessible and enjoyable in your early years due to better health and energy levels. Having a significant amount of money when you can no longer enjoy its benefits is seen by Perkins as a waste.
Much of the opposition to this philosophy centers around the fear of not leaving money to one's offspring. Perkins addresses this concern by suggesting that money given to children earlier in life can be better utilized and appreciated by them. This parallels the concept that individuals derive more utility from money in their 30s than in their 60s, advocating for the same approach with children. Another concern is the fear of running out of money in later life. Perkins and financial experts often recommend the purchase of an annuity as a way to mitigate this risk, as spending naturally decreases in later years.
'Sapiens' by Yuval Noah Harari
The title of 'Die with Zero' and the influential ideas it proposes are further supported by the concepts outlined in Yuval Noah Harari's 'Sapiens'. Reading this book has changed my perspective on what money truly represents, dispelling myths and providing new insights into its nature and value.
Money is not Real
According to Harari, money is a shared belief – a socially constructed concept. He emphasizes that 'money is not real' in the sense that its value lies entirely in the trust and belief we invest in it. This belief is what allows us to use currency as a medium of exchange and a store of value. Harari further explains that only a small portion of money in the economy is represented by physical currency (like coins and banknotes); the vast majority is merely data stored in servers.
Money is Data
Harari goes on to describe how most of the money in the modern economy is stored as digital data, existing in the cloud or on servers. The concept of '90% of the money in the economy is merely a data stored in the server somewhere' challenges the traditional notion of money as a tangible commodity. This digital nature of money also highlights the critical role of trust and belief in maintaining its value.
Money is a Trust
Ultimately, Harari's perspective on money underscores the idea that 'money is a trust'. He explains that when you run out of money, you are essentially running out of trust. This trust is the social contract that allows money to function effectively in a society. Whether it's a government, a company, or a household, trust is the foundation upon which money's value is built. Perceived loss of trust can lead to a collapse of the system, as seen in financial crises where people lose confidence in the value of money.
Money is a Reputation of the King
Harari also delves into the historical context of money, tracing its origins back to ancient societies where centralized authorities (often referred to as 'kings') controlled monetary systems. In these societies, money was closely tied to the power and reputation of the ruling monarch. Harari uses this historical analogy to highlight the intertwining of financial policies and governmental or corporate trustworthiness.
Conclusion
The books 'Die with Zero' and 'Sapiens' have fundamentally altered my perspective on money by making me question its true essence and value. By recognizing money as a shared belief, data, trust, and a reputation, I have come to appreciate it in a more nuanced and practical way. These insights have encouraged me to approach my finances with a new set of principles that align with the idea of maximizing enjoyment and trust in my personal life, rather than purely accumulating wealth.
Keywords: Die with Zero, Sapiens, Personal Finance Philosophy