How “Die with Zero” by Bill Perkins Changed My Spending Mindset

Introduction

Growing up, I was always taught to save for the future. The goal was to build wealth by investing in things that grow in value, while avoiding spending on things like fancy gadgets and luxury vacations as it was seen as a “waste of money.” This way of thinking taught me to be frugal and see spending as a step towards financial trouble. But then I read “Die with Zero” by Bill Perkins, and it completely changed how I see money. The book taught me that spending money wisely on things that make life better is just as important as growing it. Perkins’s main idea really hit home for me: if we can, we should fully enjoy what life has to offer.

The Core Philosophy of “Die with Zero”

Bill Perkins’s book offers a fresh look at how we think about saving money. He asks us to think about what money is really for, saying that it’s better to spend it on experiences that matter to us than just to keep it for the sake of having it. He points out that money doesn’t do us any good after we’re gone, so we should use it to make our lives and the lives of those around us better now. But he also says this advice might not work for everyone, especially if you’re just getting by.

Key Takeaways

Embracing Life’s Experiences

Perkins encourages us to use extra money for things that add value to our lives, like travel, hobbies, and spending time with loved ones, once we’ve taken care of our basic needs like food and shelter. He makes a good point that saving too much can mean missing out on great life experiences. Imagine reaching the age of 85 with $50,000 left unused in the bank. This sum represents not only the additional work hours to earn it but also the missed opportunities for experiences, such as vacations or fine dining, making it a waste of life’s energy.

Investing in Experiences Early

Perkins underscores the diminishing returns of happiness from spending money as we age, attributed to escalating financial responsibilities and potentially waning health. This realization has prompted me to prioritize investing in memorable experiences now, rather than deferring them to a future that might not accommodate full enjoyment. Perkins advocates that during our 20s and 30s, we should allocate more funds towards exciting activities — like embarking on adventures, cherishing moments with friends, and participating in tournaments you enjoy worldwide. He identifies three main reasons for this: earning power, memory dividends, and the constraints of old age.

Earning Power and Memory Dividends: Initially, our earning potential typically grows with age. Therefore, an amount that seems substantial at 20 becomes relatively insignificant by 40, given an established career and increased income. This insight is pivotal; as our earning capacity expands, the joy derived from spending a certain sum diminishes over time. Hence, for those in their youth, accumulating substantial savings should not overshadow the value of spending on experiences that offer immediate happiness and long-lasting memories.

For instance, imagine a two-month hike through Italy at age 20, creating memories and lessons that enrich your life for decades. Conversely, delaying such experiences for financial security means missing out on invaluable years of joy and life enrichment.

Health and Enjoyment in Later Life: As we age, our ability to enjoy certain activities may decline, even if we can afford them. Perkins illustrates an almost inverse relationship between our earning potential over time and our physical capacity to relish experiences as we grow older.

Perkins’s message is nuanced: while advocating for spending on experiences in youth, he clarifies that the goal isn’t to deplete one’s bank account but to encourage thoughtful consideration of how money and time are spent, challenging the propensity to oversave and underspend.

Applying the Lessons

Inspired by “Die with Zero,” I’ve made several changes to how I approach my finances and life:

• Prioritizing Experiences: I’ve embraced the significance of creating lasting memories over amassing possessions, from spontaneous trips with friends to attending unique events.
• Strategic Gifting: Heeding Perkins’s advice, I now offer financial support to loved ones when it can make a meaningful difference, rather than postponing generosity. In addition, I set a monthly budget on guilt-free spendings which include taking my family and friends out for a meal or buying presents for them for a special occasion.
• Balancing Risk and Reward: I’ve learned the value of calculated risks, which have opened new personal and financial opportunities, embodying the preference for “oh wells” over “what ifs.”

Practical Tips from “Die with Zero”

Time Bucket Your Life: Perkins gives advice on how to manage our time, money, and health at different stages of our lives, encouraging us to make the most of our resources. In our youth, we often find ourselves rich in time and health but lacking in financial resources. As we transition into the ages of 31 to 60, we strike a balance with a reasonable measure of time, health, and financial resources. Beyond 60, we might enjoy an abundance of time and money, yet our health and energy may wane. Perkins’ advice resonates deeply with me: tailoring our resource expenditure to our life’s chapters ensures we utilize them most effectively.

Taking Calculated Risks When Young: Perkins champions the idea of taking bold, calculated risks early in life. The asymmetric risk-reward ratio greatly benefits the youthful, who stand to gain significantly from life-altering opportunities without the burden of heavy losses.

1. Pursue Physical Adventures Early: If your dreams involve physically demanding adventures like running a marathon or cycling across Asia, rock climbing, or skiing, aim to fulfill these while you’re under 50 and in peak physical condition. Conversely, save less physically demanding yet expensive experiences, such as cruise trips, for later in life when time and money are plentiful but energy might be limited.
2. Be Bold, Not Foolish: Perkins’ second piece of advice emphasizes the importance of risk-taking in our younger years, when we have less to lose. For instance, investing a thousand dollars in a startup at 20 poses a minimal risk; failure is a setback easily overcome with time. Success, however, can catapult your financial status significantly. The same logic applies to relocating to a new city or making other major life decisions with considerable upside potential. Even in failure, the experience often yields valuable lessons and cherished memories from giving our all to a daring venture.

Addressing Common Concerns

Perkins doesn’t ignore the worries some might have, like running out of money when we’re older, not leaving anything for our kids, or how to think about giving to charity. He suggests planning carefully to make sure we can enjoy life and also help others while we’re still here.

• What if I run out of money? Perkins notes that many of us save more than we need to, which means that many actually save more than needed, exaggerating the risk of financial shortfall.
• What about the kids? Perkins argues that giving money to our kids when they’re younger can help them more than waiting until we’re gone. A windfall in one’s 20s or 30s, as opposed to their 60s, can profoundly influence life choices and opportunities, from home ownership to entrepreneurial ventures. For example, my parents provided financial support for me and my siblings’ University education, a decision that offered us immediate relief from student loans and the freedom to pursue our career without the burden of debt. Another example could be helping your children with the down payment for their first house, enabling them to secure a home in a competitive market.
• What about charity? Perkins also talks about how giving to charity or helping out loved ones while we’re alive can be more impactful.

Overall, Perkins’s philosophy encourages generosity towards family or charitable causes and emphasizes the increased effectiveness of giving during one’s lifetime rather than after one’s death.

Controversial Topics

While I find Perkins’s ideas very inspiring, I know not everyone will agree with everything he says. For example, some might think he underestimates the value of having money saved for options or the importance of investing in education.

1. Redefining Life Energy and Wealth: Perkins posits that the money in your bank account represents your life energy. Consider the concept of passive income, where initial efforts, albeit minimal, can set off a cascade of wealth generation with little to no ongoing exertion. This idea, highlighted in the book ‘The Millionaire Fastlane’, illustrates that wealth can accumulate beyond active labor, challenging the notion that financial resources directly correlate with expended life energy. My personal journey encapsulates this: dedicating to build and grow my childcare business, enriching my writing skills by writing blogs, and indulging in hobbies like playing badminton. These endeavors, while technically work, are driven by passion rather than necessity. The joy derived from these activities blurs the lines between work and play, suggesting that wealth can accrue without sacrificing enjoyment or life energy.
2. The True Value of Optionality: According to Perkins, money inherently does not provide optionality. However, some might argue that liquidity — having readily accessible funds — stands as a testament to financial freedom, enabling quick action in the face of opportunities or emergencies. This flexibility is invaluable, yet Perkins warns of its potential overemphasis. Holding onto wealth solely for the sake of optionality, without actualizing those options, can lead to a paradox where resources remain untapped until it’s too late. Balancing optionality with purposeful expenditure is key, fostering a life rich in experiences and preparedness.
3. The Overlooked Importance of Education Investment: While Perkins advocates for spending on experiences, the significance of investing in education appears underrepresented. Echoing Charlie Munger’s wisdom, “Those who keep learning will keep rising in life,” underscores the invaluable returns of educational pursuits. Knowledge and skill acquisition not only enrich personal and professional life but also open doors to new experiences and opportunities, amplifying the very essence of living ‘Die with Zero’ to its fullest potential.

Conclusion

Bill Perkins’s “Die with Zero” has profoundly impacted my approach to life and finances. It has encouraged me to live more fully, focus on what truly brings joy, and share my resources in ways that matter. It’s a powerful reminder that the best legacy we can leave is one of rich experiences and positive impacts on others. For instance, I outsourced cooking two meals a day to one meal by purchasing pre-made meals such as Factor. This helps free up hours each month, allowing more time for my passions and quality moments with my loved ones aligning with my future goals.

By challenging conventional financial wisdom, Perkins encourages us to prioritize relationships and experiences over wealth accumulation, take calculated risks, and invest in our personal growth. In reflecting on Perkins’s philosophy, it’s clear that a holistic approach to life’s journey — one that encompasses financial planning, personal passions, optionality, and lifelong learning — offers the most enriching path forward. Balancing these elements invites a life not just lived, but fully experienced.