Note: While reading a book whenever I come across something interesting, I highlight it on my Kindle. Later I turn those highlights into a blogpost. It is not a complete summary of the book. These are my notes which I intend to go back to later. Let’s start!

  • Rule No. 1: Maximize your positive life experiences. In October of 2008, Erin and her husband, John, were successful lawyers with three young children when they learned that John had clear-cell sarcoma, a rare and rapidly growing cancer of the body’s soft tissues. “Nobody thought that a healthy 35-year-old would have a tumor the size of a baseball,” Erin recalls. So no one suspected cancer until the tumor had spread to John’s back and leg bones. “We didn’t understand how serious his condition was until he had an X-ray and it was lit up like a Christmas tree,” Erin says. The grim diagnosis terrified and overwhelmed her. And with John too sick to work, the full burden of taking care of the family physically and financially fell to her. It was too much for one person to bear. I had been friends with Erin since we were kids, so I wanted to do everything I could to make the situation less horrible. “Stop what you’re doing,” I told her, “and spend time as a family while John still can.” I also offered to help with the costs. It turns out I was preaching to the choir: Erin had already been thinking about quitting work to focus on what really mattered. And that’s what she did. So at their home in Iowa, between John’s cancer treatments, the couple enjoyed the simple pleasures of each other’s company: They’d go to the park, watch movies, play video games, and pick their kids up after school together. In November, when local doctors had done everything they could, without success, Erin found a clinical trial in Boston, where she and John made several trips to undergo the experimental treatment, using their free time to go on some of the city’s historic tours while John could still walk. All too soon, though, their hope faded, and one day John broke down at the thought of everything he’d miss, from watching his children grow up to passing the years with Erin. John died in January of 2009, just three months after his diagnosis. Looking back at that period, Erin recalls the trauma and devastation, but she is glad she quit her job to be home with John. Most people would have done the same in these circumstances. Death wakes people up, and the closer it gets, the more awake and aware we become. When the end is near, we suddenly start thinking, What the hell am I doing? Why did I wait this long? Until then, most of us go through life as if we had all the time in the world. Some of that behavior is rational. It would be foolish to live every day as if it were your last: You wouldn’t bother to work, or study for a test, or visit the dentist. So it makes sense to delay gratification to some extent, because that pays off in the long run. But the sad truth is that too many people delay gratification for too long, or indefinitely. They put off what they want to do until it’s too late, saving money for experiences they will never enjoy. Living as if your life were infinite is the opposite of taking the long view: It’s terribly shortsighted. Clearly, the story of Erin and John is an extreme case. Advanced clear-cell sarcoma is rare, and death was staring this couple in the face much more starkly than it does for most people. Yet the challenge that their situation presented is common to everyone: Everyone’s health generally declines with time, and sooner or later we all die, so the question we all must answer is how to make the most of our finite time on earth. Put that way, it sounds like a lofty, philosophical question—but that’s not how I see it. I’m trained as an engineer and made my fortune on the strength of my analytical skills, so I see this question as an optimization problem: how to maximize fulfillment while minimizing waste.  

  • We all face some version of this question. Of course, the dollar amounts differ from person to person, often dramatically, but the core question is the same for all of us: What’s the best way to allocate our life energy before we die? I have thought about this question for many years, going back to when I was barely earning enough to live on, and over time I’ve come up with several guiding principles that make sense. These are the ideas behind this book. For example, some experiences can be enjoyed only at certain times: Most people can’t go water-skiing in their nineties. Another principle: Although we all have at least the potential to make more money in the future, we can never go back and recapture time that is now gone. So it makes no sense to let opportunities pass us by for fear of squandering our money. Squandering our lives should be a much greater worry.

  • It’s more complicated than just knowing what makes you happy and spending your money on those experiences at every moment. That’s because our ability to enjoy different kinds of experiences changes throughout our lifetimes. Think about it: If your parents took you along on a tour of Italy when you were a toddler, how much did you get out of that expensive vacation, besides maybe a lifelong love of gelato? Or consider the other extreme: How much do you think you’ll enjoy climbing Rome’s Spanish Steps when you’re in your nineties—assuming you’ll still be alive and able to climb them at all by then? As the title of one economics journal article put it, “What Good Is Wealth Without Health?”  

  • In other words, to get the most out of your time and money, timing matters. So to increase your overall lifetime fulfillment, it’s important to have each experience at the right age. And that’s true no matter what you enjoy or how much money you have. So while the magnitude of everyone’s lifetime fulfillment will differ—for example, people with relatively little discretionary income tend to have lower fulfillment levels, and naturally happy people tend to have higher fulfillment levels—we all need to time our experiences properly. Maximizing your fulfillment from experiences—by planning how you will spend your time and money to achieve the biggest peaks you can with the resources you have—is how you maximize your life. By taking charge of these crucial decisions, you take charge of your life.

  • As Americans, we’re steeped in the old-fashioned work ethic. But people in many other cultures understand that life is about much more than work. You get a sense of that from the amount of yearly paid vacation time people in many European countries take—six weeks or more in places like France and Germany! On the island of St. Barts, one of my favorite places on the planet, every shop closes for two hours in the middle of the day so that everyone can hang out with their friends and enjoy a nice long lunch. That’s a much better work-life balance than most of us are used to.

  • Rule No. 2: Start investing in experiences early. When I was in my early twenties, my roommate at the time, Jason Ruffo, decided to take about three months off from work to go on a backpacking trip to Europe. This is the same friend with whom I was splitting the rent on a pizza-oven-size apartment in Manhattan: We were both screen clerks making about $18,000 a year. To make a trip like that a reality, Jason would have to put his job on hold—and he’d have to borrow about ten grand from the only person who would lend him that much money: a loan shark. You know, the kind of lender who doesn’t ask for collateral and doesn’t care about your credit report because he has other ways to make sure you pay up. I said to Jason, “Are you crazy? Borrowing money from a loan shark? You’ll get your legs broken!” I wasn’t worried only about Jason’s physical safety. Going off to Europe meant that Jason would also miss out on opportunities for advancement in his job. To me, the idea of doing something like that was as foreign as going to the moon. No way was I going to go with him. But Jason was determined, so off he flew to London, both nervous and excited about traveling alone with a Eurail pass and no set schedule. When he came back a few months later, there was no discernible difference between his income and mine—but the pictures and stories of his experiences showed that he was infinitely richer for having gone. You have to remember: This was the early 1990s, before high-speed Internet and Google Earth. To see what Prague looked like without actually going, you had to get a coffee-table photo book about the place. So hearing his stories and looking at his photos was like listening to some exotic explorer.

  • In Germany, he saw the horrors of Dachau. In the newly formed Czech Republic, he heard about life under Communist rule. In Paris, he and two friends he’d made whiled away an afternoon sitting in a park, just enjoying baguettes with cheese and wine and feeling like anything was possible. Eventually he made his way to the Greek islands. Somewhere along the way he fell in love with a woman and had sex on a beach for the first time. As he met locals and young travelers from all over, he learned more about himself and other people and cultures and felt his world opening up. His stories of the interesting cultures he’d seen and the connections he had made were so amazing, I felt pretty envious—and regretful that I hadn’t gone. As time passed, that feeling of regret only grew. When I finally went to Europe, at age 30, it was too late: I was already a tad too old and too bougie to stay in youth hostels and hang out with a bunch of 24-year-olds. Plus, by the time I was 30, I had many more responsibilities than I’d had in my early twenties, which made it that much harder to take months off for travel. I finally, unfortunately, had to conclude that I should have just gone earlier. Like me, Jason knows he timed that European trip exactly right. “I wouldn’t enjoy sleeping in a youth hostel with 20 guys on a shitty bunk bed now, and I wouldn’t enjoy carrying a 60-pound backpack around on trains and through the streets.” But unlike me, he actually took the trip, so he doesn’t have to live with second thoughts. In fact, despite the high-interest loan, he has the opposite of regret about the expense. “Whatever I paid, I feel it was a bargain because of the life experiences I gained,” he tells me. “You can’t take those away, and I would never have them erased for any amount of money.” What he gained from that trip, in other words, is priceless.  
  • The main idea here is that your life is the sum of your experiences. This just means that everything you do in life—all the daily, weekly, monthly, annual, and once-in-a-lifetime experiences you have—adds up to who you are. When you look back on your life, the richness of those experiences will determine your judgment of how full a life you’ve led. So it stands to reason that you should put some serious thought and effort into planning the kinds of experiences that you want for yourself. Without that kind of deliberate planning, you’re bound to just follow our culture’s well-trodden, default path through life—to coast on autopilot. You’ll get to your destination (death) but probably without having the kind of journey you would have actively chosen for yourself. Sadly, that is how too many people spend their lives. To switch metaphors: They build a well, they get a pump, and as the pump pumps water into a cup, the cup quickly fills, so the water starts overflowing. They take a sip and they keep pumping. And at the end of their lives, after a lifetime of pumping, they see that they’re still thirsty. What a waste! Imagine the regret you would feel if you got to the end of your days only to realize you haven’t managed to live a life full of satisfying experiences. In the wise words of Carson, the butler of Downton Abbey, “The business of life is the acquisition of memories. In the end that’s all there is.” That sounds really nice, but it’s also the sort of thought that tends to go in one ear and out the other. You hear it, maybe nod approvingly, and then go back to business as usual. Toward the end of my father’s life, though, this idea that life is about acquiring memories really hit home.  

  • Earlier I said that life is the sum of all experiences. Well, I wasn’t just speaking figuratively: If you were to put a numerical value on each experience, you could then actually add up the value of multiple experiences. Doing that makes it possible to compare bundles of disparate experiences, which is a step toward maximizing your lifetime fulfillment. How do you place a numerical value on an experience? For starters, think about the enjoyment you get from each experience in terms of points, like the points you’d earn in a game. Peak experiences will bring you many experience points. Small pleasures will get only a few points. How many points you assign to an activity is totally up to you, because everybody’s values and interests are different. Some people like nothing more than tending their garden, so they would say that every day they spend gardening gets a high number of points. Other people would say you’d have to pay them to prune plants or pull weeds, so for them any time spent gardening would get zero points. (There are no negative points in this system.) If you take all of your positive experiences from a given year—say, last year—and add up their point values, you get a number (for example, 5,090 points). You can represent this number as a bar on a bar chart. The higher the number, the higher the bar. It’s as simple as that.

  • You can do the same for every year of your life so far. Some years are better than others, for various reasons, and some of these reasons are out of your control. (If an accident left you confined to a hospital bed for 12 months, for example, you probably wouldn’t have many enjoyable experiences that year.) But this book focuses on managing what is under your control through the decisions you make—so realize that a few factors are in your control, and one of the biggest is how much time at each age you devote to earning money versus having enjoyable experiences. It’s just like the work-play trade-off faced by the ant and the grasshopper. As you take control of these decisions, you change the heights of the bars and therefore the shape of your curve.  
  • Each bar represents the number of experience points for one year. All the bars together help make up your fulfillment curve. So increasing your total fulfillment increases the area under the curve—and by shaping the curve, you shape your life.  

  • When you teach your daughter to swim or to ride a bike, it’s not because you think she’ll get a better-paying job with those new skills. Experiences are like that: When you spend time or money on experiences, they are not only enjoyable in the moment—they pay an ongoing dividend, the memory dividend

  • Experiences yield dividends because we humans have memory. We don’t start every day with a blank brain, like characters in so many sci-fi movies. We wake up every morning preloaded with a bunch of memories that we can access at any time—mainly to get around and navigate the world. When you face a large rectangular panel with a protruding round knob, you don’t ask yourself, What is this thing? No, you know it’s a door. And you know how to open that door. So there’s a huge dividend from having once learned what a door is—think of all the doors you can open!

  • Think back to one of the best vacations you ever had, and let’s say it lasted a full week. Now think about how much time you spent showing pictures of that trip to your friends back home. Add to that all the times you and the people you traveled with reminisced about that trip, and all the times you’ve thought about it yourself or given advice to other people considering going on a similar trip. All those residual experiences from the original experience are the dividends I’m talking about—they’re your memory dividends, and they add up. In fact, some of these memories, upon repeat reflection, may actually bring more enjoyment than the original experience itself. So buying an experience doesn’t just buy you the experience itself—it also buys you the sum of all the dividends that experience will bring for the rest of your life. This becomes really clear when you think in terms of experience points—my way of quantifying how much enjoyment you got out of an experience. Remember how you can represent the number of experience points with a vertical bar? Okay, now think about that bar as just the beginning of the enjoyment you are getting from the experience. Because of the memory dividend, you also receive an additional little bar every time you recall the original experience. If you stack up all those little bars—all the ongoing memory dividends from an experience—you get a second bar that might be as tall as the bar that represents the original experience.  

  • In fact, sometimes the second bar is even taller. One way this can happen is through compounding, just like with money in the bank. Due to compounding, your financial savings don’t just add up—they begin to snowball. And the same thing can happen with your memory dividends—they also can and will compound. This happens whenever you share the memory of the experience with other people. That’s because whenever you interact with someone, sharing an experience you’ve had, that is an experience in itself. You’re communicating, laughing, bonding, giving advice, helping them, being vulnerable—you’re doing the stuff of everyday life. By having experiences, you not only live a more engaged and interesting life yourself, but you also have more of yourself to share with others. It’s like the idea that business begets more business. Positive experiences are radioactive and contagious in a good way; they start a chain reaction that releases more energy than you thought you had. One plus one can be more than two. That’s one of the reasons I say that you should invest in experiences.

  • Once you start thinking about the memory dividend, something becomes really clear: It pays to invest early. The earlier you start investing, the more time you have to reap your memory dividends. For example, if you start in your twenties (rather than your thirties), you’ll have a long tail of memory dividends—so you’ll be more likely to have the tail add up to more than the head (the number of experience points from the initial event). Clearly, the closer you are to death when you start having wonderful experiences, the fewer memory dividends you will have. So when I say you should invest in experiences, my investment advice is pretty much standard. It’s kind of like what Warren Buffett says: Invest early, and by the time you get to a certain age, look at how much you’ve accumulated. Many investment advisers want you to start your 401(k) plan early. A lot of investment advice is like that: Start early, start early, start early. Warren Buffett and other investment advisers are trying to grow money, and I’m trying to grow the richest life I can; and when I say rich, I mean rich in experiences, in adventures, in memories—rich in all the reasons you acquire money. So here’s my investment advice in a nutshell: Invest in your life’s experiences—and start early, start early, start early.

  • So when you’re young and cash poor, my advice is to explore all the free or nearly free experiences you can have. Think of the free outdoor concerts and festivals that city and local governments put on with your tax dollars to make your town wonderful. Or consider how much fun you can have with your friends just talking, hanging out, or playing cards or board games. Or how much of your own town there is to see and explore on foot or by public transportation. Most of us aren’t taking anywhere near full advantage of these opportunities for free or virtually free enjoyment. I know I don’t—do you?

  • Rule No. 3: Aim to die with zero. Staying on autopilot is easy; that’s why we use it. But if you’re trying to live a full and optimal life, rather than just taking the path of least resistance, autopilot won’t give you what you want. To fully enjoy life instead of just surviving it, you need to stop driving mindlessly and actively steer your life the way you want it to go.

  • If you spend hours and hours of your life acquiring money and then die without spending all of that money, then you’ve needlessly wasted too many precious hours of your life. There is just no way to get those hours back. If you die with $1 million left, that’s $1 million of experiences you didn’t have. And if you die with $50,000 left, well, that’s $50,000 of experiences you didn’t have. No way is that optimal.  

  • When Christmas rolled around that year, Grandma presented me with a gift: a sweater. To this day, as far as I know, that sweater (which I would guess cost about $50) was the only thing that ever came of my $10,000 gift. There was no incremental joy she got from that transfer of $10,000, aside from whatever joy she got from getting me that sweater, or from knowing that her grandson wanted to give her money. But for whatever reason, she just could not spend the money. She was just too thrifty for her own good—someone who actually kept every couch, love seat, and easy chair covered in plastic to protect the upholstery from wear and tear. Unfortunately, of course, the plastic also made the furniture uncomfortable and unattractive. One day I came into my grandmother’s house for somebody’s funeral and sat on a colorful, comfy couch—she had taken the plastic off for this special occasion. But the next time I visited, all the plastic was back on, and it stayed on for the rest of my grandmother’s life. This never made sense to me: Why spend all this money on furniture that you don’t get to enjoy? The plastic over the couches is a microcosmic example of much of what I’m talking about in this book: the senselessness of indefinitely delayed gratification.

  • Rule No. 4: Use all available tools to help you die with zero. If you’re still with me, I assume you agree that trying to die with zero is a good idea, at least in principle. But you are probably skeptical about the feasibility of hitting this goal. And you are right to be skeptical. In fact, dying with exactly zero is an impossible goal. To attain it would require knowing exactly when you’re going to die—but none of us is God, so we can’t know the day we’re going to die. Still, just because we can’t predict the exact date doesn’t mean we can’t get close. Let me explain. Have you ever used a life expectancy calculator? Many insurance companies offer them for free on their Web sites, and I think they’re kind of fun to try out. These calculators are, admittedly, imprecise tools, but in order to forecast how long you’ll live, they ask a series of questions about your current age, your gender, height, and weight (how good is your BMI?), smoking and drinking patterns, and other major predictors of overall health. Some also ask about your family history and whether you use a seat belt. After you’ve answered all the questions, the calculator typically gives you a number—you’ll live to be 94! (Or 55 if you don’t lose 90 pounds and quit drinking like a sailor and smoking a pack a day.)  
  • Rule No. 5: Give money to your children or to charity when it has the most impact. Every single time I talk about dying with zero, I get some version of the same question: What about the kids? This question always comes up, without fail, no matter who I talk to. A couple of variations of this question even have a moralizing, self-sacrificial tone. Some people have actually said to me, “Well, that’s what somebody would say who doesn’t have kids.” And even when they know I have children—two daughters—some people will still imply that dying with zero is the ultimate act of selfishness. No matter how they put it, what most people who ask about the kids mean is this: Planning to die with zero might be good for someone thinking only about themselves, but shouldn’t you care about the well-being of your children, too? Because if you cared about someone other than yourself, you wouldn’t die with zero. You would make sure to leave money for the kids. Their implication: If dying with zero is a philosophy only for selfish bastards, then it can’t possibly be the right philosophy for decent, caring people like themselves.  
  • When one of these good friends poses this inevitable question—“What about the kids?”—I first explain that the money you’re leaving to your kids is not your money. So when I say you should die with zero, I’m not saying: Die with zero and spend all your kids’ money along the way. I’m saying: Spend all your money. That is, give your children whatever you have allocated for them before you die. Why wait until you’re gone? Remember, these are conversations I’m having with my closest friends, and we always call each other out on our BS. So I tell them straight out, “You’re full of BS! Where’s your trust fund for your kids? How much is it set to? When is it going to distribute? Have you even thought about these things, or are you just parroting what you’ve heard?” Do you see what I’m saying? If you’re really putting your kids first, as you claim you are, don’t wait until you’re dead to show your generosity. (I like to say that dead people can’t give money away—they can’t do anything.) Putting your kids first means you give to them much earlier, and you make a deliberate plan to make sure that what you have for your children reaches them when it will make the most impact. A real plan for dying with zero includes the kids, if you have kids. That way, you’ve already separated out their money (which becomes untouchable by you) from your money, which is what you must spend down to zero. That’s my short answer to the question about the kids.  

  • I don’t want to say there’s an age when it’s just too late to give your children money—late, after all, is better than never—but age 60 is worse than 50, and 50 is worse than 40. Why? Because a person’s ability to extract real enjoyment out of the gift declines with their age. This happens for exactly the same reason your own ability to convert money into enjoyable experiences diminishes after you get past a certain age. And for a whole host of activities, you need a certain minimum mental and physical state to enjoy them at all. So, for example, if the peak utility of money (the time when it can bring optimal usefulness or enjoyment) occurs at age 30, then at age 30 every dollar buys you one dollar’s worth of enjoyment. By age 50, the utility of money has declined considerably: Either you would get a lot less enjoyment out of that same dollar or you would need more money (say, $1.50) to obtain the same amount of enjoyment as you got out of $1 back when you were a healthy, vibrant 30-year-old. For the same reason, as your adult children age, every dollar you give them goes less far, and at some point that money becomes almost useless to them.

  • Of all the experiences you are trying to bequeath to your child, one of those experiences is time with you. Time with you is crucial, because the memories your kids have of you have lasting effects, for better or worse. Scientists have known for some time that young adults who as young children receive more affection from their parents come to enjoy better personal relationships in general and to also have lower rates of substance abuse and depression. We also know that the positive effects of loving, attentive parents last well past young adulthood, thanks to a study of more than 7,000 middle-aged adults. Researchers asked these adults a bunch of questions about their memories of their mother and father—questions like “How much time and attention did she/he give you when you needed it?” and “How much did she/he teach you about life?” and “How would you rate your relationship with your mother/father during the years you were growing up?” Obviously, the higher a person’s ratings on questions like these, the more positive their childhood memories of that parent. So what did the researchers find? By correlating these ratings with answers to questions about particular outcomes, the researchers were able to conclude that those adults who had memories of higher parental affection ended up with better health and lower levels of depression. The word “experience” may not evoke images of a child being taught about life, or of simply being given time and attention—but all those are indeed experiences, too, and they’re indispensable, paying off in sometimes surprising ways. I don’t know anybody who wouldn’t want that kind of experience and that kind of memory dividend for their children. So how do you quantify such things—what is the value of a positive memory? Your first instinct might be to say that it’s impossible to say, or that memories are priceless. But let me put it another way: What is the value to you of a week at a cabin on a lake? Or of a day with a beloved relative? The price might be extremely high or fairly low, but the fact that you can even propose a ballpark price says that the value of an experience can be quantified.  
  • I am making a big deal about quantifying the value of experiences with your children because doing so forces you to pause and think about what’s really best for your kids: Sometimes it is earning more money, and sometimes it is spending more time with them. So many people tell themselves that they are working for their kids—they just blindly assume that earning more money will benefit their kids. But until you stop to think about the numbers, you can’t know whether sacrificing your time to earn more money will result in a net benefit for your children.  

  • What can thinking about the numbers tell you? Well, take an extreme example. Let’s say you live in the wilderness, and you must “go to work” to cut down trees just to build a basic shelter for your family. When you have to work just to enable your family to survive, of course it makes sense to work instead of hanging out with them. But once you get past the point of just working for basic needs and avoiding negative experiences, you can start to exchange your labor for positive life experiences. As far as your children are concerned, you can either work for more money to buy them experiences or spend your extra free time to give them the experience of time with you. At the other extreme is the billionaire who works such long hours and travels so much for work that he spends no time at all with his children. If you’re already a billionaire, it’s safe to assume that your children would be better off if you spent at least a little more time with them, even if it’s to the detriment of your career. The financial cost to your career is small, but the benefit to your children is immense. So it’s a net gain to the family, including to you. The value of time with your kids is like the value of water—if you’ve got 50 gallons of water, you wouldn’t pay a dime for an additional gallon of water. But if you’re dying of thirst in the desert, you might be willing to cut off your arm to get even one gallon. Most of us, of course, are somewhere between these two extremes. We are neither working all the time just to survive nor completely neglecting our children. As such, we are facing a more difficult trade-off between time and money. But the thought process should be the same as at the extremes, even if the answer isn’t obvious: Is each additional hour of work you do really worth it to you and your children? Does your work add to your legacy—or does it actually serve to deplete it? Parents’ employment is a mixed blessing for kids of all income levels. When parents go to work, the income they earn can improve their kids’ lives in many ways, but as the economist Carolyn Heinrich points out, work (especially long hours and night shifts) can take time away from parent-child bonding and can bring real stress into children’s lives. And low-income parents are especially likely to be working stressful jobs with long hours. But, of course, most people have to work to provide for their families, and the optimal balance between time at work and time with your kids isn’t always obvious. Where you and your children are in your lives matters, too. Just as you can’t keep delaying ski trips because there is a minimum level of basic health you need in order to go skiing, you can’t keep delaying time with your six-year-old, because eventually your child won’t be six. Or seven. Or a child. The fact that those opportunities gradually disappear should cause you to reevaluate how much money you’d be willing to give up to have those experiences. Now look at it from your kids’ point of view, because it’s our kids’ fulfillment that we’re trying to maximize here. What do you suppose is the value to your child of an extra day with you? Or to have you home when she comes home from school? Or to have you attend her soccer game or music recital? I’m well aware that your kids, especially when they’re very young, probably don’t value these experiences when they’re having them. If I were to ask my older daughter how much she values my going to one of her games, she might not even know what I was talking about. But these shared experiences clearly have a value, especially in retrospect. Remember: The purpose of money is to have experiences, and one of those experiences for your kids is time with you. Therefore, if you are earning money but not

  • Having experiences with your kids, you are actually depriving your kids. And yourself. If you really think through the implications of saying that your legacy consists of experiences with your children, the conclusion you reach might be somewhat radical: That is, once you have enough money to take care of your family’s basic needs, then by going to work to earn more money, you might actually be depleting your kids’ inheritance because you are spending less time with them! And the richer you already are, the more likely this is to be true.

  • Rule No. 6: Don’t live your life on autopilot. At the beginning of this book, I told you about the time my boss told me I was an idiot. As you might recall, I was a penny-pinching guy in my twenties, proud of myself for managing to save up money on my meager salary. My boss, Joe Farrell, knocked some sense into me by reminding me that I was on a path to earn much more in the coming years, so I was foolish not to spend whatever money I was making now. Joe Farrell didn’t just make this advice up. The idea that it’s rational for young people to be freer with their money is shared by many economists, even though it runs counter to the advice most of us grow up hearing. When we’re around eight or nine years old, our parents tell us to save some of our birthday money instead of spending it all. When we’re all grown up, financial advisers tell us it’s never too early to start saving part of our paychecks.

When I say it makes sense to borrow money when you’re young, I’m not saying you should be racking up credit card debt—such high-interest loans are a bad idea for almost everyone. Borrow modestly and responsibly. And when you have many years of rising income ahead of you, it really doesn’t make sense to save 20 percent of your income. That would mean forgoing memorable life experiences you could be having, and it also means working to pay for a richer future self—a suboptimal use of your life energy, that’s for sure.

  • If you knew you were going to die tomorrow, you’d spend today one way, and if it was two days from now, you would spend today slightly differently—because you’ll still have tomorrow. The same is true for three days from now, four days from now, or 20,000 days from now: The further back in time you go, the more the balance shifts between living for today and planning for the future. So if you work your way back one day or year at a time, from your deathbed to the wheelchair to retirement, and then further back to your thirties, twenties, and so on, you should see at least subtle changes in how you should be spending your life. This is easy to see when you’re talking about a few days—those changes aren’t subtle. But when we’re talking about thousands of days—of years and decades—people tend to forget this logic altogether and act as if 20,000 days is the same as forever. But of course none of us have forever. We need to keep that in mind so that we take optimal advantage of the time we have and don’t fall into the trap of living our lives on autopilot.

  • Last week, I was playing tennis and noticed that my knees were kind of hurting, so I stopped. That wouldn’t have happened 20 years ago. My friend Greg, who loves skiing and is in great shape (for his age), recently went skiing for seven days in a row—something he could have done easily when he was 22—but afterwards he was in a lot of pain and realized that skiing seven days straight is too much for him now. This diminished enjoyment from declining health also has a real impact on how far your dollar goes, and skiing is a good example of this effect. Let’s say that an aging skier decides to continue enjoying the sport by giving himself more breaks or longer breaks between runs. Great idea—but that doesn’t mean he’s getting the same experience as when he was younger and stronger. If he used to get in 20 good runs in one day on the slopes, now he can manage only 15. In effect, the same amount of money he spent on that day of skiing now brings him only 75 percent of the skiing enjoyment it did years earlier. My buddy Greg will recover and be able to ski again, but his future enjoyment will be diminished because he can’t ski as much as he used to—and eventually not at all.  
  • Whenever you shift in order to spend money, you are necessarily also shifting when you save. So, for example, instead of saving 20 percent of your income throughout your working years, some people would be better off saving almost nothing in their early twenties (as we’ve discussed), then gradually ramping up their saving rate during their late twenties and thirties as their income begins to rise. Then they should save even more than 20 percent in their forties—and then slow down their savings so that eventually (as I explain in the next chapter) they actually start outspending their earnings. Notice that I am being careful to say that some people would be better off doing that. Everybody’s situation is different. For example, some people’s favorite activities, such as mere walking, are inexpensive; others don’t require tip-top physical health. How much you should save also depends on how fast your income grows from year to year, where you live, and how fast your savings grow. Because of all these variables, and all the possible combinations they produce, there is no one-size-fits-all rule.  

  • Think about the three basics people need to have to get the most out of life: health, free time, and money. The problem is that these things rarely all come together at once. Young people tend to have abundant health and a good deal of free time, but they don’t usually have a lot of money. Retirees in their sixties, seventies, and beyond—the other end of the spectrum—have abundant time (and often more money than young people), but, unfortunately, they have less health, and thus a diminished ability to enjoy the time and money they do have than the young do.

  • Suppose your work nets you $40 per hour, and suppose laundry takes you two hours each week, because you’re slow and inefficient at this chore. A professional service that has better equipment and does laundry all day every day is much more efficient than you are and can turn a profit even while charging you $50 or less. Is it worth it to spend $50 per week on a service that picks up a week’s worth of your dirty laundry and delivers it clean and neatly folded the following week? Absolutely, because at $40 per hour, two hours of your time is worth $80. This is true even when you are not using that time to earn money; you can be using the time to take your kids to the park, or to read a book, or to meet a friend for lunch, or whatever you would enjoy more than doing the laundry. Laundry is just one example; the same logic applies to any undesirable chore, like housecleaning. To me this kind of outsourcing always seemed like a no-brainer—so much so that I started doing it in my twenties, when I had a much lower income. Even then, I would choose to spend a Saturday morning rollerblading in Central Park and going to brunch at Sarabeth’s rather than cleaning my apartment. And thank the Lord that I chose to spend that money—because I now have lifelong memories of many pleasant weekends. The more money you have, the more you should be using this tactic, because your time is a lot more scarce and finite than your cash. I am constantly trading money back into time. I’ll never get more than 24 hours in a day, but I can do my utmost to free up as much of that finite time as I possibly can.

  • You know how I’ve proposed that your ability to extract enjoyment from money declines with age? Well, the corollary to that is that the older you are, the more someone should have to pay you to delay an experience. How much they should pay you is what I call your personal interest rate—which rises with your age. This idea immediately hits home for people in finance, who are used to thinking about interest rates and the time value of money. Let me explain. Suppose you’re 20 years old; at this age, you can afford to wait a year or two to have an experience, because you can typically have the same experience later. Therefore, your personal interest is low—someone doesn’t have to pay you much for you to be willing to delay the experience. Let’s say you wanted to take a trip to Mexico this summer, but your boss said to you, “I could really use you here this summer. I know you wanted to take this Mexico trip, but would you consider taking it next summer instead? I would pay you x percent of the price of the trip to do that.” Okay, interesting offer. So how high would x have to be for you to agree? 10 percent? 25 percent? Now suppose you’re 80. At this point, delaying an experience becomes much more costly, so your x would have to be much higher than when you were 20. Even if someone paid you 50 percent of the price of the trip to delay it, you should not necessarily take the offer—your personal interest rate at age 80 may be higher than 50 percent. It might even be higher than 100 percent. What happens if you are terminally ill? Once you know that you won’t be around a year from now, your personal interest rate is off the charts—there is no amount of money someone can pay you to delay a valuable experience. So your personal interest rate rises with age, but unfortunately we don’t always act as if it does. If this concept of a personal interest rate works for you, though, then keeping it in mind when you are considering buying an experience can help you decide whether it’s worth it to spend the money now or to save it for another time.  
  • Should you wait nine to ten years to get two of the experiences you could have today? It’s totally up to you, and your answer will depend a lot on the kind of experience it is—as it should. For you to even consider the choice of one now versus two or more later, the experience has to be one that can be replicated. (Once-in-a-lifetime events like weddings and graduations of family and best friends obviously can’t.) You should also think about whether the experience might actually be better if you delay it: Sometimes by waiting, you can use the extra money to buy a significantly better version of the same experience. I can tell you, for example, that experiencing Las Vegas at 40 is much better than Las Vegas at 20, assuming you have significantly more money at 40 than at 20. It’s like two different Las Vegases. I’m not saying that no 20-year-old should go to Las Vegas. My point is there are times to delay gratification, because doing so will net you more life experience points. So it depends on the experience you’re trying to have. But in general, I think you’ll find that if you ask yourself, Would I rather? you will naturally choose to delay when you’re younger and to avoid delays when you are older. If you’re 20, your answer will probably be that you’re willing to wait. Why? Because ten years on, you’ll probably still have much of your current health, and two trips are better than one. But if you’re 70, you probably don’t want to wait until you’re 80! Your declining health—which means that the experience might not be available to you if you delay having it—tells you to have the experience now.  

  • So you see, thinking in terms of Would I rather? is really getting at the same issue as the personal interest rate: The older you get, the less willing you should be to delay an experience, even if someone pays you a lot of money to do so.

  • Rule No. 7: Think of your life as distinct seasons. When my daughters were little, we loved watching Pooh’s Heffalump Movie together. I think it’s the most wonderful kids’ movie there is—a sweet, innocent story about friendship. We watched it many times. But then one day, when my younger daughter was ten, I suggested we watch the Heffalump movie and, to my astonishment, she just wasn’t interested anymore. All of a sudden, she thought she was too old for it! If someone had told me that by this date my kid would stop wanting to watch the Heffalump movie, I probably would have watched it with her a lot more. Unfortunately, in real life you rarely get an exact date for when you will no longer be able to do something—these things just seem to fade away. And until they’re gone, you don’t give their gradual demise much thought, if any. You just kind of assume that some things will last forever. But of course, they don’t. That’s sad, granted, but there’s good news: Just realizing that they don’t last forever, that everything eventually fades and dies, can make you appreciate everything more in the here and now.

  • We will all die and, as we age, our health will gradually decline. But there’s another, less obvious truth about “dying” that has important implications for how you should live your life: We all die a multitude of deaths throughout our lives.

  • My experience with the Heffalump movie is just one example. For several years, I was living the life of a dad who watches his favorite kids’ movie surrounded by his young children. But then one day that stage of my life and theirs was gone. I’m still here, of course, and I can still enjoy other experiences with my daughters—watching their soccer games and dance recitals, for example, and taking them on trips. But someday they will grow up and that version of me will disappear, too. Likewise, but for reasons of my own inevitable aging, there will eventually be a last time I ever go wave-running, and a last time I play in a poker tournament, and a last time I’ll be able to board a plane and fly somewhere exotic. Some of these final experiences will come sooner than others, but all will definitely come at some point in the (hopefully) far distant future. Now, I’m not trying to be morbid, nor am I trying to present so much in the way of gloom and doom. My point—and this is important—is that the day I die and the day I stop being able to enjoy certain experiences are two distinctly different dates. And this is true for everyone.

  • That is what I mean when I say that we die many deaths in the course of our lives: The teenager in you dies, the college student in you dies, the single unattached you dies, the version of you that’s a parent of an infant dies, and so on. Once each of these mini-deaths occurs, there’s no going back. Maybe “dies” is a bit harsh, but you get the idea: We all keep moving forward, progressing from one stage or phase of our lives to the next. So much death and doom, I know—but the upside is that we have many lives to live and to enjoy and to maximize! The challenge of maximizing these lives is not just that there’s no going back. Think back to your own past experiences. When was the very last time you went outside and played with your childhood friends? When was the very last time you talked to a beloved professor before he or she died? Even if you can recall the exact date, you probably didn’t know it in advance. Unlike school years and round-trip vacations, the end points of most periods in our lives come and go without much fanfare. The periods may overlap, but sooner or later each one comes to an end. Because of this eventual finality of all of life’s passing phases, you can delay some experiences for only so long before the window of opportunity on these experiences shuts forever. The best analogy I can think of is a set of different swimming pools, the kind some large resorts have—there’s usually a wading pool for little kids, a pool with a waterslide for older kids and teens, an adults-only pool, maybe even a pool for lap swimming and a pool just for seniors. Now, you can go in every pool for as long as you want, but only if you follow that pool’s precise rules.

  • The problem of confronting overly delayed gratification and the resulting regret doesn’t occur just once, at the end of one’s life. Rather, it can occur at every period during your life, from the bookworm teenager who missed out on all the fun of high school by making too many sacrifices for the sake of a supposedly brighter future to the middle-aged dad who repeatedly skipped irreplaceable experiences with his own teens by constantly hustling for one job promotion after another. Sometimes people realize their mistake just before the window of opportunity closes—like when one’s children are getting ready to leave the nest—and sometimes the recognition comes when it’s too late to do anything at all about it except resolve to do better in their next life stage. The saddest, though, is when the realization doesn’t hit until you’re facing your own mortality, when it really is too late to change anything and all you can do is make peace with your past. For those of us who still have time to make changes and adjustments, it can be enlightening and even motivating to read or hear about other people’s deathbed regrets.

  • Most people just have the sense that there’s no time urgency near home; they act as if they will always be able to visit that museum or that nearby beach or that friend some other time. As a result, we spend many of our evenings watching TV, and we fritter away our weekends. In short, when something feels abundant and endless, the truth is, we don’t always value it. But the reality, of course, is that the time you get to spend in each phase in your life is not that abundant, and it’s certainly not unlimited.  
  • Time buckets are a simple tool for discovering what you want your life to look like in broad strokes. Here’s what I suggest you do. Draw a timeline of your life from now to the grave, then divide it into intervals of five or ten years. Each of those intervals—say, from age 30 to 40, or from 70 to 75—is a time bucket, which is just a random grouping of years. Then think about what key experiences—activities or events—you definitely want to have during your lifetime. We all have dreams in life, but I have found that it’s extremely helpful to actually write them all down in a list. It doesn’t have to be a complete list; in fact, you can’t know right now everything you’ll ever want to do, because, as you know, new experiences and new people you meet tend to reveal unexpected additional interests that you’ll want to pursue. Life is all about discovery. And you will revisit this list later in life, too. But I’m sure you already have some ideas about which experiences you’d want to have at some point, some perhaps more than once. For example, you might want to have a child, run the Boston Marathon, hike the Himalayas, build a house, file a patent, start a business, volunteer for Doctors Without Borders, dine at a Michelin-star restaurant, attend the Sundance Film Festival, go skiing 50 times, go to the opera, take a cruise to Alaska, read 20 classic novels, attend the Super Bowl, compete in a Scrabble tournament, visit Yellowstone, see autumn in Vermont, take your kids to Disneyland three times, and so on. You get the idea. Be as creative as you want. Your list will be your own unique expression of who you are, because your life experiences are what make you who you are. Key point: As you’re making your list, don’t worry about money; money at this point is just a distraction from the overall goal, which is to envision what you want your life to be like.  

  • Then, once you have your list of items, start to drop each of your hoped-for pursuits into the specific buckets, based on when you’d ideally have each experience. For example, if you want to go skiing 50 times in your life, during which decades or five-year buckets would you like to have those ski days? Here, too, don’t think about money just yet—rather, think about the point in your life when you’d really like to have each experience. Some of these bucketing decisions will be easier than others. In fact, you probably already have a decent idea of some of the wonderful experiences you’d like to enjoy in your lifetime. As for your other “wish list” items, well, for example, you can always travel to a faraway place. But as we’ve noted, it’s always easier to travel when you’re in your forties or fifties than when you’re in your seventies or eighties. The point is, today’s the day to start actively and consciously thinking and planning for your years ahead.

  • You might notice as you fill up your time buckets that some experiences are more flexible than others. For example, you can still enjoy visiting libraries, watching classic movies, reading novels, and playing chess well into your old age. Taking a cruise can be enjoyable at just about any age. Still, as you start filling up your time buckets, you’ll probably see that the experiences you want to have in life don’t fall evenly across the ages. Instead, they naturally cluster during certain periods—taking on roughly the shape of the right side of a bell curve (see figure below). As long as you’re still ignoring the money factor, and still focusing primarily on your health and your free time, that bell will probably skew to the left—because you’ll want to have most of your experiences (especially those with physically demanding activities) when you’re at peak health to enjoy them, and before you’re constrained by the demands of parenthood. If your life plan includes children, the experiences you want to have with them will cluster a little later, probably creating a peak around your thirties and forties. Again, all that’s true even if you don’t take the cost of experiences into consideration.

  • Rule No. 8: Know when to stop growing your wealth. I recently celebrated my 50th birthday. I certainly had a wonderful time on that day, but it actually wasn’t the biggest party of my life. My biggest, best party happened five years earlier, after I had set out to plan the most memorable 45th birthday celebration I could afford. The idea was to bring together all of my family and friends from every stage of my life and to introduce them all to one of my favorite places on the planet: the serene and beautiful Caribbean island of St. Barts, where my wife and I had spent our honeymoon. Even though turning 45 is just a semi-milestone, I knew I didn’t want to wait until I turned 50 to have this experience: My mom was already old, and I wanted her to be able to fly in and to fully enjoy the celebration. (My dad was already debilitated and couldn’t travel, so it was even more important that my mom attend.) Plus my friends weren’t getting any younger, either! Who knew if there’d ever be another chance to bring all of these people together? That year was the right time bucket, and I was determined to make the party happen. I wanted to have this significant and unique memory for the rest of my life.   
  • You should find that one special point in your life when your net worth is the highest it will ever be. I call that point your net worth peak, or just “your peak.” Why should there ever be a peak—why can’t your net worth just keep going up? First, remember that, from my perspective, your overarching goal is to maximize your lifetime fulfillment—to convert your life energy to as many experience points as you can. Doing that requires figuring out the optimal allocation of your money and free time to the right ages, given the inevitability of declining health and eventual death. As a result, some years you need to save very little money (so that you can spend more on your meaningful life experiences), while other years you should save more money (so that you will have more money to enjoy more, or better, experiences later). But there’s an even more important reason for a net worth peak: your goal is to die with zero. If your net worth keeps climbing, rising from your sixties to your seventies and beyond, then there is no way you will die with zero. So, at some point you must actually start dipping into your lifetime savings; if you don’t, you will end up with unspent money, which means you haven’t acquired as many experience points as you could have. That is why I say your net worth reaches a level at which it is the highest it should ever be—after which you must start spending it down on experiences while you can still extract a lot of enjoyment from those experiences. That point, in effect, is your peak. You can’t leave the timing of the peak to chance—to get the most out of your money and your life, you must deliberately determine the date of your peak. Later in this chapter I will give you some guidance on how to know and pinpoint that date.  
  • The peak is not a number (a specific dollar amount) but a specific date (tied to your biological age). Those are two very different ways of thinking about your financial goals. Many of us have been trained to think that our plan for drawing down our savings should be framed in terms of numbers—that is, that once we reach a certain amount in savings, we can then retire and start living off those savings. And there’s no shortage of suggestions about what that number should be. The most simplistic advice, which can’t possibly be right, is for everyone to aim for a single number, such as $1 million or $1.5 million, no matter who you are or where you live. (How can $1 million in savings be the right number for both the healthy, world-traveling person living in San Francisco and the quiet homebody living in, say, Omaha?) No real retirement expert would suggest a one-size-fits-all number. Instead, these experts give more personalized advice—basing the recommended number on your actual cost of living, your life expectancy, and projected interest rates (such as a typical annual 4.5 percent rate of return after inflation). Some advisers even take into account the fact that your retirement spending won’t be constant from the start of retirement until its end—thus they tell you that you will need more money at the start of retirement (your go-go years) than when you’re 10 or 20 years in. So there are definitely various degrees of sophistication in all this retirement-planning advice. But what all this financial advice has in common is the idea of coming up with a single number—one financial target to shoot for and hit before you can safely start to draw down your savings. For those people who haven’t saved enough to live on in retirement—either because their income is too low or because they’ve been too much of a grasshopper—the focus on reaching a financial target does make sense. Without such a pinpointed target in mind, people who haven’t saved enough clearly risk ending up living out everyone’s worst-case scenario: running out of money and then being too old to go back to work. But a number should not be most people’s main goal. One reason is that, psychologically, no number will ever feel like enough. For example, let’s say the number you come up with (based on calculations like the kind financial advisers recommend) is $2 million. To reach that goal, you can easily justify working longer by telling and convincing yourself that you will be able to enjoy an even higher quality of life if you save up $2.5 million. And by that logic, you can provide for an even higher quality of life by saving $3 million. So where does it end? That’s one problem with a numerical target. To try to keep up with this moving target, you just keep working on autopilot and end up postponing the best experiences of your life. To understand why you should think in terms of a date, not a number, you need to recall that enjoying experiences requires a combination of money, free time, and health. You need all three—money alone is never enough. And for most people, accumulating more money takes time. So by working more years to build up more savings than you actually need, you are getting more of something (money), but you are losing even more of something at least as valuable (free time and health). Here’s the bottom line: More money doesn’t equal more experience points.  
  • Once you’ve finally determined your net worth peak, you must start spending down, or decumulating. This means you will be spending more in your real golden years, when you are in reasonably good shape in both health and wealth—between 45 and 60—than people usually do, because most people who save money for the future save for too late in life.  
  • Rule No. 9: Take your biggest risks when you have little to lose. Mark Cuban, the owner of the Dallas Mavericks and one of the investor “sharks” on Shark Tank, learned entrepreneurship at a young age. At 12, he was selling trash bags to his neighbors. At 16, he was buying stamps and then reselling them for profit. Growing up in a working-class family in Pittsburgh, he remembers his mom urging him to learn a trade, like laying carpet. Instead, Cuban went to study business management in college, which he paid for by giving disco dance lessons and eventually buying and running a campus pub. As it turned out, police went on to shut down the pub for underage drinking, and when Cuban graduated, he was still broke—but he now had the skills and confidence to make it in business. So after a short stint working for a bank in his hometown, the 23-year-old Cuban packed his meager belongings into an old Fiat and drove to Dallas, joining a friend from college who’d sung the city’s praises. There, the two shared an apartment with four other guys, where Cuban’s bed was a sleeping bag on a beer-stained carpet in the living room. But he kept hustling. He got a job as a bartender, and another as a salesman in a software store. And when he got fired for defying the boss at the store, he hatched plans for his own company—a computer consulting business called MicroSolutions. A few years later, when he was 32, he sold that company for $6 million and retired for five years. Bet When You Have Nothing (or Little) to Lose Eventually, Cuban came out of his early retirement and started the business that made him a multi-billionaire—but that’s really beside the point here. What’s most interesting to me about Mark Cuban’s experience is that none of the bold moves that led to this success felt risky to him—not the move to Dallas or the jobs he took there, not defying his boss, and not the business he started after getting fired. “I had nothing,” he recalled. “So I had nothing to lose, right? It was all about going for it.” What Cuban is saying is that he was facing a situation of asymmetric risk: when the upside of possible success is much greater than the downside of possible failure. When you face asymmetric risk, it makes total sense to be bold, to grab the opportunity at hand. At the extreme, when the downside is very low (or nonexistent, as in the “nothing to lose” case) and the upside is really high, it’s actually riskier not to make the bold move. The downside of not even taking a chance is emotional: potentially a lifetime of regret and wondering What if? The upside of taking a chance always includes emotional benefits—even if things don’t work out. There’s a great sense of pride at having pursued an important goal wholeheartedly. If you’ve given something your all, you’ll get a lot of positive memories out of the experience no matter what happens. That’s just another form of the memory dividend I talked about earlier: When you look back from any point during your life, you will remember your actions in a positive light. In other words, even experiences that don’t end the way you’d hoped can still yield positive memory dividends. So being bold is an investment in your future happiness—and therefore another way to maximize the area under the curve.  

  • Most opportunities don’t present an extreme asymmetry of risk, but if you think them through, you’ll often see that the downside isn’t as high as you might think.

  • Bear in mind what I said about investing in experiences, especially when you’re young. The idea is that it’s always good to invest in experiences—but it’s especially good to do it when you’re young. Well, a similar logic applies to being bold: When you’re older, some risks become more foolish than bold.