I have had several clients mention to me this year that they have read the book “Die with Zero” by Bill Perkins. So, I recently read the book which is about how to get the most out of your money and life. I didn’t realize that the author has ties to Iowa by graduating from the University of Iowa and playing for the Hawkeyes football team in the late 80s. He graduated with a degree in electrical engineering but became successful later in life by being an energy trader and working for and then starting his own hedge fund.
The book’s premise is that rather than endlessly accumulating wealth, we should focus on maximizing experiences during life and especially when we are young. The author challenges the cultural norms in our country that we should defer most of our joy until retirement and argues that true wealth is not measured in dollars but in meaningful experiences. The book’s title comes from the argument that we should literally die with as close to zero dollars as possible by spending our money on experiences and enjoyment during life to the maximum extent possible.
This is obviously an extreme view that is meant to challenge most people’s current way of thinking. While I don’t agree with everything the author promotes, I do think that the book presents several valid arguments and here is a summary of the key points.
The Power of Experiences and “Memory Dividends”
One of the author’s strongest viewpoints is that we should spend money on experiences while we are young. He explains his idea of “memory dividends” where having experiences earlier in life are more valuable because they can bring joy for a longer period. The memories from those experiences pay off in the form of happiness every time we think of them, like an investment that pays dividends out over time.
The author gives an example of how he took a trip to Europe in his early twenties even though he didn’t have the money to pay for it. He borrowed money to go on the trip, and he said it was one of the best decisions of his life because of the lifelong memories and perspective it gave him. This is something that most financial advisors would discourage since getting into debt at a young age can be very detrimental to one’s long-term financial success. I would also not encourage people to go into debt but the idea of traveling and having experiences while we are younger and healthier seems valid.
I have worked with many clients who waited too long to travel to the places on their “bucket” list, and their health failed them before they could complete their list. When I was in college, I spent nearly all my savings that I had accrued working in the summers to travel while studying abroad in Australia. I can also say that this was some of the best money I have ever spent because of the memories and perspective I gained. Ironically, I happened to read this book while vacationing with friends after one of my best friends had a health scare. He spent over a month in the hospital, and we took a big trip to celebrate his recovery noting to each other that we need to enjoy life and experiences together while we can.
While having experiences while we are younger is beneficial, it is also important that we try to save money when we are young. The benefits of compound interest by saving early in life are just too great to pass up. One of my favorite examples of saving money early is that if a person saves $7,000 per year (the max amount to a Roth IRA) for just 10 years from age 25-34, that person will accumulate $1 million by age 65 (assuming an 8% annual return)!
Giving to Family During Life
Another one of the author’s strongest opinions was that we should give money to family during life rather than waiting until after we die. He argues that money is most valuable to our children when they are younger and need it most, often between their 20s and 40s. At this stage of their life they are establishing careers, buying homes, and raising young families. Financial gifts during this time can create real blessings such as paying off student loans or helping on a home down payment. Not being burdened by debt can give our kids a big leg up in life. We also get to enjoy seeing the benefits of our giving in our loved one’s lives and this creates a type of “return on investment” of our wealth. By contrast, giving an inheritance to our kids in their 60s or 70s is often too late to significantly change a person’s life trajectory and we don’t get to witness any of the benefits.
While helping our children or loved ones when they truly need it can be a blessing, wisdom is certainly needed I believe. The goal is to help make our children succeed in life and become good people, but giving too much too soon can have the opposite effect. Each child is different and we need to be careful not to foster dependence or entitlement while making these gifts.
Giving to Charity During Life
While the author does not spend a lot of time writing about giving money to charity, he does make the argument that giving money to charity during life is better than waiting until death. He makes some of the same points as his argument to gift money to our family during life. We get to see the impact of our gifts and experience the joy of making a difference in other people’s lives that are in need. We can also set a good example with our generosity and inspire others to give as well which will multiply our impact.
He also makes the point that giving is most powerful when it happens sooner rather than later. Most causes that we give to need the money now and can impact and save lives immediately. Delaying the gift delays the good that can be done. To emphasize this point, the author told the story of a nun who saved up a large amount of money (about $3 million) and planned to leave it all to charity when she died. She lived very modestly and gave little to charity during her lifetime because she wanted to make this one big charitable gift at death. The author goes as far as calling the nun “selfish” for delaying her gift and waiting to help others until after she died. He claims that by waiting she deprived both herself and others of the joy and impact that her gift could have produced earlier.
I think it is unfair to call the nun selfish in this example because she was generous with her money and it could still make a very significant impact after her death. But the author makes valid points on the benefits of giving during life, and living generously is one of the most meaningful uses of our wealth.
Overall, I really enjoyed this book and thought the author did a good job of trying to give people a different perspective on their money. In some respects, it felt like the book’s main message of maximizing our experiences during life was a little shallow, like the author was encouraging people to seek a life of maximizing personal pleasure. However, that message was balanced with the ideas of also living generously by giving to our families or those in need during life as well.
I think one of the best messages was that we should not let fear control our lives or money. In my 20+ years in financial planning, I have found that people are often held back by fear. The fear is that something unforeseen or the worst-case scenario will happen and that they will run out of money. This causes many people to save well beyond their needs and create too large of a safety net. This leads them to missing out on blessing themselves or others.
However, the author of the book probably goes too far by encouraging people to die with zero and essentially have no safety net. I think having a financial cushion is prudent and that giving away money to family or charity at death is admirable. We don’t need a huge safety net, and we don’t need to wait until retirement to enjoy our money. Instead, we can be intentional to live a balanced life of work, leisure, and purpose and that probably does mean spending money on experiences, helping our children, and being generous to those in need earlier in life.