One calculation I wish I would have learned sooner and it’s not about money.

I recently read the book titled Die With Zero, authored by Bill Perkins. As the title suggests it is about money, but not totally in the way you think. In the book he discussed in detail the concept called “ROE” (Return on Experiences). And I wish I would have learned this concept earlier in my life.

So what is Return on Experiences? For the remaining part of this post I will just use the acronym (ROE).

In the book the author talks about a friend of his who is looking at purchasing a property that is located in a destination/resort area. His friend is looking at the property as a place for himself and his family primarily, but secondarily his friend would like for it to make business sense as well.

In discussing the property with Bill (the author), the author asks him how much will the experiences that he has with his kids and family at the property over the next twenty years be worth to him? The friend responds with “there really is no way to quantify it”. The friend says that the memories and the experiences will probably be something they will talk about for the rest of their lives.

Then the author responds with then the ROI (Return on investment) of the property from an investment standpoint shouldn’t matter then, because the return on experiences is infinite.

I think it is easy to see the point here. I can only speak for me here, but so often focusing on the investment or the money prevents you from having an experience that the memories will last forever.

I read this book on the plane ride to a trip to Cabo, Mexico. We met another couple in Cabo and spent four days with them. We made many memories on this trip, that I have no doubt we will talk about for many years.

However, since I was very aware of certain things, because of reading this book. I noticed that throughout the trip, my friend and I spent many hours talking about all of the many experiences we had from our twenty year relationship. All of those memories and experiences is what we relived over and over.

Return on experiences shouldn’t just be looked at for the experience itself. That experience will pay your for years and years to come as you relive those experiences with the people you enjoyed them with.

In the book, the author talks about something called a personal interest rate. You know what an interest rate is. It is either a calculation of additional money you owe when you borrow money. Or it can be a rate of money that is owed to you by an entity based on an investment of deposit of your money.

The personal interest rate as the author describes in the book means the older you get the more someone should have to pay you to delay an experience. The reason for this, is because the book shows research and study after study how the older you get the less people actually enjoy and do something with the money they have.

If you are younger, lets say in your twenties, the cost of you delaying a trip to Mexico is pretty low. You can go next summer. So the personal interest rate is low. But lets say you are 70? Then by delaying one year to go to Mexico should have a much higher interest rate, because in one year a lot could change. The reality is, the older you get then you should not delay things, because it gets more difficult to do things and more things can happen the older you get.

In the book the author mentions that there are three things that are necessary for us to get the most out of life and you rarely have all three at once. The three things are health, free time, and money.

When you are young, you typically have great health, maybe some free time, and most likely not a lot of money. When you are old. You have a lot of free time, more money, and in some cases your health isn’t the best. That is the reality.

The author talks about something called time buckets versus a bucket list. A bucket list is just a check list of things you would like to do before you die. The author suggests a different approach. Put certain things into buckets for certain time periods in your life.

For example: If you want to hike the mountains in Europe. Most likely you wouldn’t want to do that in your fifties or sixties. This is something you most likely need to do in your thirties or forties. You want to do this when you have enough money and free time to do it. But also, while your health will allow you to enjoy it.

I could unpack the entire book within one post, but you wouldn’t read it. I encourage you to pick up the book.

My hope is that you start looking at expenses as investments in experiences. I wish I would have done more of this throughout my life. You can’t do everything you want to do and justify this way, but you most likely can do more of it and will be just fine.

To your success and your future.

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