Franco Modigliani, who went on to win the Nobel Prize, posited something that came to be known as the Life-Cycle Hypothesis (LCH)—an idea about how people manage their spending and saving to try to get the most from their money across their life span. He basically said that making the most of your money in the course of your life requires that, as another economist put it, “wealth will decline to zero by the date of death.” In other words, if you know when you will die, you must die with zero—because if you don’t, you are not getting maximum enjoyment (utility) from your money.
Perkins, Bill. Die With Zero (p. 46). HarperCollins. Kindle Edition.
Rule No. 1: Maximize your positive life experiences.
Rule No. 2: Start investing in experiences early.
Rule No. 3: Aim to die with zero.
Rule No. 4: Use all available tools to help you die with zero.
Rule No. 5: Give money to your children or to charity when it has the most impact.
Rule No. 6: Don’t live your life on autopilot.
Rule No. 7: Think of your life as distinct seasons.
Rule No. 8: Know when to stop growing your wealth.
Rule No. 9: Take your biggest risks when you have little to lose.