As always I have to mention that while I got this book for free (thank you XY Planning Network for feeding my personal finance book addiction), these opinions are my own and I have not been paid to write this review.
Okay. Now that that’s out of the way…
The One Page Financial Plan Review
There’s a quote by Seth Godin on the cover that reads, “This isn’t a money book, it’s a life book. And you’ll remember reading it for the rest of your life.”
After reading it myself I would have to mostly agree with this.
In fact, this is the kind of book I wish would have been available to me five years ago when I was just out of school and had a financial mess going on.
Reason being that every book I read back then, while beneficial in some ways at the time, never asked me what I wanted it out of my money. Instead, they told me what I should do with my money and proceeded to tell me what kind of mutual fund I should invest in. Or, they would tell me to sock away 15% of my salary into retirement savings which I definitely could not do when a) I was unemployed for six months b) I was underemployed for a few years and c) every spare dime I had was going toward building a business.
Clearly, these traditional methods haven’t really worked out for us. And here’s how I know this:
- According to the National Institute of Retirement the median retirement account balance for all households is $3,000 for all working age households, $12,000 for households closer to retirement.
- The 2012 National Financial Stability survey by FINRA found that 40% of Americans could not scrape of $2,000 within the next month if an emergency were to come up.
- According to a new Capital One Investments survey, 93% of millennials still distrust the market and their lack of investment knowledge makes them uneasy about actually putting some skin in the game by investing in the market. They have about 40% of their assets in cash despite pathetic interest rates and the American market’s history of having a good return.
- Although credit card debt went down during the Recession, apparently Americans have already forgotten about how credit works because in 2014 credit card debt had a net increase of $57.1 billion dollars. Yes, that’s billion with a big fat “B.” It’s also forecasted to rise 5 percent in 2015.
Clearly we have some work to do!
It’s About What You Value
Here’s what I liked most about The One Page Financial Plan, Carl Richards emphasizes that financial planning has very little to do with what your real estate agent is telling you, the hot stock your brother in law is talking about or the news – it has more to do with what you want out of your money.
He acknowledges that everyone’s situation is different so a one-size-fits-all formula like “Sock away 15% of your income for retirement” doesn’t really work. In fact, in many ways it sets us up for failure.
Instead, the entire first part of the book is dedicated toward helping people get clear on what they want out of their money (and subsequently their lives) so they can make financial decisions based on that.
My business coaching clients can tell you that this is one of the first things we do while working together. It’s because this kind of clarity works, and if you ask me it’s about damn time the financial industry approached money from this perspective.
Don’t Try to Be Perfect
The other thing I loved about this book? The practical tools he suggests don’t make you feel like you need to live up to some impossible standard.
Whether the author did this knowingly or not, the book makes you feel like you should focus on progress instead of perfection. For a Type A personality who tends to be brutally hard on herself when it comes to money, the message was very comforting and actually helped get me out of a funk.
He acknowledges that money isn’t linear because life isn’t linear, shit happens and we make mistakes. He shares his own story of having lost his home during the mortgage crisis and what it’s taken to come back from that. He also shares how he bought $10,000 worth of InfoSpace stock only to watch it depreciate to about $80 when the tech bubble burst.
Again, this is the kind of stuff the financial industry doesn’t tend to touch, at least not from an empowering perspective like Richards does.
He Explains Budgeting In One of The Best Ways I’ve Ever Heard
Budgeting sucks because it sounds like deprivation. Richards flips this on its head by explaining that budgeting is more about self-awareness than it is about depriving yourself.
The more self-aware you become about your finances, the more self-aware you become about life in general. Since how we save and spend money is extremely psychological, this comes in handy.
He Backs Up His Tips With Psychology
Once Richards gets to tips for saving, budgeting and investing he backs up his advice with psychology. Some examples below:
- Pay attention to your surprise or impulse buys. These “surprise” choices happen time and time again due to psychological factors like marketing and emotions.
- Take the thinking out of saving. If you have to manually transfer money you are less likely to actually do it. Part of the reason people don’t save those $500 bucks they say they are working toward is because they never get around to actually moving the money over.
- He emphasizes investing like a scientist, meaning do your research and keep your emotions out of it. (As someone who invests I can tell you that yes, it is that basic.)
He also touches upon making decisions like buying insurance, buying a home, paying down a mortgage and all these real life money conundrums we have to deal with on a daily basis.
It’s An Easy Read
Guys, if I had to estimate how long it took me to read this book cover to cover I’d say it was about 3 hours. There’s is nothing complicated, salesy or inflated about it’s content. Richards is clearly a straight shooter and that makes financial stuff a whole lot easier to read and understand.
Of course there’s no way for me to explain every detail of this book in a blog post, for that you’ll just have to read it for yourself.
Want to read more after checking out my One Page Financial Plan review?