I ran across this book by mistake and I decided to give it a go seeing that I’ve had my fill of fantasy novels. The book shows a practical approach in managing money and gives positive and negative examples along the way. I had to skip a few chapters as I felt they were too preachy and some which don’t actually apply to me as a person (but who knows, they might apply to someone else).
What I liked
How to educate your kids about money
As a parent, strive to strike a balance here. You want to instruct your kids about money so that they understand how it works and can take responsibility, but you don’t want to do it so much or so intensely that your kids treat money in unbalanced ways. At all times, you want to maintain a healthy relationship with money yourself (Chapter 3), so that you can pass positive attitudes, behaviors, and values on to your kids. Money is a loaded topic, and when it’s handled poorly, the effects can ricochet in subtle ways down the generations, leading to chronically poor decision-making, not to mention damaged relationships and emotional turmoil. Reflect on how you talk about money at home, and how you actually spend it. Make sure the messages you’re sending through your behavior and spoken words are the right ones.
Jill Schlesinger seems to have a few great ideas in this chapter. She shows the pros and cons of parenting a child when you have (or don’t have) money and the effects it can have over your kids. Too much money and they’re spoiled and entitled. Too little, and the kids will feel like they’re missing out and will want to over-compensate for their deprived upbringing with their own kids, thus creating entitled brats again (the cycle is never broken). There’s also the other approach of teaching your kids about sensible saving and not over-obsessing over possessions.
There’s the example of Steven who was raised with parents who taught him that he’ll never amount to anything if he doesn’t have money.
Their son, Steven, heard all this and understood that a) money was all that mattered; b) if you didn’t make a lot of it, you didn’t “succeed”; and c) if you didn’t succeed, you weren’t worth very much as a person. Before Steven had even graduated from high school, he and his parents had hatched an elaborate strategy to turn him into a multimillionaire. He would study finance in college, land a job at an investment bank or consulting firm, move up the ranks, get an MBA, go back to his finance job, and eventually leave to work at a start-up, where he, too, would be showered with IPO cash. Following this path, he would make “real money.”
I also liked the chapter called
SIX PARENTING TIPS TO LIVE BY
- Communicate Transparently Many parents I meet don’t communicate enough about money with their kids. They leave the family finances shrouded in mystery. And be sure to emphasize, like my father did, that money isn’t that important—other parts of life matter more.
- Keep Your Money Problems to Yourself Don’t regard transparency as a license to unload your money problems on your kids.
- Get Them Jobs One of the best ways to teach your kids healthy attitudes and habits around money is to encourage them to work.
- Be Careful When Helping Out Your Kids Just because your kids are working doesn’t mean they should pay for everything .
- Cultivate Financial Literacy As your kids grow up, explain the basics of money to them. As research has shown, kids start to form money habits by age seven, so it’s imperative to start early. If you decide that you will provide allowances to your kids, start when they’re six. Most experts agree that you shouldn’t base an allowance on the performance of household chores, but rather on what you already spend on small, discretionary items your child likes but doesn’t need (toys, treats, and so on). Make it clear that the amount you’re giving replaces what you otherwise would have spent on such items. Encourage your kids to save 10 percent of their allowance by opening a savings account for them and explaining the concept of earning interest.
- Nurture Feelings of Appreciation. As human beings, we’ll all feel jealous and resentful of others at times. That’s okay. To raise kids with healthy attitudes about money, try to put the spotlight as much as possible on all your family has, not what your family lacks in comparison to others.
What I didn’t like about the book
Target audience is in the recently retired zone, among people who have no idea what to invest their pensions in and scared about not losing it.
There’s a lot of doom and gloom and scare tactics that you normally observe when people are trying to sell you a product you don’t need – like an additional life insurance or talking about putting money away in an ISA account. Boring things when you’re young. I have this odd feeling she wrote this book with the intention of gaining some (older) new customers for her financial business using the book as proof of knowledge.
Bad things happen to us all the time, and we just have to accept it. We’re not special. We’re just like everyone else. We don’t have to dwell on the dark sides of life, but in my experience, planning your estate actually frees you of a lot of the worries that would otherwise pull at you.
Also, most of the examples have rich American couples earning 6 figures and wondering what to do with their income. Or people being left millions in inheritance. Or people retiring with “only” half a million in savings. In other parts of the world, people and their entire extended family can live off such amounts, but apparently, in America, it’s not enough to get by.
Thirteen Smart Things Smart People Should Do Every Month…
- Review your bank account and credit card statements: Pay attention to your spending patterns. Is anything unusual or unexplained? Look out for unusual activity in your accounts that might suggest that you have been a victim of identity fraud. Think about how you feel about your financial life: Are you stressed out? Has a certain money issue been bothering you, even keeping you up at night over the past month? Did you veer off plan? Did you spend money unexpectedly? If so, take action to get back on track.
- Think about pending purchases of financial products: Did someone pitch you a product over the past month, like an insurance policy or a new mutual fund? If you’re about to sign on the dotted line, take a few minutes to review the product and confirm that you fully understand it. If you don’t understand it, seek the guidance of a fiduciary adviser.
- Reflect on your behaviors around investments: Did certain market moves you made freak you out? Did you deviate from your financial plan and try to time the market? If so, take stock, and recommit yourself to your financial plan and the passive investing philosophy.
- Review your aging parents’ financial situation: Did anything change in your parents’ lives that might require action on your part? If they suffered a health setback, what are the financial implications? What conversations do you need to have with them or other family re-balancing manually, be sure to do this, but only on retirement accounts that are not taxable, so as not to create unnecessary tax consequences.
- Change all passwords on your financial accounts: Do I really need to nudge you on this? Um, yeah, I do.
- Every Year…
- Review your investments: Are you comfortable with the level of risk you’ve taken on, and the returns you’re making for that level of risk? Be realistic. If the market is up by ten percentage points, but your account is up by just five, don’t get so upset if you’ve chosen to take on only moderate risk. Also, inquire whether fees on your account have changed. Be sure to rebalance your taxable accounts and consider whether you would like to make any tax-related moves, like taking losses against gains or making charitable gifts with highly appreciated securities. Perform a tax audit: Every year after tax time, review whether you encountered any surprises while preparing your taxes. Do you need to change your withholding for the upcoming tax year? Doing so can free up money during the year to fund other goals or prevent a nasty surprise next year. Be sure to also check in before the end of the calendar year to determine whether you need to make any new charitable contributions or if you should convert a traditional IRA into a Roth IRA.
- Secure your identity: Go to annualcreditreport.com for a free review of your credit record. If you find a mistake, stay on top of it with the credit reporting agencies until the situation is rectified. Check in on college planning for your kids: Are you saving adequately for your kids’ education? If they’re in high school, have you spoken with them about their college choices and what options the family can realistically afford?
- Every Three Years…
- Review your homeowner and life insurance policies: Did the value of your property change? Did you have more kids? Make sure you’re adequately covered.
- Review your estate plan: Are your documents up-to-date? Have any changes occurred in your life or your family that might affect your plans? Do you need to change the guardian for your kids listed on your will or the beneficiaries of your retirement accounts?