Smart couples finish rich, by David Bach.

A review for Investment Mastery by Paul Browning.

Introduction.

I found the beginning of this book annoying. David Bach talks about when he was
first married. He says that rather than paying automatically into a joint account to
finance the weekly shopping and rather than paying most of the bills by two cheques
in proportion to his income and his wife's income, he in stead engaged in blazing
rows with his wife about who pays which bill!

This is probably why he ended up writing this particular book. Although David
worked as a financial planner since that time and focused on helping couples to be
"smart" and to "finish rich", and although he studied the subject in some depth and
had stories to tell about his experiences by the time he wrote this book after having
been married for approximately 4 years, he still retained a strange idea that fighting
with ones' wife is the first thing that he needs to teach you not to do.

Clearly he had a problem with his own attitude at the time that he was married. I
shall try very hard not to comment further on this subject, but in this review I have
reported what the book says. The book is very American and was written a little
while ago, so some of it does not seem to be directly applicable to the UK in 2016,
but having said that I think it merits closer consideration than I have been able to
devote to it. I intend to look at the book again at a later time to see how I can make
something worthwhile of it, but right now my concern is just to complete this initial
review. David Bach is a well meaning person who genuinely aims to help people,
and this book includes some good ideas.

In the pages that follow David explains various actions that you need to take if you
are going to finish rich. They include;
(1) If you are going to get rich you need to learn to get rich. Take classes, read
books, study the stock market and make friends with rich people.
(2) Go on the financial journey together with your partner, the sooner you start
working together the more quickly you will dramatically improve your financial picture.
David says on page 8; "Can the process of working on your finances as a couple
really be fun? Absolutely, in fact there are few things in a relationship that can do
more to solidify your bond and make you a stronger couple than planning your
financial future together."
(3) David would like you to use the book as a road map, and think of him as a friendly
guide. "Do yourself a favour and invest the few hours necessary to really read this
book and put the nine steps to work". "If you do them they will change your life",
David says on page 12. The next nine chapters each cover one of the nine steps.
You can do two or three of them five or six of them or all nine of them, they are each
self contained, but each builds on the previous ones.
Step 1.
Learn the facts about couples and money.
This chapter starts with two contrasting stories, one couple didn't plan, the other
couple did. "It's not just about money". Communicate. Plan. Finish rich. That is
David's goal for you. The chapter proceeds to look at the facts and myths about
couples and money;
Myth 1; If we love each other we won't fight about money. (My comment; See what I
mean? Why not, we don't fight full stop?! ...OK I said I wasn't going to comment
further so I'll shut up nicely.)
Fact 1; Money has very little to do with love ... and a lot to do with how much you
fight. (?!)
Myth 2; It takes money to make money.
Fact 2; It takes very little money to make money ... as long as you are patient and
disciplined. David talks about investing in stocks and bonds in this part of his book,
saying that there is still time, even if you are in your fifties. He says that most people
overestimate what they can do financially in a year, and underestimate what they can
do financially in a few decades.
Myth 3; We don't make enough to be investors.
Fact 3; Everyone makes enough to invest. David includes a chart here that shows
that you are likely to earn a lot of money in a lifetime.
Myth 4; Taxes and inflation are now under control.
Fact 4; Taxes and inflation are never going to be completely under control.
Myth 5; If we don't talk about money, everything will work out okay.
Fact 5; If the two of you don't start talking about money you'll more than likely die
broke.
Step 2.
Determine the true purpose of money in your life.
This chapter has something magic about it. I read part of it to my wife, and her
reaction was to tidy up part of the house! I cannot explain how that happened, but I
am rather grateful to David for it. He was talking about; What is the purpose of
money in your life? What are your values? He described a seminar when he asked
such questions of a room full of attendee couples, and came up with the following list
of values;
Teaching my children to be good people. Balance. Security. To have fun. Freedom.
Confidence. Happiness. Peace of mind. Excitement. Power. Passion. Love.
Romance. Marriage. Fulfilment. Family. Friends. Health. Spirituality.
Independence. Growth. Creativity. Adventure. Helping others. Making a difference.
...and about 20 others.
David says money helps people be; to live in a particular way that defines who they
are.
David says money helps people do; to take actions that help create the kind of lives
they want.
David says money helps people to have; to buy stuff.
David says that many people spend so much time on the having and doing that they
never get around to considering who they are and who they want to be. He
recommends looking really deeply at what is most important to you and planning your
finances around that. What do you value? Plan your life around those things. David
has a technique that he calls the value circle to create a purpose focused financial
plan where he makes a list of the top 5 values for each member of a couple, and
writes them down in a circle. The use of a circle implies that you need to put enough
effort into all of your top values so that your life doesn't become unbalanced. Then,
he looks at each value in turn to see if the person's financial behaviour matches their
value circle. For example, it is no good just making lots of money if that is your only
achievement. He then suggests allocating be, do and have items to each value. To
create your own value circle, answer the following question; What values are really
important to you, what is the purpose of money in your life? Focus on values, not
goals, things or stuff to buy. Values are about being, they define a way of life. Goals
tend to be about doing and having, they involve stuff.
Step 3.
Plan together...win together.
This chapter is about creating your purpose focused financial plan by following 9
rules;
Rule 1; make sure your goals are based on your values,
Rule 2; make your goals specific, and with a finish line,
Rule 3; put your top five goals in writing,
Rule 4; start taking action towards your goals within 48 hours,
Rule 5; enlist help,
Rule 6; get a rough idea how much money it will cost to achieve your goals,
Rule 7; make sure your goals match your values as a couple,
It is about planning leading to big rewards, about failing to plan together being the
same thing as planning to fail.
It is about the fundamental truths of financial planning;
1 you can't plan your finances if you don't know where you are starting from,
2 you can't plan your finances if you don't know where you want to end up,
3 in order to stay on track from your starting point to your destination, you have to
monitor your progress.
It is about giving yourself a financial cleanup. It is about a file folder system. It is
about talking your values and making them real. It is about; Twelve months from
now, what five specific things would you need to have accomplished in order to feel
you have made great financial progress in your life? The chapter finishes with a
template to fill in your purpose focused financial plan, and congratulations from David
for getting this far reading his book.
Step 4.
The couples' latté factor.
This chapter is about drinking less coffee.
Step 5.
Build your retirement basket.
This chapter is about your retirement basket. Pay yourself first. Commit to it now. If
you want to be really rich you should save 15% of your income. Where to put the
money you paid yourself, (a pension). There is a list of useful websites;
morningstar.com ranks funds, finance.yahoo.com offers stock analysis, portfolio
tracking etc, means.com ranks funds by performance, financenter.com provides
calculators for everything, quicken.com provides expense tracking software,
gomez.com compares online brokers, banks, insurance companies and other
financial institutions, mutuals.com sells and manages mutual funds. Join your
company pension scheme. This chapter includes the finish rich rules of retirement
investing; rule 1; know what your money is doing, rule 2; invest for growth, rule 3;
allocate your assets so you maximise return and minimise risk, rule 4; invest in your
company's stock, but do your homework, rule 5; read all of step 8, which includes the
biggest mistakes investors make.
Step 6.
Build your security basket.
This chapter is about your security basket. Start planning seriously for life's
unexpected problems. Life is messy. Hope for the best but prepare for the worst.
Six things to do right away to protect yourselves; 1 set aside a cushion of cash, 2
write a will; When you die what should be done with your property? What happens if
you both die at the same time? What happens if one of you gets sick or becomes
incapacitated? Set up a living trust, which is a legal document that allows you to
transfer ownership of any of your assets to a trust while you are alive, and designates
who should be given those assets when you die. Name yourself as the trustee. This
can be an alternative to probate. 3 buy health coverage. 4 protect those who
depend on you with life insurance. 5 protect yourselves and your incomes with
disability insurance & long term care coverage.
Step 7.
Build your dream basket.
This chapter is about your dream basket. Almost anything is possible if you plan for
it.
Some dreams don't require money, but most do, so create a dream basket that will
enable you to pay for your dreams. Write down your top five dreams and ask your
partner to do the same. What fun things would you really like to do?
Step 8.
Learn to avoid the ten biggest financial mistakes couples make.
They are; 1 having a 30 year mortgage, 2 not taking credit card debt seriously, 3
trying to get rich quick by day trading, 4 buying stocks on margin, 5 not starting a
college saving plan soon enough, 6 not teaching your kids about money, 7 not
signing a prenuptial agreement, 8 not having a greater purpose beyond the two of
you, 9 not figuring out who is responsible for what, 10 not getting professional
financial advice, this includes eight golden rules for hiring a financial advisor; 1 hire
locally, 2 get a referral, 3 check out the advisor's background, 4 be prepared, 5 ask
about his philosophy, 6 go with your gut, 7 be prepared to pay, 8 if you can't get a
referral, do your own research.
Step 9.
Increase your income by 10% in 9 weeks.
This chapter is about asking for a pay rise.
Three words that make a difference.
The three words " I love you" cannot be heard enough.
Appendices
Various forms that can be completed.

As identified earlier, this book merits a more in depth study and it merits actions to be
taken in conjunction with my partner. If my wife takes an interest in this book, I look
forward to investigating this further with her with a view to improving our lives.