The only money guide you’ll require – Scott Pape

This is very interesting book written by Australian author Mr.Scott Pape.

I loved the way the author discussed every aspect of finance in a smooth transition from zero finance management to holistic finance management.

The words of wisdom from this book are:

  • Nature has an easy-to-understand pattern: plant, grow and harvest. It’s the same with your money.
  • We’ll plant the seeds of wealth. We’ll watch them grow. And then, we’ll enjoy a life-changing harvest.

    Build a Budget like this:
  • Knowing how much it costs to run ‘You, Inc.’ — actually having a monthly dollar figure — is powerful.
  • Get out your phone and calculate 60 per cent of your take-home pay. This is your Barefoot Benchmark — how much you should be spending on bare-bones living expenses.
  • Next, work out what it actually costs to be you (think shelter, groceries and bills). If it’s more than your Barefoot Benchmark figure, look at ways to cut costs.
  • Finally, calculate your 10–10–20 figures (10 per cent of your take- home pay to Splurge, 10 per cent to Smile, and 20 per cent to Fire Extinguisher). Now you have your numbers, we’re going to get crafty.
  • I want you to draw your own serviette, right here. Put in your numbers, name your accounts, and actually see where your money is going. Now you have a simple, visual plan. Now you are in control.

The author has devised the following steps for finance Management:

Step 1: Schedule a Monthly Barefoot Date Night

Truth is, most people totally over estimate what they can achieve in one year, but totally under estimate what they can do in six years.

So to reiterate: you’re going to schedule five weekly Barefoot Date Nights — after which it’s monthly, forever.

Step 2: Set Up Your Buckets

Yes, our entire money management plan consists of dividing our income into three ‘buckets’:
• a Blow Bucket, for daily expenses, the occasional splurge and some extra cash to fight financial fires
• a Mojo Bucket, to provide some ‘safety money’
• a Grow Bucket, to build long-term wealth and total security.

Step 3: Domino Your Debts

This is similar to your Debt Snowball Method (Dave Ramsey style).

Step 4: Buy Your Home

Build an investment portfolio to buy an house.
When buying your first home, you should save a 20 per cent deposit.

Step 5: Supercharge Your Wealth

After 15 years of detailed research, the author of the survey, Deakin University Emeritus Professor Bob Cummins, says he’s finally cracked the code to wellbeing, which he has dubbed the ‘Golden triangle of happiness’:
1. A sense of purpose
2. Strong personal relationship/s
3. Financial control.

Step 6: Boost Your Mojo to Three Months

This is similar to boosting our Emergency Fund.

Step 7: Get the Banker off Your Back
This consists of getting rid of your Mortgage (Home Loan) earlier.

Step 8: Nail Your Retirement Number
One should know this number to nail it.

Step 9: Leave a Legacy

Build wealth for posterity. (This reminds me of Dave Ramsey)

The gist of the book is:

It is all about momentum. When you feel in control and have a taste for winning, it’ll transform your life.

I definitely recommend reading this book because I liked the story woven by the author. If you have not read Dave Ramsey yet then may be you should pick up this book first along with your spouse.