I love reading the blog of J.D.Roth ( https://www.getrichslowly.org/ ) So I was very keen to read his book and I enjoyed reading it.
This book is really a good guide for finance and it is indeed the missing manual for newbies. It provides a lot of books and websites for people who are really trying to improve their finances.
The words of wisdom from the book are:
- SMART goals are Specific, Measurable, Achievable, Relevant, and Timed.
- The 60% Solution
- 60% to committed expenses like taxes, clothing, basic living expenses, insurance, charity (including tithing), and regular bills (like cable).
- 10% to short-term savings for things like vacations, home repairs, new appliances, and so on.
- 10% to long-term savings including car purchases, home renovations, emergency savings, and paying down debt.
- 10% to retirement savings through Roth IRAs, 401(k)s, and the like.
- 10% for fun money you can spend on anything you want: hobbies, dining out.
- Remember: Your goal isn’t to keep a budget, it’s to live a rich and happy life. Your budget is merely a tool to help you build a successful financial life. Just as you have to tinker with your lawnmower—adjust the belts, change the oil, sharpen the blade—so too you’ll need to adjust your budget from time to time.
- Maximizers only accept the best. Every time they make a purchase (or do anything else), they need to be sure they’ve made the best possible decision.
- Satisficers are willing to settle for “good enough.” These people still have expectations and standards, but they’re willing to settle for something other than the absolute best in order to save time, money, or effort.
- “Be industrious and frugal, and you will be rich.” —Benjamin Franklin
- In the book Clutter’s Last Stand, Don Aslett argues that the value is in the using, not the owning. “No matter how you look at it,” he writes, “clutter is a poor investment.” So buy only what you need.
- “Your greatest asset is your earning ability.” —Brian Tracy
- Tyler Durden says in Fight Club, “You’re not your job. You’re not how much money you have in the bank. You’re not the car you drive. You’re not the contents of your wallet.” When you stop wanting to always have the newest, best things and you realize that money is in no way connected to your self-worth, you’ll not only be better at managing your finances, you’ll be happier.
- “Count the dollars, not the pennies.” —Elizabeth Warren
- Like so much of personal finance, saving on travel comes down to two things: doing it yourself and going against the flow.
- House is made of brick and mortar, but home is made by the people who live there.” —M.K. Soni
- Generally, once you’ve saved 20% for a down payment and you can afford monthly mortgage payments, you’re ready to start looking for a home. Yes, you can buy a home with a smaller down payment, but it’ll cost you in the long run.
- As comedian Jerry Seinfeld says, “A lawyer is basically the person that knows the rules of the country. We’re all throwing the dice, playing the game, moving our pieces around the board, but if there’s a problem, the lawyer is the only person who’s read the inside of the top of the box.”
- Allan Roth writes, “If you can’t explain your investment strategy and every product in your portfolio to a second grader, you are probably doing something wrong.” People tend to think that the more complicated something is, the better it must be, especially when it comes to finances.
- Remember that nobody cares more about your money than you do; it’s your job to protect your savings from people with clever-sounding get-rich-quick schemes. The bottom line: Never invest in something you don’t understand.
- The secret to financial success is mastering the basics: saving, asset allocation, and matching the market.
- John Bogle writes, “Rebalancing is a personal choice, not a choice that statistics can validate. There’s nothing the matter with doing it…but also no reason to slavishly worry about small changes…” In other words, rebalance if your asset allocation is way out of line but don’t worry about small changes—especially if you’d end up paying a lot of fees by rebalancing.
- “When you get to my age, you’ll measure success in life by how many of the people you want to have love you actually do love you. That’s the ultimate test of how you’ve lived your life.” —Warren Buffett
- But be careful about offering your opinion unless someone asks for it.
The most important lesson from the book is:
Ultimately, the most important thing isn’t how you invest, but that you do invest.