Monday, June 18, 2007

Smart Couples Finish Rich

I'm spending the week in a training course out of town and so had some time to do some reading. A couple of months ago a blogger had listed Smart Couples Finish Rich as one of his top 10 books, so I spent my flight reading it. Overall, I would recommend this book and wish I had read and followed such a book 35 years ago. I hope I can impart the attitude of saving while young on my children. The power of compounding has to be one of the greatest discoveries of finance.

My spouse and I are in very different places financially. She grew up in China during the Cultural Revolution and knows poverty that I cannot even begin to imagine. Her focus on security is primary in every thing she does and debt drives her crazy. She started reading this book before I left and couldn't put it down. I'm sure she'll have a list of things for me to do once I get back to improve our finances, which is great.

I don't think Smart Couples Finish Rich is the best finance book I've read but it does have some good points that everyone ought to be aware of:
  • starting to save when you are very young
  • maxing out your 401k
  • paying yourself first (the 401k contribution is the key here)
  • making a written financial plan
  • doing something towards your goals now
  • having adequate life and disability insurance
  • having your financial records organized
  • having a dream that both you and your spouse work toward

When I was involved in Amway (now Quixtar), the leaders talked incessantly about having a dream. It's something I have always believed in. Many people won't voice their dreams for fear that they will be laughed at. However, I don't believe that you can be motivated long term just to reduce debt or have $1M at retirement. You've got to have something exciting that draws you as well.

There are some parts of the book that are weak, but it's worth going to the library and getting a copy.

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