Because this month was seemingly all about women and money (Are Financially Independent Women a turn on? drew a record 89 responses on my blog, woot!), I thought I would do a giveaway for a book tailored to women, as well. I’m a big fan of David Bach’s books, namely The Automatic Millionaire. He’s the one who taught me that paying yourself first is the way to go, and that if we skip daily luxuries such as that Starbucks latte, we will be on our way to financial freedom.
When I stumbled upon Smart Women Finish Rich: 9 Steps to Achieving Financial Security and Funding your Dreams at a bookstore, I had thought it might just be another spin off of his bestselling book, with a focus on women. I was pleasantly surprised and actually think this book is better than The Automatic Millionaire.
He begins by talking about why women nowadays are taking control of their financial futures, and gives anecdotal evidence as to why this is crucial (more divorces, women are in the dark about the finances because the husband usually handles the finances). He then goes on to explain WHY we need to do more financial planning than men- we live longer than men (sorry guys!), we earn less than men, oftentimes women are the ones let go by corporate downsizing… the list goes on.
In the next step, David asks you to re-evaluate your values, and list them. Money is a vehicle in which we can express our values. He says men often seek to gain money for the sake of gaining money (e.g. “I want to make $100,000 a year by the time I hit 30”) and women seek money to so they can use that money to manifest their values (be it: have more time for family life, being financially secure etc.). I really enjoyed this chapter because it made me think hard about where my values lie- this is something I don’t do often, admittedly.
In the next few chapters, he talks about finding where your money is. Really finding out where your money is, and how much you’re paying in commissions and fees etc. how much is in your registered portfolios, how much is in your non-registered portfolios, how much cash you hold. The nitty gritty.
Of course a David Bach book isn’t complete without mention of the Latte Factor, in which he explains that if you cut out your daily needs (like that daily lunch out, daily coffee and a muffin) you can amass some serious wealth. He does use a 12% annual return, which to me sounds somewhat unrealistic, though.
David Bach’s Grandma instilled some pretty sage advice about money into little David Bach. So much so that he writes about her advice, namely the three-basket approach to financial security. One is your security basket, one is your retirement basket, and one is your dream basket. Dreams are categorized into short term dreams and long term dreams. You know which basket is my favourite! Dreams!! 🙂 In this section, he goes into detail about how to invest, and why you need to invest (and not just put your money in a high interest savings account earning next to nothing after inflation). I really like how he does it “step by step” and its easy to read.
Another thing that’s different from his initial book is that David Bach talks about the major mistakes investors make and how to best avoid them, he writes about how to raise children so that they are not financially incompetent, and how to attract greater wealth. Basically how to make sure you are getting paid for what you’re worth. Men may make more than women because they’re not afraid to ask for a raise, they’re not afraid to quit a job and move onto another job if they aren’t getting paid well (uh, case in point: boyfriend is on his 5th or 6th job and he’s been out of school for 6 years!).
All in all, I was really impressed by this book and I think I can safely say Smart Women Finish Rich is my favourite David Bach book now. I like how he incorporates empowerment of women in the book (coming from a GUY I thought it would be difficult to do, because I was thinking “what do you know about being a woman, boyyyy?”). Grrrrl power! I would highly recommend this book to any female.