If you want financial freedom, you need to take charge.
For a supposedly intelligent person I’m really not that smart when it comes to money. I have been lucky enough to have good jobs, am always cautious not to spend more than I have and avoid debt as much as possible. However, over time I have had that niggling feeling that I should be doing more with my finances.
Truthfully, I never had enough mental energy to think about it, let alone learn and understand all the financial terminology. Add that to a lot of negative media about unscrupulous financial advisers and knowing more than one friend who had lost a significant amount of money taking their advice. It was all too hard and overwhelming.
You can live the rest of your life with excuses about your lot – most people do – but they sure as hell won’t protect you from the financial fire that’s eventually going to work its way to you.
One of the goals I set myself at the start of my sabbatical was to gain a better understanding of financial matters and sort out our financial life. I spent a few months procrastinating, doing a few internet searches, reading a few articles but not really achieving much.
Then while browsing in an airport bookstore I came across The Barefoot Investor: The Only Money Guide You’ll Ever Need by Scott Pape.
This book – and the solid-as-a-rock steps it gives you – is built on values that have stood the test of time.
And that is what hooked me. No promises of get rich quick schemes. No give up a coffee a day and you’ll become financially secure. Just honest, down to earth common sense.
I don’t want to get carried away but this book changed my life. The Barefoot Investor is easy to read and more importantly the author clearly explains how to put his advice into action. The Barefoot Steps start with scheduling monthly date nights. (Scott even suggests a glass of wine or two!) Now this is a financial advisor who gets me!
The Barefoot Investor starts with a section called Plant where you build your financial infrastructure. Scott recommends setting up a number of bank accounts, or buckets, and give them memorable names like Spend, Splurge, and Smile. He outlines options for superannuation and insurance and how to cut your debt.
The second section, Grow, discusses buying your own home, investing and providing a bucket (called Fire Extinguisher) for emergencies.
In the third section, Harvest, he talks about how you can pay off your mortgage, have enough for retirement and even leave a legacy for your children.
I am working my way through Scott’s recommended steps. I’m not finished yet but when it comes to financial matters I expect that I will never finish. (More date nights! More wine!) And be warned, not everything applies to every reader. This is a book written for an Australian audience, some information such as the superannuation advice may not apply. However, the core ideas are sound and could be adapted for most people’s situations.
Also reading the book won’t solve all your financial problems. You have to do the hard work. The tips on where to look for more information and scripts to help when you call your bank and insurance company give you the confidence to do what you need to do.
I have joined the Barefoot Investor cult!
From this point on, no matter what you face in the future, you can look yourself in the eye and confidently say to yourself… I’ve got this.
The Barefoot Investor: The Only Money Guide You’ll Ever Need, Scott Pape, John Wiley & Sons Australia, June 2017, ISBN 9780730324218