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Kindle Notes & Highlights
by
David Bach
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November 19 - December 27, 2018
In short, we’ve learned to make a priority of discussing our finances and planning our financial goals and dreams together. Doing this changes everything: it ends the fights and it focuses the energy of a relationship on the positive instead of the problems.
IF YOU WANT TO GET RICH, YOU HAVE TO LEARN TO EARN
My goal is to help you be the strongest couple you can be, and the best way I know to do this is to go on the journey together.
all couples should work on their finances together. And when I say all couples, I mean all couples. Age isn’t a factor.
When it comes to money, just having heard of something isn’t enough; you’ve got to know what it means. And just knowing what something means doesn’t matter if you’re not actually doing it.
It’s not what you know about money—it’s what you don’t know that can wipe you out.
Becoming rich is nothing more than a matter of committing and sticking to a systematic savings and investment plan.
…most people overestimate what they can do financially in a year—and underestimate what they can achieve financially over a few decades.
The truth is that most couples don’t have an income problem; what they have is a spending problem.
The bottom line is that you and your partner are trading precious time in your life for this income. To me—and hopefully to you—that makes it critically important to ensure that you don’t waste what you earn, but rather that you manage it efficiently and intelligently. The key to doing this is to start saving now.
Couples Who Plan Together Have a Better Chance of Being Happy Together
What I believe is most important is first having a conversation about what it is that matters most to you. What is it that you stand for and what is it that you care most deeply about? In other words, what are your values?
YOUR LIFE VALUES SHOULD DETERMINE EVERY LIFE DECISION YOU MAKE
once you have a clear picture of what you value most in your life, you’ll be able to create a truly meaningful Purpose-Focused Financial Plan.
Step Two of our journey to finishing rich involves learning how to understand what your values really are. Once your values are clear to you, it will be easy to decide what kind of “stuff” you want and what sort of things you want to do
“WHAT’S THE PURPOSE OF MONEY IN YOUR LIFE?”
“When you think about money in the context of your life and the things that are important to you, what purpose does it serve?”
“When you think about the way you live, what are the values that money enables you to fulfill?”
“it’s always interesting to me how easy it is for us to list the kind of stuff we want to own versus the kind of values we want to live by. Yet the truth is that it’s a lot more important to understand what your values are and to live your life by them than it is just to have stuff. Unfortunately, too many of us spend our lives pursuing stuff, without really looking at our values. And you know what that leads to?” “Credit-card debt!” a woman called out. We all laughed. “Well, that too,” I said, “but actually I was thinking of something even more serious that happens when you spend 20 years
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values are the key to living smart and finishing rich. The sooner you and your partner start putting your values first—and stuff second—the sooner the two of you will start living a life that excites and empowers you both.
As a financial advisor, I’ve learned that when all is said and done, money is good for three basic things. It helps people… Be Do Have
money helps people be, I mean that it allows them to live in a particular way that defines who they are. When I say that money helps people do, I mean that it makes it possible for them to take actions that will help create the kind of lives they think they want. And when I say that money helps people have, I mean that it enables them to buy stuff.
The challenge as I see it is that most people focus first on the “having,” second on the “doing,” and third on the “being.” Which means that many people, even ones who use financial planners, go about it all backward.
the process is basically a matter of looking really deeply at what is most important to you, and then planning your finances around that.
The point is that smart financial planning is more than a matter of numbers. It involves values first and stuff second.
All you need to do is decide what you think your top five values are, write them down, and then start planning your life around them.
Notice that I wrote down Kim’s and Bill’s top five values not in a column but in a ring. There’s a starting point to this ring, but there is no ranking. That’s because we don’t want to suggest that any one particular value is more important than any other. This reflects the fact that if you don’t put a fair amount of effort into all of your top values, your life can become unbalanced.
value synergy,” I said. “Often, promoting one value also helps fulfill another.”
Purpose-Focused Financial Plan. This consisted of a sheet of paper on which we listed the five values each had decided to focus on over the coming year. Next to each of the values, we wrote down five matching “do” ideas—that is, actions they needed to take in order to bring the way they lived their lives more into harmony with their values. (We’ll cover how to do this in the next chapter, Step Three.) And next to those “do” ideas, we wrote down matching “have” ideas—that is, specific material goals that living according to their values would allow them to achieve.
Remember, values are about being; they define a way of life. Goals tend to be about doing and having; they involve stuff.
So what is a Purpose-Focused Financial Plan? A Purpose-Focused Financial Plan is nothing more than a list of things to do (your goals) to enable you to live a life in line with the values that are most important to you. Here are seven tips on how to define those goals,
RULE NO. 1 Make sure your goals are based on your values.
living the life you want based on your values doesn’t just happen. You have to make it happen. You have to design it. This means using the Value Circle from Step Two and getting your top five values clearly defined.
RULE NO. 2 Make your goals specific, detailed, and with a finish line.
RULE NO. 3 Put your top five goals in writing.
I know it’s a cliché, but it also happens to be true: people who write down their financial goals get rich. It’s a fact.
RULE NO. 4 Start taking action toward your goals within 48 hours.
you should never leave a goal just “sitting there” without taking some action toward achieving it within the next 48 hours. The idea, he explained, was that if you don’t get moving immediately toward your goal, even if only in a small way, chances are you’ll never get moving at all.
I’ve learned from Tony Robbins is that a cause set in motion becomes a life set in action. This is why our Purpose-Focused Financial Plan worksheet includes a box that asks you to write out your “48-hour plan.” This can be anything—but it has to be something.
RULE NO. 5 Enlist help.
So when it comes to achieving your goals, stop and think for a second. Whom can the two of you turn to for help in achieving your top five goals?
You never know—the person you’re sitting next to at a dinner party or a lecture may be in the perfect position to help you make your dream a reality. If you keep your goals to yourself, you could miss your big chance.
RULE NO. 6 Get a rough idea of how much money it will cost to achieve your goals.
part of creating a Purpose-Focused Financial Plan involves estimating how much money you think you will ultimately need to pay for your top five goals.
So ask yourself, What is this goal going to cost? How much do I need to start putting aside each week or month to help me get there?
RULE NO. 7 Make sure your goals match your values…as a couple.
“Twelve months from now, what five specific things would you need to have accomplished in order to feel you have made great financial progress in your life?”
THE PROBLEM IS NOT OUR INCOME…IT’S WHAT WE SPEND!
Use the same free calculator I used to run this at www.investor.gov (search for “calculators”).
ClarityMoney.com
