Book Review: Your Life and Your Money

. . . too many people are unwilling to do what’s necessary to get their financial house in order. . . . Everyone wins when we have our financial  affairs in order.

~ Scott Feher, Your Life & Your Money

If you’ve been reading this blog for any period of time at all, you know that I write a lot about imbalances in the global economy and in our society at large. Scott Feher, author of Your Life & Your Money, seems to have noticed some of the same trends. He writes:

“We live in an age of delusion. . . . Our biggest delusion is a sense of entitlement. . . . People delude themselves into believing everything is fine while engaging in behavior that’s definitely not fine. Then, when something goes wrong, they stand there blankly and do nothing about it, expecting somebody else to pick up after them!”

You may recognize some of these themes from a piece I wrote a while back that asked Have We Become a Society of Financial Adolescents? A lot of this type of sentiment can sound pretty negative, but the purpose is not to wave a finger at people. It is to incite them to take control of, and responsibility for their own destiny – financial and otherwise. But how? That’s the question that Mr. Feher aims to answer in this book.

Family CFO Basics

One of the key principles of the book is that, like any good corporation, every family needs a good Chief Financial Officer (CFO). The CFO needs to educate him/herself on financial matters and follow some basic rules in order to secure the family’s future prosperity. Here are just a few of the ideas discussed:

• Write a financial mission statement: This is just a written outline of goals and priorities the family will work toward according to specific timelines. Of course, it should remain flexible as life progresses and inevitably throws us the odd curveball.
• Don’t invest in any product or service that isn’t aligned with your mission statement: If a product doesn’t fit with your goal to limit spending, don’t buy it. If an investment doesn’t fit your risk profile, choose a different one.
  
• Know where your money goes: “Buying what you can’t pay for is called living beyond your means. It’s delusional, so don’t do it.”
• Master your expenses or you’re destined to fail: If you can’t say no to some expenses, you’re going to have a hard time living within your means.
• Don’t let financial mistakes become your permanent life story: We all make mistakes. The key is to learn from them, fix them, and move on.
• Keep apprised of economic issues that affect your finances: Taxes, risk, and inflation can have a big effect on how much of your money you get to keep. Understand the trends and how they could affect your money plans.
  
• Understand asset classes and how to use them: Mr. Feher offers a comprehensive review of the different types of asset classes and how to use them to plan your financial future.

Who Should Read This Book?

This book offers a concise review of the basics of personal finance and investing. The simple writing style is suitable for a novice, but also offers advice and perspectives that more seasoned family CFOs might appreciate as well. Scott Feher is a financial adviser himself, and he explores some ideas on whether you need an adviser and how to go about choosing one that’s right for you.

The book is written from an American perspective, and some portions deal with investment products that are unique to the U.S. market. There is a full chapter on the best ways to hold your assets that looks at pensions, annuities, and government programs, some of which would not apply to Canadians. Still, the basic financial principles espoused here are universal and the message is clear: You are responsible for your financial life and ultimately, only you can improve it.

I liked the way Mr. Feher put as much emphasis on personal finance basics as investing principles. He stresses learning about covering the basics before you move on to more advanced investing and planning techniques. It’s difficult to hear about folks trying to figure out which fund or stock to invest in when they are swimming in debt. Walk before you run.

Like many books on personal finance, Mr. Feher’s work ends with the idea that it’s not really about the money. Money is only a tool that we can use or misuse. If we use it wisely, we can enhance our life balance sheet as well as our financial balance sheet. If we misuse our money, we can do some real damage to both types of balance sheet.

With headlines becoming increasingly populated with stories about economic difficulties and household financial challenges, it seems that this book has come at the right time. As noted in the opening quote, fiscal responsibility at home is not only good for your personal balance sheet, it can help society at large. The more people who have a good handle on their finances, the fewer our over-indebted governments will need to bail out. In the end, that’s good for all of us.

Your Life & Your Money is straightforward and relatively short, making it very easy to digest. It’s only about 140 pages long, not including a couple of useful appendices which include an inventory of expenses and an investing questionnaire. If you’re ready to improve your balance sheet and you’re looking for some ideas on how to get started, this just might be the book for you.

Does this book sound interesting to you? What types of questions would you like answered in a book like this?