A Great Read: “All Your Worth”

I’ve always had a pretty laissez faire attitude toward my finances. I’m thrifty by nature (I was one of those kids who would save my little weekly allowance for months on end to buy “big ticket” items like a push-scooter or a Gameboy) and married a thrifty man. We don’t use credit cards, so we’ve always just sort of let things work themselves out. The other day, though, it occurred to me that we’re still in grad student mode: we always pay our bills, but we aren’t really saving for the future (retirement, college for W, etc). Sure, we have our 401Ks through work, but we haven’t really evaluated whether those are well-invested or whether they’re enough to actually provide for us in the future. Consequently, I decided we needed a financial check-up, and possibly a financial makeover.

Unfortunately, while I have a good head for science, I’m not a financial wizard. I’m not even particularly financially literate. My mom, however, is (not just literate, but a wizard). She recommended a book by Elizabeth Warren and her daughter, Amelia Warren Tyagi, called “All Your Worth.” I checked it out and loved it so much I had to share.

The premise of the book is relatively simple: for financial security, money needs to be in balance. Balance means that 50% of income goes toward “must haves,” 30% goes toward “wants,” and 20% goes toward lifelong savings. I was a little skeptical at first, both because of the percentages (they seemed off to me, and furthermore, I was suspicious of the notion that the same percentages would work for everyone) and because I didn’t really know whether a plan this simple really required a whole book (I hate reading books that take 200 pages to justify a paragraph’s-worth of information). Upon further reading, however, I realized that the book doesn’t just justify the idea, it actually gives practical, how-to advice on achieving money balance. Furthermore, it has simple investing tips, provides information on getting out of debt (for those who need it), has tips on avoiding common scams, and is packed with common sense advice.

What did I like best about the book? Unlike most financial books out there, which tell people who already have lots of money how to make MORE money (“don’t work for your money! make your money work for you!”), this one tells the average person who doesn’t have a pile of investments how to build a solid nest egg for later in life. Definitely worth a read.

How about you? Have you read any great finance books?

 

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9 Comments (+add yours?)

  1. Megyn
    Oct 18, 2012 @ 09:19:05

    This is the second post I’ve read about the book. To make a long story short, this 50-30-20 is unrealistic for a large part of the population, us being one of them. It really comes down to what is important to you. We choose to spend more on “must-haves” and less on “wants” in order to stay in a decent place in a safe neighborhood with good schools. If we wanted to get our “must-haves” down to 50% on The Hubs’ current salary, it would mean living with a ghetto 1bdrm apartment with 4 people, not having cell phones at all, and eating crap food–none of which we are willing to do. Instead, we spend about 80% on must-haves and compensate by spending very little on wants. It works for us, and we are debt-free (other than our house)family of 4 on $34K gross a year. If you look at the 47% who do require assistance, you’d realize that this sort of budget is just not feasible.

    Reply

    • SquintMom
      Oct 18, 2012 @ 11:20:10

      Thanks for sharing your experience. Without going into financial detail, I’ll say that we are definitely not among those who have lots of money and are just looking to make more; we definitely clip coupons. Regardless, the 50-30-20 is feasible for us with some creative budgeting and a few sacrifices. I think every family needs to look at their own situation, and furthermore, Warren makes it clear in the book that even those who can’t get to the “perfect” 50-30-20 can still benefit from looking at their spending. Regardless of whether the message of the book was helpful for you, however, it clearly made you think…which is, IMHO, a good thing when it comes to finances. Anyway, I write a science blog, not a finances blog, so I am in no way condoning the book, saying everyone should do it, or speaking to its efficacy. I just wanted to share that I though it was worth reading, particularly for people like me, who would rather pull out fingernails with a pliers than read a finances book.

      Reply

  2. Ashley @ C is for Cockerham
    Oct 18, 2012 @ 12:34:39

    Haven’t read any books, but my hubby is great with investments. I bet more than 50% of his check went to some form of savings before we married, bought a house, had kids, etc. He handles that side of things while I do the day-to-day bills, which works out nicely. I checked the accounts the other day and saw where T already has a nice little fund building up for college too. I hope it all pays off…literally!

    Reply

  3. Susan
    Nov 10, 2012 @ 14:54:27

    At the recommendation of a senior colleague at the start of my professor career–so this is 20 years ago when I was just starting my first tenure-line job–I read Your Money or Your Life, which is a book about getting your budget in line with your values. What I liked about it was the emphasis on figuring out how to allocate money–the first exercise was to track all your expenses for some period of time and then categorize them according to divisions that made sense to you and then evaluate. So it supports the kind of analysis a commenter mentioned above–we want to spend more on this b/ c it’s worth it to us to live in this sort of place. My colleague had used the book and realized she was spending way more money on her house (which was in a lovely downtown historic neighborhood) and so she ended up selling it and downsizing into a modern condo. Less character, but way cheaper, and gave her more $ in some other areas.

    I also liked Get Rich Slowly as a good intro to different sorts of investments.

    Reply

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