Each Friday, The Simple Dollar reviews a personal finance book of interest.
Over the last six months since the start of 2007, Robert Pagliarini’s The Six-Day Financial Makeover has easily been the most requested book review for The Simple Dollar – more than a dozen people have requested it. I was a little hesitant to give it the time of day, as the title sets off one of my biggest warning bells about financial information – if the promise is compressed into what seems like too short of a time frame, it’s probably bogus.
It turns out that the “six day” concept is just a very loose framework – most of these steps, if given appropriate introspection, could take months, but “The Six Month Financial Makeover” just doesn’t quite have that same bookstore appeal.
Instead of a “six day plan,” Pagliarini’s book is actually much more of a process to rethink your financial situation, reviewing it and making sure it’s actually in line with your long term goals.
Day 1 – Get the Most From Life
Pagliarini starts with goals, and from my perspective, that’s usually the right place to start. He doesn’t just stick with financial goals, either – although the book focuses on financial health, he suggests that your goals should also touch on every important area of your life (he suggests your faith, personal growth, physical health, business and career, relationships, and family, as that’s the areas he finds important). As I worked through the exercises, I defined my key areas as my family, my relationship with my wife, my intellectual growth, my spiritual growth, my writing career, and my physical fitness.
After that, the book pushes you to define goals in each area so that you begin to live a well-rounded life – again, not just financial goals. Pagliarini writes so effectively and passionately about goal-setting that I actually used his advice to rethink some of my own personal goals – mostly outside of the financial and career realm.
Day 2 – Transform Your Financial Life from the Inside Out
Pagliarini’s seven limiting beliefs are:
1. No matter what I do, I can’t get ahead.
2. Getting by is good enough.
3. Small actions are insignificant and don’t produce big rewards.
4. If I’m financially successful, I’ll be working so much I won’t have any time with my family or my buddies.
5. You must lie, cheat, and take advantage of people to become successful.
6. I’m not smart enough to be financially successful.
7. I should be able to read a book or attend a conference and immediately become financially successful.
In some form or another, all of these limiting beliefs show up very regularly on The Simple Dollar in the form of reader comments and emails. Take number three, for example – it shows up every time I talk about frugality, because many people don’t believe little steps can help them. Number five shows up in a lot of emails I receive, where people seem to imply that I’m lying because anyone who makes a solid income is lying. Number seven shows up when people write to me and complain that they read Your Money or Your Life but they’re not suddenly in financially solid shape.
The one that frustrates me the most is the one about little steps. Little steps make all the difference. I have a friend who goes to Starbucks every morning and gets a giant cauldron of overpriced coffee and a muffin. I’ve told her that if she just cuts it down to three days a week (and just drinks coffee at the office on Tuesday and Thursday), she’ll have an extra $100 a month, but she acts as if I’m lying to her.
Day 3 – Discover and Maximize Hidden Wealth
Day 3 is really the meat and potatoes I expected from the book based on reading the title. This is basic personal finance stuff that everyone needs to go through a time or two, compressed down to a single chapter.
Pagliarini covers most of the basics here: budgeting, the whole “spend less than you earn” philosophy from both sides of the issue (earning more and spending less), figuring out your actual net worth, and so on. This is basic information that should be in any personal finance book.
Day 4 – Invest with a Purpose
As with the theme earlier in the book, Pagliarini focuses in on the idea that you should only be investing with a concrete goal in mind, because without that concrete goal, you don’t have a timeline or a target that you’re trying to reach.
Thus, this part breaks down into two pieces: defining your goals for investing and how to translate those goals into actual investments. For example, if you’re saving for the short term and it’s imperative that you have little risk because you have a specific number you need to reach, you should be heavily into bonds and cash and far away from riskier things. On the other hand, if your goal is long term with a big upside (say, building the best house you can in ten years…) but no worries about a minimum, then an aggressive stock portfolio is probably best. Your investment choices directly come from your goals, in other words.
Day 5 – Survive .. When Disaster Strikes
This section covers insurance in all its various forms as well as estate planning – pretty typical personal finance advice.
Pagliarini is a pretty strong advocate for being well-insured. He makes the case that it’s much better to pay a regular expense and know that you’re covered in the event of almost any unforeseen disaster that could befall you. In places, he almost veers towards insurance salesman, as he tries to make emotionally compelling cases for why you need specific insurance types.
Day 6 – Protect What You’ve Earned
The book closes with a look at asset protection in the form of liability insurance, plus Pagliarini spends a surprising amount of time looking at safe deposit boxes and home safes to keep your key documents secure.
The safe issue is one I had not seen covered in a personal finance book before, so I found it intriguing. In a nutshell, Pagliarini advises having both a home safe and a safe deposit box. My wife and I currently do not have a home safe, so this is one action point that I might be inspired to follow up on based on this book. The biggest reason for a home safe would be to provide a fire-resistant (and reasonably theft-resistant) place to store our key documents, which are currently stored in a tiny safe without much fire or theft security.
Some Thoughts on The Six-Day Financial Makeover
Here are a few thoughts I had while reading this book.
The central vitality of goal-setting is key to this whole book. Goals provide a focal point and give us something to work towards in every aspect of our lives, and I spend time each day reflecting on my goals both for the day, but for the longer term as well. This keeps me focused, on task, and moving in the direction I wish to move.
Although it says “financial” on the cover, many aspects of this book go far outside the realm of financial. Particularly in the early sections on goal setting, Pagliarini doesn’t stick solely to financial issues, but looks at broader life issues and puts finance in that context. I prefer this approach to the “money-only” approach that many personal finance books tend to use.
Pagliarini falls prey to the “smiling picture on the cover” syndrome. There’s a huge number of personal finance books that find it necessary to depict a well-dressed and smiling picture of the author on the cover. Perhaps I’m in the minority, but this makes me not want to buy the book. I understand the desire to market a person, but I’m picking the book up for financial advice, not to buy into the “Pagliarini philosophy.”
Is The Six-Day Financial Makeover Worth Reading?
Pagliarini’s book does a lot of things right. He starts off by focusing on goals, including those in a wider context than just money (after all, it’s your money and your life, right), and then uses those goals as a baseline for discussing basic personal finance. That’s the approach I think is the best in terms of personal finance books.
My only complaint is that the writing in this book often left me cold – it felt in many places like it was “overdesigned” with lots of pointless infographics and sidebars. While the content itself is strong, it gave me a vibe of “attempting to launch Robert Pagliarini as a personal finance guru” more times than it should. And that’s not a vibe I want to be getting from a book – I want to walk away feeling like “this book had some excellent advice.” It did, but it was overshadowed by the other sentiment.
If you want a strong introductory personal finance book, particularly if you’re already a strong wage-earner, this one’s definitely worthwhile. Just don’t pay any attention to the infographics and other materials at the start of the chapter and focus in on the advice – there’s a ton of good meat in here underneath the attempted marketing gloss.