Updated on 03.07.08

Review: Start Late, Finish Rich

Trent Hamm

Each Friday, The Simple Dollar reviews a personal finance book.

start lateAs I’ve written before about David Bach’s books, you really only need to read one of them. I’ve read and reviewed The Automatic Millionaire, Smart Women Finish Rich, and Smart Couples Finish Rich and I found that … well, for the most part, they were the same book.

Bach’s books focus on a handful of points (the “latte” factor, the power of automatic savings and investments, the idea that your relationships with people are key for money management) and applies them to different groups (women, couples, people with large money aspirations). Here, Bach’s focus is on middle-aged people – people who are seeing retirement age sneak up on them but haven’t really started saving for it.

So why review Start Late, Finish Rich? If it’s “another” David Bach book, why review it?

The biggest reason is that it has the potential to give some real insight into shorter-term goals. Most of the ideas presented in Bach’s other books assume that people are going to be investing for the long haul – thirty or forty years. This book tosses that assumption out the window – what about goals of ten or fifteen years? While I’m not looking at retirement in that time frame, I am looking at some other goals and I’m wondering if there’s useful advice in here for me.

More importantly, though, my father-in-law will be retiring in this time frame. I’ve talked to him a bit about financial questions and, if this book seems to make sense, I’ll be giving my copy to him and recommending that he read it.

Is it worthwile? Let’s dig in and find out.

Looking at Start Late, Finish Rich

Part One: It’s Time to Get It
Start Late, Finish Rich opens with some good ol’ fashioned motivation. Within that motivation, though, is some good ol’ fashioned truth. Bach makes two really astute points in this section:

First, it’s never too late to start saving. No matter how close you are to your goal, it’s never too late to start. I like to think of it this way. Imagine you’re going to buy a car in six months and don’t have a dime saved for it. You’re far, far better off saving $300 a month starting now and having a $1,850 (or so) down payment in six months than not saving a dime until then and getting a loan for the whole car. You reduce your debt by $1,850 and also reduce the amount of interest you’ll pay over the life of the loan. Start now, not later.

Second, the first (and biggest) step is recognizing that there’s a problem. The day you really realize you need to kick things into gear and start doing something – anything – about it is the most important day of all.

Part Two: Spend Less
In the second section, Bach offers some pretty straightforward advice on spending less and reducing debt. Unsurprisingly (for anyone who has read other Bach books), he leads off with the “latte factor” (calling it the “double latte factor”, but it’s the same idea). For those uninitiated, the “latte factor” refers to the idea that over the long haul, you can save a lot of money if you cut out very small routine expenses from your life – like a daily latte at Starbucks, for example. Using the repetitiveness of a $4 latte, if you were to buy one every weekday for a year, you would have spent $1,040 on lattes in a year. If you take that $1,040 and put it somewhere where it earns 7% a year (say, a retirement account), you’ll have just shy of $100,000 after thirty years. Obviously, not everyone overspends on lattes, but everyone does have something that they spend a little more than they should on routinely. I had a whole pile of “latte factors” before my financial meltdown… in fact, I’ll be talking about this later today.

Bach also addresses credit card debt – basically, that credit card debt will eat you alive, but it’s not because of the amount you owe. You’ll be eaten alive by the interest (and possible late fees). You do have some leverage, though – so many companies are in this business that they’re cutthroat with each other, thus it’s not too hard to talk a credit card company into reducing your interest rate to keep you as a customer.

Two other good suggestions: don’t devote all of your resources to debt elimination if you’re this late in the game, and also don’t use credit counseling services for things that you can figure out yourself (and most consumer debt situations can be figured out on your own with some time and care).

Part Three: Save More
There’s really two principles in this section.

First, make your investing and savings automatic. This is the big principle behind Bach’s book The Automatic Millionaire. Simply put, instruct your bank to directly sock some money away for you in an investment or savings account. That way, that money isn’t even there in your checking account to tempt you into spending it. I agree wholeheartedly with this idea – it’s a big part of how I manage my own money.

Second, buy a house. Even in today’s terrible housing market, this still makes a lot of sense over the long haul because you’ll wind up holding an asset rather than putting money in someone else’s pocket. My feeling is, though, that many people in Bach’s audience already do own their own home (or are close to it).

Part Four: Make More
Here, Bach argues that it’s going to be pretty tough to make up the difference if you don’t kick your income into high gear. That means either increasing your pay doing what you’re doing right now or starting a side business.

For increasing your pay, Bach basically says to take an honest evaluation of yourself as an employee and ask if you’re valuable to the organization. If you are, use the exact reasons why you’re valuable as leverage for higher pay. If you’re not, find ways to become more valuable at work – be self-motivated, waste less time, and so on.

Bach also encourages people to find a side business, and he offers up quite a few suggestions in detail. At least one of them is dated – I don’t know that too many people who are involved in real estate on the weekends that are doing really great at it right now – but many of them are solid ideas.

Part Five: Give More, Live More
Why do all of this – working harder and cutting back on the little perks of life? Bach addresses that here, and basically it’s a matter of not having to work until you drop dead. Your final years can be ones of peace both for yourself and for your children and grandchildren, instead of stressful.

This whole section reminded me of the grandmother of one of my college friends, who was still going strong at work when I was a college student. She kept working, she said, for the same reasons that she worked forty years earlier – she was working to make life better for her children. Back then, it was directly – she put a roof over their head and paid for them to go to school. Now she was working to make sure she didn’t become a burden on her children – and so that she could do some things that would make her grandchildren very happy (and thus, by extension, her children). Her reasoning was absolutely beautiful, and it almost brought tears to my eyes – I can’t even imagine how it would have felt if I were related to her.

Ask yourself why you want to finish rich, and use that for the motivation.

Buy or Don’t Buy?

It’s another David Bach book, what can I say? They’re all solidly written, but they all cover much the same material with only a minor difference in perspective. Basically, I stick to my original belief that if you’ve read one David Bach book, you’ve covered most of the material in all of his books.

If you’re over the age of forty, this is probably the one Bach book to read. He cuts the timeframe down a bit from his other books, recognizing that you’re not going to be saving for forty years – more like twenty five or thirty. The writing also recognizes that you’re probably going to need to make a bit more serious lifestyle changes than in other books, as he delves more into increasing one’s earnings.

Of course, he does rely heavily on the old Bach chestnuts of the “latte factor” and the mantra of “make it automatic.” Those things are true in pretty much every book I’ve read by him. After so many readings, I realize that these are really his core principles and he feels a need to hammer them home in every book he writes.

It’s a good book, especially if you’ve never read a David Bach book. If you’re under 40, though, there may be better choices – try reading Smart Women Finish Rich if you’re female, Smart Couples Finish Rich if you’re married or in a long term relationship, or The Automatic Millionaire if you’re under 40, male, and single.

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  1. I often wonder how many books will be printed that have the word, “rich,” in its title. I have not read “Start Late, Finish Rich,” and I suppose there are some good points in it, as you have highlighted; however, I have one question:

    Does the author encourage the reader to first define “rich” for themselves before following his suggested path? If not, then he is only promoting the kind of sheepish behavior that leads the reader farther away from inner-happiness.

    Automatic Millionaire is a classic but I am tempted to believe that Mr. Bach is now in the business of selling books…

    “What is important in life is life, and not the result of life.” ~ von Goethe

    “If thou wilt make a man happy, add not unto his riches but take away from his desires.” ~ Epicurus

    Thanks for the post. I do enjoy your book reviews…

  2. Like all of Bach’s books and any other reputable financial writer, the bottom line is taht we have to make lifestyle choices that allow us to grow our net worth.
    No matter how many ways the same words are spun, if you don’t CHOOSE to invest in assets and grow your net worht, wealth is only a glimmer of hope or a dream.
    So, how do we grow our net worth and thus our wealth?
    There are only two ways:
    1.) Increase our assets
    2.) Decrease our liabilities (debts)
    Yes, there are many ways to do both of these things, but please get the basci concepts down first and then find the most appropriate way for you to grow your net worth.

  3. Saving Freak says:

    This is another classic by Bach. I love the concept of giving. Giving is one of the main reasons I strive to be debt free. The act of giving to others and the community is so much more rewarding that getting stuff.

  4. Deborah says:

    This is the one David Bach book I have read – mostly because it was the only one in my library system at the time. Even though I’m not really the demographic for this book – 30 years old and many, many years from retirement – I found a few helpful nuggets. I read it when I was just beginning to really pay attention to my financial future last year, and it motivated me to learn more, even if it didn’t give me many of the specific how-tos that I was looking for. I’ve found that I can get much more timely information online (as long as I’m careful about it).
    After reading this book, though, I definitely felt like I could make a difference in my finances, because I had more years to work at it than the target audience.

  5. John says:

    oh hey that’s my formula too. spend less, save more, earn more. he stole my idea!

    i own my house but i’m thhinking of renting an apartment with a friend and renting out my house. so i can save more. it’s a big step but i’ve run out of bigger steps for savings.

  6. Nebula says:

    I still think Smart Women Finish Rich and Smart Couples Finish Rich are my favorites. Because Bach starts out each book with a crucial step in the process of taking charge of your finances: his trademark “FinishRich File Folder System,” which in itself makes reading one of his books worth your while.

    It’s a deceptively simple yet brilliant solution. I have been using it for years and have yet to need any other system to file my financial papers. I should have been able to come up with it on my own but alas, I’m just not that organized.

    I’ve read the Automatic Millionaire and I don’t think he includes it in that book. I’ve read Start Late, Finish Rich but I don’t remember if he includes it. (I review personal finance books also and go through a lot of them so fast I sometimes forget the details!)

  7. InvestEveryMonth.com says:

    The best part about this book is that it serves as a warning. We all need to invest early in life so we won’t need to worry about playing catch up later in life.

  8. !wanda says:

    Does he recommend buying a house because a house is a better investment over 10-15years than taking the money you save by renting and putting it in the stock market? (Of course, I live in an area where a one-bedroom condo still sells for 400-600k, so even if I bought one outright, property taxes and HOA fees would far exceed what I’m paying in rent.)

    Also, are there any books about how to divorce someone cheaply? My mom would like to get divorced, but she needs to figure out whether it’s more expensive to get divorced or stay with her spendthrift husband. No, talking to him really, really doesn’t work: my dad hasn’t respected anything she’s said in 26 years and is not going to start now.

  9. H-Bomb says:

    Thank you, thank you, thank you! I will be buying this for my parents. I hope they will not take offense. Eh but who cares if they do. I would rather them be upset with me and learn how to retire comfortably with no time, than keil over as they are greeting customers at walm-mart or something.

  10. Clara says:

    You don’t recommend the same book for men and women. I’m curious — what advice did you find in these books that you think should apply differently to people of different genders?

  11. I totally agree with you that you only need to read one of David Bach’s books. I bought his “The Automatic Millionaire Homeowner”, and I liked it. Later I borrowed a couple more of his books from the library, and I was confused and asked myself, “Did I read this already?”

  12. plonkee says:

    I’m with Clara. Why do women need a separate book to men?

  13. These is a very good review and this book sounds like it is very practical yet insightful.

    The most important thing that i got out of this, is that its the fundamentals that really make all the difference.

    If you see some of the suggestions that are made in this book you can really see that they are simple things that you replace in front of your old habits.

    who knew that a cup of coffee could potentially save you hundreds of thousands in the future.

    I think if we sat down and really took account of where we spent all our money we would be quite shocked.

    Young Investor


  14. Jason L says:

    I’m pretty sure Trent wasn’t specifically segregating men and women. He was basically saying: “You’ve read one, you’ve read them all.” So, if you are only going to read one, then why not read the one specifically targeted to your demographic? Women read the women’s book (it says women right in the title), couple’s read the couple’s book (it says so in the title), the rest fit the catch all book.

  15. guinness416 says:

    Echoing Clara and Plonkee (and those of us who asked the same question in the “Smart Women …” review) – for women who aren’t 50s-era kept women, who seem to have content directed to them in the “Women” book based on your conclusion there, why would you think it’s better for us?

  16. guinness416 says:

    Christ, could I have used the word “women” more in that comment? Sorry :)

  17. plonkee says:

    So funny. I think you’d have struggled. ;)

  18. reulte says:

    I haven’t read all the books in questions but possibly one concern that is more relevant to women is discrimination based on prevailing attitudes can be gender-biased (Have I opened a cn of worms?) and these assumptions can prove detrimental to a woman’s finances.

    Some examples/for instances:
    Car repair – mechanics can be either very patronizing and occasionally cheating if they believe a woman knows nothing about cars
    Telephone sales – Have you every heard “May I speak to the man of the house?”
    Shopping – “This is such a great bargain, your husband won’t even complain about the cost.”
    Credit in one’s own name – “Oh, you don’t have any credit, all the credit cards that you have are in your husband’s name. So sorry you’re getting divorced.”

    Generally, in divorce a woman’s living standard goes down, a man’s goes up (even taking into consideration children/house ownership).

    Do you know an elderly (or not-so) woman who is destitute because she depended upon her husband to take care of her — but he dumped her for the latest model or never told her where the insurance papers were?

    We all have to watch out for different things — sometimes our commonality is our gender, other times our net-worth, other times our jobs, other times our passions. It’s no different than seeing a book “Entrepreneurs Finish Rich” next to “Factory Workers Finish Rich” or “Finances for Book Readers” next to “Finances for Car Collectors” The basics (as Trent points out) are the same while the focus is a little different.

  19. Clara says:

    Well, that was sort of my question… it’s a lot more obvious what kind of advice would be different in a book targeted at entrepreneurs vs. a book targeted at factory workers than it is what would be different in advice for men and women. So I was curious what Trent saw in the women’s book (or men’s book) that struck him as usefully different.

  20. guinness416 says:

    I gotta tell you, reulte, that I’ve never heard any of your examples (I’m a 31 year old woman) – either personally or anecdotally from friends. Your example of the elderly woman is valid, but it’s 2008 at this point ….

  21. reulte says:

    guinness416 – we just travel in different circles. Other than the telephone example I gave, I have heard of each of these within the past 5 years (either myself or through various friends/acquanitences). Although, I will admit that this is becoming – thankfully – less common in my experience.

  22. Someone says:

    @reulte– where you live that is so thoroughly stuck in 1957? Remind me never to move there =^P

    The first after I became interested in finances that I saw a finantial peice labeled “for women”, I was confused. “Bwah? Why would it be different?”. I read the article, and what it should have said was “finances for parents“. I’ve got news for the author of that article– not only are not all women parents (I’m not, and I plan to keep it that way) but –amazingly– there are just as many male parents as female! Whodathunkit?

    (OK, this may not quite be true, because I think the prejudices of our society make it easier for a lesbian couple to adopt a child than for gay male couple to adopt, but I don’t think that’s enough of a gap to assume that a “parent” is more likely to be a woman than a man, let alone assume that anyone with kids is a woman and all women have kids, as this article did! Seriously, had the author of the article never once in his/her life encountered a “Dad” or even a “father”? I mean, come on now!)

  23. reulte says:

    Someone (#22) Currently I live in the 1600’s — with cars! Although, usually I live in Texas; of which some parts, I’m sad to say, are stuck in various time warps as early as the 1830’s….

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