This week, The Simple Dollar takes a look at David Bach’s Smart Couples Finish Rich, a personal finance book that proposes to address the difficulties of a couple getting on the same personal finance page and aiming their financial ship in the right direction. Does it work? Let’s take a look.
Step Seven: Build Your Dream Basket
The “dream basket” is the third place you should put your money, after the retirement basket and the security basket. Bach recommends that you put at least 3% of your annual income towards your dreams, simply so you can see that bright horizon in the future and know you’re actually moving towards it.
Bach and I agree on one thing: it’s a lot easier to live within your means if you see that you are working towards your dreams instead of working for your immediate wants and desires.
Step Eight: Learn to Avoid the Ten Biggest Financial Mistakes Couples Make
Most of these big mistakes are pretty well known (having credit card debt, not having a prenup, and so forth) and relatively unsurprising, though it is a good idea for a couple to review them together just to make sure that they’re both on the same page.
However, I found the first “mistake” to be quite interesting: getting a 30 year mortgage is a big mistake. Here’s why: the higher interest rate and longer term of the loan eat so much of your money that it’s not worth getting a slightly lower payment each month. This is an interesting issue, one that I’m going to look at very carefully in the near future.
Step Nine: Increase Your Income By 10 Percent in Nine Weeks
The final step is the one with the alluring title; who wouldn’t want a 10% increase in their salary in nine weeks? The catch (and there’s always a catch with concepts like this) is that the 10% increase comes from requesting a raise from your boss. This section merely provides a week-by-week guide building up to the actual raise request, including such items as looking at what others in your field are getting paid and so on. I was actually expecting some investment advice here; this is just not the type of “investment” I was expecting.
Tomorrow, I’ll give my semi-traditional buy or don’t buy recommendation for Smart Couples Finish Rich.
Smart Couples Finish Rich is the ninth of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.