This week, Money360 takes a look at David Bach’s , 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 One: Learn the Facts and Myths About Couples and Money
This chapter mostly focuses on debunking some pretty basic myths about money, such as the idea that love conquers money (money has nothing to do with love) and that it takes money to make money (compound interest can make big money for you). Mostly, it sets a psychological foundation for communicating about money within a relationship, enabling you to be able to talk about later topics while being on roughly the same page.
The exercise for this chapter is a basic financial knowledge quiz that both members of a relationship can take and talk over. The questions mostly relate to personal financial numbers, such as a couple’s current net worth and where the assets are. It gives a good indication of who possesses the financial knowledge in a relationship and what areas each person may be weak or strong in – and thus the two members can talk about these things and make sure that they’re both in the know, or have the opportunity to be.
Step Two: Determine the True Purpose of Money in Your Life
The focus of this chapter is squarely on figuring out your basic values. The chapter is dominated by an example of a couple digging through their personal belief structures to isolate what their core values are, a process that works wonderfully if you learn by example. An important distinction is made between goals and values here; goals are merely the expression of values, and as values are interconnected, so should goals be.
The exercise for this chapter revolves around listing the five central values in your life. The author encourages a relaxing situation before beginning to piece together your central values, and he also provides a lot of help in the process. Why would you want to do this? Once you’ve figured out your true values, you can use them as the basis for the rest of your life.
Step Three: Plan Together … Win Together
This step revolves around the development of a planning system that couples can share in, from a carefully designed record-keeping system to an assessment of long term goals. I felt that the suggestions in this chapter were pretty specific given how they’re supposed to be based on individual values (which can vary a lot), but they definitely do focus on the relationship between the two people and their relationships to money.
Key activities in this chapter include the development and implementation of a system to keep and maintain financial records and, from these records, the development of a plan that reflects the values you teased out in the second step. Bach provides a very steady hand in guiding these activities, which is reassuring for some but was a little too much for me.
Tomorrow, we’ll continue with the next three steps in the book.
Smart Couples Finish Rich is the ninth of fifty-two books in Money360’s series 52 Personal Finance Books in 52 Weeks.