Book Review: Smart Couples Finish Rich

After reading yet another mention of the book Smart Couples Finish Rich by David Bach the other day, I finally broke down and borrowed a copy of the Canadian Edition from my library.

Overall I liked the book as a beginner book. It provides some solid advice on some basic parts of personal finance for a beginner, yet there are a few ideas that might cause problems.

So overall here is what I liked:

  • Right near the start the author deals with finding out your goals and values and then develop a plan from there. After all if you don’t know what your values are how can you decide if you want your first house more than a dinner out and which investment will work best to get you to your goal (to get an overview of this concept read this post)
  • The basic file system is actually fairly complete. I liked it so much I based my own system on the one provided on the book.
  • The Latte Factor is a bit over rated, but the point is valid. If you keep spending $5 to $10 several times a day you are potentially wasting a lot of cash on things you really don’t care about.
  • The book is a quickly paced which provides a good basic education of personal finance in a modest 238 pages.

Here are the things I didn’t like:

  • He assumed in every example that you wanted to retire at 65. Come on David, we are trying for retirement at 45 here. Work with me!
  • Despite covering planning with your values/goals in the front of the book, he spends the rest of the book ignoring what he worked so hard to cover in the first place. I was expecting a theme of investing with your values and it just didn’t happen in the book.
  • The author always used double digit returns when providing an example of investing. This sets up an unrealistic expectation for a beginner to have, so I thought he should of stuck with a more modest 7% return instead.
  • I HATE the term Latte Factor and all the other Trade Marked terms he used in the book. The author ends up coming across as arrogant.

Overall it is worth a read (if you borrow it from the library) if you are just starting out in the world of personal finance. It gives you a few basic tools to get started, but I would highly suggest a person keep reading other books to balance out their point of view. If your a die hard personal finance geek, skip the read you won’t learn anything new here.

7 thoughts on “Book Review: Smart Couples Finish Rich”

  1. What I really didn’t like about this book:

    In his Ten Biggest Mistakes Couples Make list, he ranks Not Getting Professional Advice as #10.

    Everyone reading PF blogs probably won’t come close to following Bach’s advice on professional help but …

    My personal finance journey started with The Wealthy Barber. Smart Couples was my second book. Overall I had liked the book because it reemphasized everything that David Chilton had advised. So I thought I was making a big mistake by going with no load, low MER mutual funds that I chose myself without the help of an advisor.

    (At the time, I did not know what a BLOG was. I’m serious. When I stumbled on this blog back in January of 2007, I asked a whole bunch of people at work and my husband and my neighbour. No one really knew what a ‘blog’ was.)

    And if all my favourite PF bloggers got together and made a list of 10 Biggest PF Mistakes, HIRING A PROFESSIONAL is probably right up there with NOT EDUCATING YOURSELF ABOUT PERSONAL FINANCE (i.e. only reading two books before changing the way you do things).

    Anyway, I think Bach is leading people astray with rule #10. Maybe he was hoping I’d contact one of his advisors.

    Sorry about the rant.

    On a lighter note, my personal finance journey is back on track and I owe a big FAT thank you to Personal Finance blogs. You guys make a HUGE difference to alot of people starting out.

  2. Hmm. I hadn’t realized there was a Canadian version of this book out there. I’ve been thinking of reading it simply to try to have more of a conversation with my husband about this sort of stuff. He tends to ignore personal finance whenever possible. If it’s got a decent basic filing system, then it’s definitely worth a look just for that. Time to head over to the library site…

  3. You have to keep in mind that ‘The Latte Factor’ isn’t how much you spend on caffeine products. It’s how much you waste on every day items that you don’t even think you’re spending money on. Sure the term is a little cheezy, but it’s easy to remember and will stick in your head. Each time you go to pay for something, you can think, do I need this item or is it just another latte factor item. I don’t think this is overrated at all. People waste an insane amount of money when they don’t have money to spend (me included). Why, just yesterday I was at the mall with the family and spent 40 bucks on lunch. We were just there to spend some time together, we could have brought snacks.

    I actually have been giving this book out for housewarming gifts and wedding gifts lately. I hope it makes a difference.

  4. I agree with Traciatim on this one.

    The thing that sets Bach apart from most of the others is that he offers simple lessons that can benefit almost anyone. The “Latte Factor” is cheesey…and catchy and that’s the point. My husband and I often catch each other by saying “latte, latte, latte” in a cheesy tone when one of us picks up an item to purchase that we really don’t need. It actually works.

    But the best thing about Bach is that he’s not only a personal finance perfessional, he is a motivator and that’s usually the missing piece that prevents people from acheiving the goal of financial independence.

    “The Automatic Millionaire” was one of the 1st personal finance books I read (actually, it was an audio book). When I got through, I was invigorated and excited to be a conscience spender and a better saver. I’ve come a long way since but he is still my favourite author to recommend for people that need motivation to get their finances in order. He gives everyone hope.

    And besides, how many PF authors have a book designed for couples? I love that. Bach is keenly aware of the fact that divorce can wreck havoc on your finances, so why not make sure you’re striving for the same goals together as a couple?

  5. I have to say that this book is pretty good for couples, especially if they are not on the same page financially (even if one is a PF geek!).

    He is a financial advisor and some of his advice is tainted (ie 12% equity returns) and I really thought his “clean up your desk and ask for a 10% raise” chapter was sci-fi. I’ll be happy if I still have my job next month – never mind asking for a raise.

    Mike

  6. Colleen,

    Actually that was a good rant. I forgot to touch on that point in my post. Thanks!

    Fucundity,

    I actually got my wife to read a few chapters and she didn’t mind it and we actually had a good conversation from it. So that’s why despite some of it’s flaws I think the book can be useful.

    Traciatim,

    I agree the term is cheesy, but it makes a point.

    Thicken,

    Perhaps that’s what I didn’t like in the book. Mmm.

    Telly,

    Yes finding a couple related PF book is nearly impossible. I’ll have to keep that in mind when I get around to writing my own book. *grin*

    FP,

    I actually avoided the entire raise thing in my review because I started laughing when I was reading it. Sci-fi is a good description. Yet the point is valid. If you think you are worth more, ask, just not for 5% every year.

    Tim

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