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Your Money! Book Summary
  Enjoy
Your Money! How to Make It, Save It, Invest It and Give It,
by J. Steve Miller.
A well-researched and documented guide to personal
finance, written in an entertaining story form. Praised by CPA's,
financial counselors, professors and many who otherwise hate money
books. Its readability and intense practicality make it a great employee
gift or graduation gift. And it covers so much territory, that it's a
great book to introduce readers to the essentials of managing money,
while motivating them to become lifelong learners.
The story: Four culturally diverse high
school seniors meet in "In School Suspension," soon discovering that
they have one thing in common: their parents suck at personal finances
and it's hurting their families. Longing to do better than their
parents, they meet with an eccentric teacher each Saturday morning as
"The Counterculture Club." They learn the secrets to financial freedom
by reflecting on the lives of fascinating people, such as billionaire
Warren Buffett, clothes-washer Oseola McCartey, Wal-Mart founder
Sam Walton and pro football coach Joe Gibbs.
Breakfasts 1 and 2: Learn the
Basics
In these difficult economic times, we hear
great financiers preaching a return to the basics - like blocking and
tackling in football. The students look at the lives of Oseola McCartey
and Warren Buffett to isolate these basics, which can be easily
remembered on your hand:
Catch a vision!
(Thumbs up) Most aim at nothing...and hit
it every time. Warren Buffett (the wealthiest man in America) caught
his financial vision in elementary school and never let it go. A long-range
goal transforms accumulating wealth into a fun game.
Work
hard! (Finger pointing at you
like a foreman) Most millionaires say they work harder than most people.
Buffett and Sam Walton (founder of Walmart) began early with paper routes
and odd jobs.
Get Wisdom!
(Central Finger) This includes sharpening your
skills and growing in knowledge. If you're the most skilled in your trade,
you'll likely be the best paid and least likely to be fired during a
recession. Buffett read over 100 business books by his high school
graduation. Benjamin Franklin learned a skill - printing - early in life,
allowing him to retire in his early 40's and dedicate his life to changing
his world.
Commit Yourself to Live Wayyy
Beneath Your Means! (Ring Finger)
Many millionaires work the same jobs that average people work, but have
learned to live cheaply so they can save and invest.
Invest
Regularly! (Pinky) It may
be small, but investing $20 a week starting early in life can multiply to
millions.
Help
Others! (Lend a Hand) The
fun of having money goes beyond having more things. Money allows us to help
others in need and make a difference in the world. Buffett always planned on
giving it all away. Many studies show that giving people are happier
people.
Breakfasts 3-5: Diversify Your
Investments with Stocks, Bonds and Real Estate
There are many landmines in the path to
successful investing, and fictional character Hash Brown stumbled into most
of them, losing money at every turn. He lost money by:
The school of hard knocks helped him to
discover the often counterintuitive wisdom of smart investors, such as:
-
"The dumbest reason in the world to buy a
stock is because it's going up." - Warren Buffett
-
"Your chances of selecting the
top-performing funds of the future on the basis of their returns in the
past are about as high as the odds that Bigfoot and the Abominable
Snowman will both show up in pink ballet slippers at your next cocktail
party." - Jason Zweig
So how should you invest?
1. Save four months of salary in an emergency
fund. A money market fund gives you access to the money while keeping it
relatively safe.
2. Start investing early for the long-term in
a total stock market index fund with a reputable mutual fund company that
offers low costs. Do it through your workplace if they offer to match your
investments in a sensible program. If your company doesn't offer a good
plan, start an Individual Retirement Account (IRA) to grow your money tax
free. Contribute regularly, rather than trying to time the market.
3. Diversify internationally, since we don't
know which countries will prosper in the future.
4. Diversify with bonds. Since we can't know
for certain whether stocks will beat bonds, even over longer periods of time
(the past isn't prologue), don't put everything in stocks. A good rule of
thumb is to let your percentage of bonds be equal to your age. Buffett's
mentor, Benjamin Graham, recommended a 50/50 split.
5. Diversify with real estate, starting with
your own home, within a price range you can afford.
Breakfasts 7-10: Live Wayyy Beneath
Your Means
So where do you find all that money to
invest? You can either earn more or save more. The benefit to saving is that
"a dollar saved = two dollars earned," once you factor in that savings
aren't taxed. After a lifetime of financial study and writing, teaching and
counseling on finances, Ron Blue summed up the most important concept in the
road to financial freedom in one, brilliant sentence:
"Spend less than you earn, and do
it for a long time."
Here are some ways to save...
-
Write down all your expenses for
a couple of months.
-
Find creative ways to cut back.
-
Learn practical ways to save on
clothes, food, cars, houses, and every area of expense.
Breakfast 11: Don't Lose Money
Buffett once gave two rules of
investing:
"Rule No. 1: Never lose money.
Rule No. 2: Never forget Rule No. 1"
Miller lists "Ten Popular Ways to Lose Loads
of Money," illustrating them with people like Mark Twain, Thomas Jefferson,
and Led Zeppelin. Tips to losing money include abusing drugs and alcohol,
not taking debt seriously, abusing credit cards, avoiding wise counsel,
listening to the wrong counsel, gambling and marrying a materialist.
Breakfasts 12-14: Make Money Through
Finding Great Jobs, Excelling at Your Jobs, and Investing in Your Mind
Counterintuitives include:
-
Don't let your poor GPA slow you down.
The average millionaire had a "C" average.
-
Concentrate on sharpening your strengths
and passions rather than focusing on your weakness. Most millionaires
love their jobs, although their jobs cover a wide spectrum of vocations.
There are not just a few great jobs that only the smartest and most
talented can get.
-
You are often more likely to find jobs by
going to places that fit your passions and strengths, even if they
aren't hiring. You can position yourself as first in line when a
position opens, perhaps getting hired before they advertise an open
position. If they don't have an opening, volunteer to work free of
charge for a time.
-
There are many ways to learn, and Sam
Walton used them all in building Wal-Mart. Paul Orfalea was ADD and
Dyslexic, never learning to read well. Yet, he built Kinkos from nothing
to a thriving chain by observing, constantly learning from others, and
depending on others to round out his weaknesses. Learn from your
competition; get candid input from everyone around you, whether or not
you consider them "smart" or "important." Everyone is you intellectual
superior in some way. NEVER STOP LEARNING!
Breakfast 15: Look for Happiness in
the Right Places
You can be rich and miserable. Sure, climbing
out of poverty leads to greater levels of happiness. But Psychologists have
found that after we've met our basic needs, just adding $10,000 or more to
our salary doesn't do much for our happiness. So what does bring
happiness?
Miller uses the acrostic HAPPIER.
Help
Others (Bringing happiness to others makes us happy.)
Attitude
Check (Count your blessings and be grateful.)
Pursue
Quality Relationships (With family and friends)
Pardon
Those Who Wrong You (Don't hold grudges.)
Immerse
Yourself in Something (Work and/or play)
Envy
Not (Stop trying to keep up with the Joneses.)
Religion
Can Help (Extensive studies find deeply religious people experiencing
greater levels of happiness.)
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