Every now and then a new personal finance book comes along that promises to change the way we think about money. But we’re left feeling disappointed, more often than not, when we realize there’s no silver bullet cure to get our finances on track. No latte factor or folksy barber wisdom can tell you exactly how to manage your money.

The fact is that good financial health is rather boring. It’s about having goals, being mindful of your spending and aligning it to those goals, diversifying your investments and keeping costs low, avoiding the big mistakes, and protecting your family from potential disaster.

The One-Page Financial Plan Review

We often veer off course when it comes to aligning our spending with our values – understanding why money is important to us. In his new book, The One-Page Financial Plan, Carl Richards helps answer that question and more with a simple, yet in-depth, 10-chapter road map.

The One-Page Financial Plan

The One-Page Financial Plan is all about the things that really matter to you. If you had to put it all on one page, what would it look like? It should let you know whether you’re on course to meet your goals, or whether you need to make some adjustments.

For example, the author’s one-page financial plan looks like this:

Time with family doing what we love.

  1. Fully fund all retirement accounts each year.
  2. Fund kids’ education accounts each year.
  3. Save for house.

“Think about your one-page plan as a snapshot, not an instruction book. If you’ve ever put together a kids’ toy, you’ll know that most of them come with a fifty-page instruction manual. Sure, the fifty-page plan is incredibly important—probably vital if you want the drawbridge on the castle to open or the rocket to launch—but what’s arguably most important is the picture on the front of the box. The picture lets you know you’re on the right track.”

Richards takes us through the entire process, starting by answering your most important money question (why is it important), figuring out where you want to go, and getting really clear about your current situation, before diving into spending, budgeting and saving for the future.

The author uses powerful personal examples to drive home two points: our financial future is unknown, no matter how precisely we plan; and when it comes to financial planning, there’s no one-size-fits-all advice. Richards humbly acknowledges his human (and fallible) qualities when he describes how irrational exuberance got the best of him (twice) in the dot-com and real estate bubbles. One decision cost him $10,000, while the other cost him his home.

One of the biggest takeaways in the book for me was to adopt a “no shame, no blame” attitude. Too often we dwell on the financial mistakes we’ve made in the past. Whether we got into major credit card debt, or spent more than we earned, didn’t pull the trigger on a particular stock that’s now soaring, or simply missed a sale on an item that now costs 50 percent more, we need to reframe mistakes as valuable lessons and acknowledge that it’s not worth the frustration.

Chapter 9 talks about the secret society of real financial advisors – ones who diagnose before prescribing, are open about conflicts of interest, transparent about fees and compensation, and will stand between you and the Big Mistake (buying high and selling low).

Finally, chapter 10 is about behaving – for a really long time. Humans are wired for bad behaviour – cognitive biases are part of our genetic makeup. Richards says the key is to set up guardrails that make it very difficult for you to misbehave. Having a plan to reference, including an investment policy statement, will help see you through difficult times. Automating good behaviour (savings, rebalancing) will help you stick to that plan.

Author Q&A and Book Giveaway

I highly recommend The One-Page Financial Plan – it’s great for beginners to learn how to get started with their financial plan, and the more financial savvy readers will find value in the behavioural aspects and powerful stories about money.

Now for the fun part. Carl Richards has graciously offered to answer some of your questions in a follow up Q&A post. He said in an email:

“I wrote this book based on an experience I’ve had repeatedly. I’ll go to lunch with friends or family members. We’ll have a great conversation. The bill will get paid. Then, with only a few minutes left, the other person leans over and says, “Can you help me with [insert financial question]?”

  • How should I invest my money?
  • What should I do about mortgage debt?
  • What should I think about insurance?
  • How can I find a real financial advisor?

This book represents my answers to all those questions. It’s incredibly frustrating to know that there are still so many people lying awake at night worrying and trying to make really important decisions in an environment that feels increasingly complex. I want to reduce the worry and make these decisions easier for as many people as possible.”

Here’s what we’re going to do. Leave your question in the comments below – it could be anything from a specific question about your finances, to some burning question you have specifically for Carl Richards. I’ll send the list of questions to Carl and we’ll arrange a follow-up post to address them.

As a bonus, anyone who leaves a comment/question will be entered to win a free copy of The One-Page Financial Plan. The contest closes at 5:00pm EST on Friday April 3rd and I’ll announce the winner in the next Weekend Reading edition.

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