The book "Financial Management Checklist for Middle-Class Families" written by Jonathan D. Pound, a well-known American financial management expert and best-selling author, provides a wealth-covering checklist for middle-class families with higher incomes, a certain wealth foundation, and relatively strong needs for investment and financial management. It provides financial advice in 10 aspects including outlook, income, debt, savings, investment, house buying, consumption, personal taxation, insurance, and retirement planning to help middle-class families protect and accumulate wealth and move towards financial freedom.
Unlike many similar works on the market that focus on investment and financial management techniques, Jonathan D. Pound repeatedly emphasizes the important principle of frugality in this book. At the beginning of the book, he talks about how important it is to have a long-term financial plan, but if you spend money as you please, it will make the long-term plan a meaningless piece of paper. In fact, the most important meaning of frugality is to shift your focus from spending money to wealth management, thereby giving full play to the power of compound growth of existing wealth. Even if some families have large expenses, such as housing loans, car loans, children's tuition fees and other rigid expenses that have no room to be reduced, there is always a surplus left. Even small amounts of funds can start wealth accumulation through wise management.
When elaborating on ways to get rich, Pound once again analyzed the common expenses in citizens’ lives, and listed some methods and ideas that can accumulate expenses in daily life: bringing bread and coffee to work instead of buying outside, bringing lunch to work instead of Go to restaurants, buy fewer lottery tickets, patronize cheaper restaurants, take public transportation or commute to get off work instead of driving, buy urgently needed generic goods instead of brand-name goods. If you do this, according to the average American city In terms of consumption level, each person can save 75-160 US dollars a week, and the annual savings can reach 3900-8320 US dollars. The money saved, based on the annual investment return rate of 7%, will be US$23,000 in five years and US$860,000 in 40 years.
Therefore, based on this, the book "Middle-class Family Financial Management Checklist" strongly recommends that middle-class citizens should develop the habit of preparing personal and family budgets, record how every penny is spent, regularly arrange future expenses, and continue to work hard. To improve the efficiency of spending money, accumulate as much money as possible for investment.
When discussing financial advice on consumption, Pound's approach still focuses on living within one's means and careful planning. He objected to the belief that many people now take "the more you spend money, the more you can fully enjoy life", pointing out that happiness and joy lie in the process of steady improvement, continuous development for the better, and the realization of beautiful visions. Moreover, whether we are running a person's life or settling down a family, we will inevitably have to make large expenditures regularly or irregularly, so we need to save and prepare for tomorrow.
What’s interesting is that Pound gave people completely different suggestions for buying cars than many other experts and consultants. That is, if a person doesn’t like driving very much and rarely travels by car, he should buy a good car or a new car and take good care of it. , try to use it until it is scrapped, which is wise and saves money; if the car buyer likes the car very much, he can consider a second-hand car, because car lovers will inevitably change cars frequently, and the cost of buying a second-hand car is higher than buying a new car directly. save.
Ironically, whether in China or many other countries and regions, people who receive windfalls such as inheritances, bonuses, and lottery wins often find it difficult to preserve their wealth. The advice given in the book "Middle-class Family Financial Management Checklist" is to calmly pay off credit card debt and other high-interest debts first, and consider starting a safe investment plan and pension plan; after that, consider paying off your credit card debt and other high-interest debt. The loved one realizes something that he has always wanted but cannot afford, such as buying a new car or a new house, but it is not appropriate to eat and drink or "travel" around the world without financial budget constraints; After this, the remaining funds can be used to invest in your own business or new skills.
When it comes to debt, the book "Middle-Class Family Financial Management Checklist" believes that only owner-occupied housing, education, and rational improvement of family conditions can be regarded as value-added assets that need to be borne by liabilities - although properties other than owner-occupied houses are usually There is also potential for appreciation, but considering that debt itself has risks and is also related to our credit, it needs to be done with caution.
"Financial Management Checklist for Middle-Class Families" recommends that citizens from middle-class families need to teach their children to manage finances. It emphasizes that first of all, do not believe that TV can help children manage finances. The core of many concepts conveyed in TV advertisements and film and television works is immediate consumption, not Live within your means and control risks; secondly, when buying things, encourage children to apply for and use coupons, but it must be emphasized that you cannot waste money buying unnecessary things just because you want to enjoy coupons; thirdly, calculate with your children The price and quantity of the required items, establish a budget and purchase plan; fourth, give children pocket money regularly, encourage them to keep the money, make a budget, and make a summary of the expenditure; fifth, do not give children high-denomination items Instead of banknotes or large digital red envelopes, give the smallest denomination of banknotes; Sixth, when families purchase financial products such as bonds, do so with their children. Similarly, when families use credit cards and repay credit card debts, do not avoid their children; Seventh, , parents should tell their children about their financial management mistakes and losses.
Books reviewed:
Book title: "Financial Management Checklist for Middle-Class Families"
Author: (U.S.) Jonathan D. Pound
Translator: Lei Jing
Publisher: CITIC Publishing Group
Publication date: June 2022
