"Smart Couples Finish Rich" by David Bach

• Money has very little to do with love...and a lot to do with how much you fight.
• It takes very little money to make money...as long as you are patient and disciplined.
• Becoming rich is nothing more than a matter of committing and sticking to a systematic savings and investment plan.
• Everyone makes enough to invest.
• The truth is that most couples don’t have an income problem; what they have is a spending problem.
• Taxes and inflation are never going to be completely under control
• If the two of you don’t start talking about money, you’ll more than likely die broke.
• By planning your finances together as a couple, you will significantly improve your chances of becoming wealthy and being happier together.
• There are three fundamental truths of financial planning
• You can’t plan your finances if you don’t know where you’re starting from.
• You can’t plan your finances if you don’t know where you want to end up.
• In order to stay on track from your starting point to your destination, you have to monitor your progress.
• One of the worst things you can do when you want to move forward positively in a relationship and deal with your finances is to start jumping all over your partner about what he or she is not doing.
• Simply writing down a few meaningful goals can literally transform your future in just a matter of days.
• Life is totally fair. You get what you go for. Go for nothing and you get nothing. Go for something, and even if you miss your main goal, you might still achieve a lot of good stuff along the way.
• Goal-setting works. It’s a fact.
• Make sure your goals are based on your values.
• The clearer you are about your values, the easier it is to base your goals on them -- and the more you base your goals on your values, the more likely it is that you will achieve them.
• Make your goals specific, detailed, and with a finish line.
• In order to achieve a goal, you must know precisely what it is that you’re after.
• Put your top five goals in writing.
• People who write down their financial goals get rich. It’s a fact. Study after study has shown that writing down your goals makes it much more likely that you’ll achieve them.
• Start taking action toward your goals within 48 hours.
• Enlist help.
• No one ever reaches a really important goal without some sort of help from some other person. No matter what the situation is, human beings need other human beings to help them move forward.
• Get a rough idea of how much money it will cost to achieve your goals.
• Make sure your goals match your values...as a couple.
• The reality of life is that just about everyone in America makes enough money to be wealthy. So why aren’t we all rich? The problem isn’t our income; it’s what we spend.
• Over time money compounds. Over a lot of time money compounds dramatically!
• You can’t think your way to wealth; you must act your way to wealth.
• If you want to be rich, forget about the government’s help -- you need to plan for your own financial future.
• There are only a few ways of amassing substantial wealth in America today. You can inherit it, you can win it, you can marry it...or you can pay yourself first.
• Paying yourself first means putting aside a set percentage of every dollar you earn and investing it for your future in a pretax retirement account.
• To finish rich, you should pay yourself first by contributing as much as you can to a pretax retirement account.
• You should be saving 10 percent of your pretax income each year.
• That 10 percent you’re paying yourself first is not for anything else but your retirement.
• If you are not paying yourself the first 10 percent of your income, you are living beyond your means.
• If you want to be really rich, you should save 15 percent of your income.
• Paying yourself first as much as you can into your 401(k) plan is essential if you and your partner are really serious about getting -- and finishing -- rich.
• The single biggest mistake people make when it comes to 401(k) plans is not spending enough time reviewing their investment options before they decide which ones to pick.
• Every dollar you invest in your 401(k) investments is a pretax investment. When you invest on your own, you lose that advantage.
• Even if you participate in a 401(k) plan at work, you can still fund an IRA if you wish.
• With a traditional IRA, you must start taking money out when you reach the age of 70.5
• Couples who maximize their 401(k) plans and then contribute to Roth IRAs are setting themselves up to finish rich! I strongly recommend this.
• Contributions to a Roth IRA aren’t deductible, so they will not reduce your current taxes. On the other hand, the money you put in a Roth IRA will grow tax-deferred. Most important, when you take it out, it’s totally tax-free -- provided it’s been in the account for at least five years and you are over the age of 59.5.
• The first priority for both of you should always be to max out your contributions to a 401(k) or similar tax-deductible company-sponsored plan.
• When you convert a traditional IRA to a Roth IRA, you’ve got to pay income taxes on the money in the account.
• Unlike a traditional IRA, with its mandatory withdrawal requirement for people over 70.5, you can leave money in a Roth IRA for as long as you live.
• Remember, whether you’re dealing with an IRA, a 401(k), or any other kind of qualified retirement plan, the process is always the same: you open the account and then you decide where to invest the money.
• As a business owner, the best way to pay yourself first is by setting up one of the three types of retirement plans meant for self-employed people:
• Simplified Employee Pension Plan
• Defined Contribution Plan
• Savings Incentive Match Plan for Employees
• Know what your money is doing.
• Make sure your retirement money is invested for growth.
• You can’t finish rich with fixed-return investments.
• The fact is, most people undercut their ability to finish rich by investing too conservatively.
• If your money is not growing at a rate at least 4 to 6 percentage points higher than inflation, you face the possibility of outliving your income. The bottom line here is that you need to invest for growth.
• Allocate your assets so that you maximize return while minimizing risk.
• The rule of thumb when it comes to investments is simple: the higher the return, the higher the risk.
• Take your age and subtract it from 110. The number you get is the percentage of your assets that should go into equities; the remainder should go into bonds or other fixed-income investments.
• If you’d prefer to keep things even simpler, forget about subtracting your age from anything -- just put 60 percent of your retirement in stocks and the remaining 40 percent into bonds. This allocation typically delivers about 90 percent of the stock market’s return with about 30 percent less risk.
• Invest in your company’s stock, but do your homework.
• Hope for the best, but prepare for the worst.
• Set aside a cushion of cash.
• The rates that money markets pay are usually three to four times what a typically bank account is paying.
• Both of you absolutely must write a will or set up a living trust.
• Wills and living trusts are not documents you should ever try to draft at home by yourself.
• A living trust is basically a legal document that does two things. First, it allows you to transfer ownership of any of your assets to a trust while you are still alive. Second, it designates who should be given those assets after you die. By naming yourself trustee of your trust, you can continue to control your assets -- which means that as long as you live, the transfer of ownership will have no practical impact on your ability to enjoy and manage your property.
• The three most common errors people make with wills and trusts:
• Not seeing it through
• Hiding documents where no one can find them
• Not keeping things up to date.
• Buy the best health coverage the two of you can afford.
• You must have health insurance. The only questions in your mind should be how do you get it and what are your options.
• Protect those who depend on you with life insurance.
• Protect yourselves and your incomes with disability insurance.
• If either of you is in your sixties, it’s time to consider long-term care coverage.
• Almost anything is possible if you just plan for it.
• Why investing in mutual funds makes sense:
• They are easy to invest in
• They offer instant diversification
• They offer professional money management
• They are cost-efficient
• They are liquid and easy to monitor
• They are boring
• A money-market account is a mutual fund that typically invests in very liquid, very safe, very short-term government securities.
• You should never invest in any mutual fund without first reading its prospectus.
• The ten biggest financial mistakes couples make:
• Having a 30-year mortgage
• Not taking credit-card debt seriously
• Trying to get rich quick by day-trading
• Buying stocks on margin
• Not starting a college-savings plan soon enough
• Not teaching your kids about money
• Neglecting to sign a prenuptial agreement
• Not having a greater purpose beyond the two of you
• Not figuring out who’s responsible for what
• Not getting professional financial advice
• By all means take out a 30-year mortgage, but under no circumstances should you take the full 30 years to repay it.
• When you make extra mortgage payments, pay close attention to your monthly statements. Banks often don’t credit mortgage accounts properly.
• Watch your mortgage statement like a hawk!
• If you discover any inaccuracies or mistakes in any of your credit reports, get them fixed immediately.
• The likelihood that you will get rich actively trading stocks is somewhere between slim and none.
• You shouldn’t even consider putting aside money for your kids’ college costs unless you are already putting at least 10 percent of your income into a pretax retirement account.
• The rich almost always use financial advisers.
• Eight golden rules for hiring a financial adviser:
• Hire locally
• Get a referral
• Check out the adviser's background
• Be prepared
• Always ask about the adviser's philosophy
• Go with your gut
• Be prepared to pay for the advice you get
• If you can’t get a referral, do your own research
• The best way to find a top-notch financial adviser is to ask the wealthiest person you know whom he or she uses as a financial adviser.
• Past performance is no guarantee of future performance!
• When your financial adviser makes you some money, take a moment to say “thank you.”
• Good people who work their tails off and add real value get job raises in bad economies.
• At work we don’t get what we deserve...we get what we go for.
• Raises don’t just fall into your lap; you have to go out and get them.
• Don’t be embarrassed to ask for more money. You deserve it.
• Self-employed people can give themselves raises by increasing what they charge for the goods and services they provide.
• Nine week plan to a raise:
• Get real
• How much do you earn on an hourly basis?
• Are you working for a good company?
• Are you currently in complaint mode or action mode?
• Write down exactly what you want
• Clean up the mess
• Get clear on how you add value
• Focus on the 80/20 rule
• Put yourself in play
• Practice asking for the raise
• Ask for the raise
• Nothing will change your attitude about your life and work faster than cleaning up your messes.
• If you have a cluttered office or cubicle or desk at work it’s going to cost you money -- and possibly a raise.
• Throw it away and see if it comes back...
• If it is really important and I throw it away, it will come back. Someone will always let me know if I’ve missed something important.
• Use three criteria to decide what to keep and what to throw away:
• Do you love it?
• Do you use it?
• Is it of either real or sentimental value?
• If you can’t answer “yes” to at least one of these questions, out it goes.
• The only reason a boss will give an employee a raise is because that employee is worth it -- in other words, because he or she adds value to the enterprise. So before you ask your boss to give you a raise, you need to make sure you understand exactly how you add value.
• 20 percent of what you do accounts for 80 percent of your results. In other words, 80 percent of your effort really doesn’t matter all that much.
• You may be paid for your time, but you are rewarded for your results.
• In simple terms, it’s all about focusing on what gets results, and cutting out everything else that wastes your time and energy.
• A big part of being able to get a raise is having the confidence to ask for one.
• It’s often a good idea to backup your verbal request with a written one. Putting almost anything in writing makes it more real. At the very least, it will make your request impossible to ignore.
• I can’t emphasize enough the importance of hearing yourself asking for the raise and stating your case out loud a half-dozen times.
• When asking for a raise -- whether of your boss or your customers -- remember to present your request in percentage terms, not a dollar amount.
• The three words “I love you” can never be heard enough.