Stop Over-Thinking Your Money

I was a little shocked when Preet Banerjee’s new book landed in my mailbox.

Not because Preet is ridiculously handsome on the cover and a sharp dresser to boot, but because his tome, Stop Over-thinking Your Money!: The Five Simple Rules Of Financial Success, contains only five simple rules. Five? Really?

 Your copy won't include the sticky notes. Sorry 3M.


Your copy won’t include the sticky notes. Sorry 3M.

Everyone knows five rules are not enough. Heck, I have dozens of blog posts boasting as few as 10 rules, a handful listing over 50 tips, and my own personal finance book documents 397 ways to rethink money. Given my vast experience with itemization, I would say I know a formidable list when I see one. “Five simple rules” seems a little light in comparison.

So I tweeted Preet with my concern.

As a Globe and Mail columnist, a money expert for the W Network, the host of Million Dollar Neighbourhood on the Oprah Winfrey Network, a financial panelist on CBC’s The National, and author of the popular blog WhereDoesAllMyMoneyGo.com (phew), I knew he wouldn’t disappoint.

Maybe I’m over-thinking Banerjee’s list. Maybe money can be mastered in five simple steps? Maybe I should just read his book.

About the book.

I have three observations. I will share all three in a list.

1. How to get an ‘A’ in personal finance. Follow the rules, get an ‘A’. Banerjee handily argues you’ll improve your financial health by reducing debt, saving money, disaster-proofing your life, reading contracts carefully, and consuming less stuff. “An A+ is better than an A, but an easy A is way better than the C- most people are currently scoring,” writes Banerjee.

2. Sincere yet tough, a fun read. Banerjee has a great conversational writing style — he delivers some tough-love zingers and sends them flying in a sincere and encouraging way. He wants you to succeed financially and explains that while his rules are simple, the challenge is in the execution. Also, he can’t execute the rules for you — you have to do the homework if you want that ‘A’.

3. Tweet with Preet. Preet really wants you to tweet him. I know this because he offers up his Twitter handle (@preetbanerjee) for general guidance at least four times. This is amazing. This is astounding. This is unheard of for a seriously popular financial guy. I’m into it.

tweet preet

For the rest of my review I’m tweeting with Preet. He doesn’t know this yet.

Five Simple Rules Of Financial Success

I thought I was an ‘A’ before reading Stop Over-thinking Your Money! Turns out I have room for improvement. My guess is we all can improve our finances when we know where to look. Banerjee shows you where to find your financial faults, and offers a solution.

Here are the places I’m working on to earn my ‘A’.

Disaster Proof Your Life

I could do a lot better with Rule One: Disaster Proof Your Life. My life isn’t a disaster, but it could be without taking a closer look at disability insurance. Carl has some nice coverage through his employer — maybe you do too. But if you’re self-employed (like me) or you don’t have a solid benefits plan (like Carl), then Banerjee advises you to “run, don’t walk, to get a disability quote from an insurance agent.”

“You insure your house and car,” writes Banerjee. “But what about your single biggest asset: the ability to earn an income for the rest of your life?”

I feel like a big asset for not covering my biggest asset. I don’t want to end up like one of Banerjee’s sad scenarios, I want to be his awesome example. So I’m getting disability insurance.

Do a ‘Financial Fire Drill’

A bell went off in my brain after reading Banerjee’s suggestion for running a financial fire drill. So I tweeted Preet.

I love this idea so much that I’m fire drilling right now. You should too.

I figure if you follow the first page of this chapter alone, the book has way more than paid for itself. Disaster proofing your life includes getting the right life insurance (he explains this sooooooo well), setting up a will and powers of attorney, and starting that emergency fund.

Now go and get disaster proofed.

Spend less than you earn.

“Spending less than you earn is the cornerstone of financial stability,” writes Banerjee. “It makes possible the elimination of money stress and is the beginning of wealth creation.”

Here’s the the mathy math: Surplus X Time = Wealth

I agree with Preet that this is an “unsexy” formula. But it’s the truth, and doing a little mathy math is how to score that ‘A’. Scoring is fun, after all.

And score you will by getting with a budget to “save the savings.” To help, Banerjee does the world a solid by recommending my blog and Budget Spreadsheet to his readers.

preet banerjee book

budget spreadsheet

squawkfox_praise

Now that’s a squawky solid. I couldn’t help but tweet Preet.

Despite being the purveyor of a “ridiculously awesome” budgeting series, I find my own budget a little ignored as of late. Life can move fast, and my life has changed drastically over the past few months. Since moving from my home on the farm, I now pay big city rent, have increased child care expenses, but spend less on transportation thanks to skipping my car and taking the subway. I need to update my budget to reflect these changes.

Since change is the only constant in life, my guess is your household budget could use a refresh too. Get to it.

Read the fine print.

“If you are worried about wasting someone’s time while you read a contract in front of them, don’t be,” writes Banerjee. “If you signed a contract, you are bound by it.”

Being a kind and courteous contract signer worried about someone’s time is such a Canadian sentiment. When it comes to reviewing the fine print, we Canucks should aim to be less Canucky.

Because contracts with fine print can be scary, I felt the need to tweet Preet.

Contracts can take a lot of different forms. Life insurance, credit cards, mortgages, rental agreements, job offers, marriage licenses, divorce papers, health forms, car financing, and even less major financial stuff like buying goods online. Hello eBay scams!

Not reading the fine print can cost you dearly. I’ve paid the price on a few purchases, so I’m a huge fan of paying the bucks to have a lawyer read over the paperwork when the print is a little too fine.

Oh, and Banerjee says, “don’t sign contracts at the door.” He explains why in his popular money podcast, Episode 11: Mostly Money, Mostly Canadian. Download from iTunes — it’s free.

So where am I going with this?

Tweeting with Preet is fun.

Disaster proofing my life and running a financial fire drill is less fun, and that’s why Stop Over-thinking Your Money! has probably saved my financial assets a few times over.

Rule 3: Aggressively pay down high-interest debt and Rule 5: Delay consumption are must reads, important words to follow. Banerjee gives you the plan to attack money-sucking credit card debt — you just need to follow it. The chapter on delaying gratification has some lovely humour.

For those who are comfortable with the “Five Simple Rules,” the latter half of the book explains investing basics, financial advisors, and insurance 101.

One final tweet to Preet.

Update: A financial advisor may not be for you. Check out Preet’s podcast Episode 21: What is a Money Coach? to learn more.

So yeah, Banerjee delivers the financial goods in just five simple rules, and money can be mastered in a concise list. For now I’m working hard for my ‘A,’ and I’ll probably tweet Preet later for some ‘A+’ curriculum. I’m studious like that.

Pick up a copy of Stop Over-thinking Your Money!: The Five Simple Rules Of Financial Success at Chapters Indigo.

Love,
Kerry

Other reviews of Preet’s book:

Your two cents:

  1. Ruth Cooke January 9th, 2014

    The book sounds like a must read for me. I’ll be checking it out for sure!

    Don’t know if he mentioned this in the “disaster proofing” part, but it’s something parents should be thinking about. If you and Carl both die, leaving Chloe as a minor, who will be her guardian? I realized that I’d need to think about this when our third son was diagnosed with autism, as the usual choices (grandparents, brothers, sister) were not appropriate.

    Have a talk with your choices, and see if they’re willing (and financially able) to take over care of Chloe if something should happen to you.

  2. Catherine Schuler January 9th, 2014

    It’s absolutely essential for parents to ensure a plan is in place for their children in the case of a disaster, and that money (via insurance or assets) will also be there so that guardians are not financially burdened by taking on your child.

  3. Merlin January 9th, 2014

    What I like about saving, is the culture of saving. Once you get past the first hurdles, watching your savings grow is addictive!

    And having some savings is nice when those unexpected “opportunities” come along. That’s opportunities, not indulgences.

    It’s also nice when life takes unexpected turns. Like when both my sons get married within 3 months of each other!

  4. Tess @ Tips on Life & Love January 9th, 2014

    “Spending less than you earn is the cornerstone of financial stability”– this is so true, and yet such a difficult concept to understand, especially here in America. Anyway, this was a very insightful post– thanks for sharing!

  5. Eric Putnam January 9th, 2014

    Thanks Kerry for sharing this great review. I have just finished reading Preet’s easy to follow book. As a former banker I highly recommend it as a “MUST READ” to all Canadians who want to improve their financial knowledge and skills. Global Tv Toronto did an interview of Preet this week too that is worth watching. http://globalnews.ca/video/1066843/preet-banerjee-offers-financial-advice-for-2014 PS Will be posting link to this review to our members at Debt Coach Canada

  6. Karen January 10th, 2014

    Consuming less can be taught very young my twin boys will turn sixteen in the spring and both have asked for an unusual gift. They both want a forklift operators ticket. They both feel this will lead to higher paying student jobs over the summer. they would like us to pay for it. Neither one has an iphone and doesn’t care. One uses my old desktop computer purchased for a home run business over 8yrs ago and the other an ipad2 that he won through our bank when they first came out. They both feel lucky and are happy even without the ‘latest’ everything.

  7. Ajka January 10th, 2014

    Obviously we differ in what consider “ridiculously handsome”.

    Otherwise, thanks for the heads up re the book, I will definitely read it. The fire drill sounds like a very idea. I would assume that everybody reading your blog has a budget spreadsheet that is being updated on a daily (or at least very frequent) basis.
    In December 2012, I downloaded yours – now that’s a ridiculously handsome file! – which I tweaked a little to suit my own needs.
    Not only I track all my expenses in it, I also make sure that I back it up each week because file corruption can and does happen. There is nothing quite as eye-opening as recording religiously every single expense, no matter how big or small, to see how much $ has been saved (or frittered away). So thanks for that.

    Kerry, perhaps you research and post about writing one’s own will using some downloadable form?

  8. Alexander Mancini January 10th, 2014

    I think your article is great although I don’t think time X surplus = wealth.

    10% of the population (the wealthy) control 90% of paper and hard assets. What makes wealth is acquiring assets that generate income, not trying to save as much money as possible with a job.

  9. Karen March 28th, 2014

    Read Preet’s book. Got injury insurance. Waiting to see if I qualify for critical illness insurance. $100 a month for both, some say it’s a good deal. It gives $1,000/no. payout for either insurance, for up to five years. I think that’s a steep price when comparing home and car insurance premiums to coverage. Our house is paid off, as are cars and I don’t have any debt. No kids. Healthy savings. BUT if something happens and I can’t work, I want to cover at least my living expenses. So I agreed to this type of extra insurance.

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