Book Review: All Your Worth: The Ultimate Lifetime Money Plan. In this blog post, I review All Your Worth: The Ultimate Lifetime Money Plan by Elizabeth Warren and Amelia Warren Tyagi. This book boasts a new way of thinking about and managing money that will give the reader lifelong emotional peace and financial well-being.
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May’s book club read was All Your Worth – The Ultimate Lifetime Money Plan. I don’t recall how I came to know about this book, but I’m glad I discovered it. Although this book was written over a decade ago, it definitely has timeless content and interesting money principles.
In this blog post, I’ll share a summary of All Your Worth – The Ultimate Lifetime Money Plan. I’ll also go on to share the lessons I’ve learned from the book. Finally, I discuss the things I liked/disliked about the book and give it a rating out of 5.
Elizabeth Warren is one of the U.S.A.’s most influential progressives and a longtime champion of working and middle-class families. Warren is the senior senator from Massachusetts and a Democratic candidate for president. A former Harvard Law School professor, she is the author of ten other books, including A Fighting Chance, a national bestseller that received widespread critical acclaim.
Amelia Warren Tyagi, along with Elizabeth, is co-author of The Two-Income Trap. She is the co-founder and Chief Operating Officer of The Business Talent Group.
The theme of this book is balance. No matter where you are on your financial journey, you need to find balance in every area. Warren suggests that your income should be divided up as follows: 50% must-have’s, 30% wants and 20% savings (or debt, whichever is applicable to you).
Quite different to Ramsey’s teaching… go gazelle intense at paying off debt, and don’t even think about enjoying your life until you get out of the mess you made! I mean, this isn’t verbatim, but if you’ve listened to a few of his podcasts, or read any of his material, you’ll know that Dave Ramsey is very intense when it comes to paying off debt.
Warren, on the other hand, promotes a life of balance. Yes, you should clear all your debt, but for your own peace of mind, you should still allow yourself some fun money.
In this book, Warren & Tyagi outline six steps for eliminating your financial troubles and building a lifetime of riches. They are:
First Step: Count All Your Worth
This step outlines the balanced money formula (see above picture). Work out where you currently are in terms of your percentage splits for Must-Haves, Savings, and Wants. Identify your problem areas and the categories in which you’re overspending.
Second Step: Escape From The Thinking Traps
Identify the negative thinking traps that may be preventing you from achieving your goals. Assess the role these thinking traps play in your life and eliminate them. E.g. “I can never stick to a budget”, “money is too hard”, “I can’t save $2 let alone $200”. Unless you believe that success is possible, nothing will ever change.
Third Step: Count the Dollars, Not The Pennies
Focus on reducing the big expenses instead of trying to save a few dollars here or there. Dollars are worth more than pennies, so look at ways to reduce your must-have expenses. If you can’t reduce your must-have’s to 50%, look at ways to increase your income.
4th Step: If You Can’t Afford Fun, You Can’t Afford Your Life
Give yourself permission to spend and set clear limits on how much is for fun. This money (30% of your income to be precise), can be spent on your wants without any worry or guilt.
5th Step: Build Your Future, Pay Off Your Past
Use the remaining 20% of your income to pay-off ‘steal-from-tomorrow’ debt. This is debt that you’ve taken that doesn’t build towards a brighter future. Things like student loans, mortgages and car loans are not included here.
6th Step: Build Your Dreams A Little At A Time
Once you’ve paid off any existing debts, the final step is to save and invest 20%. Create a lifetime savings plan. The stages of this plan are:
When I first saw the balanced money formula I thought it would be mission impossible to bring my must-have’s down to 50% of my income. At least, this was until I read the author’s break down of what must-haves actually are.
Must-haves are things required for your dignity and survival i.e. food, transport, and shelter. We shouldn’t sign long-term contracts for things that aren’t must-haves i.e. gym membership and mobile phone contracts, as doing this turns wants into must-haves and drives up the must-have’s expenses category. Don’t fall for it!
If you’re not one for tracking all your expenses and paying close attention to a detailed budget, then this book would appeal to you. These authors do not subscribe to this school of thought “Look after the pennies and the pounds will look after themselves”. This book encourages you to focus on the big-ticket items and don’t sweat the low hanging fruits. The real savings are not in the small costs, they are in the big expenses such as home and car.
In the book, the authors refer to debt as steal from your future debt and it’s so true. We don’t consider this when we rush to get ourselves into debt. All the non-essential purchases that we made on credit are literally robbing us of our future financial success.
I appreciate that the author addresses the fact that a lot of poverty particularly in the impoverished African-American and Hispanic communities wasn’t the fault of the people. It was a systematic thing designed to keep them in debt and make the banks money.
A few generations ago, credit debt was not an issue because credit wasn’t available to the poor or working class. I love that in addition to providing this education, they brought the balance. While the system may be against certain groups of people, they must take the power back and resist the bait.
This is the mistake a lot of people make. They find themselves in debt and then take on even more debt to pay off the initial debt. There’s no way around it, the debt needs to be paid so the sooner you face up to it and start to pay, the better.
Take responsibility for your financial situation rather than playing the blame game. As long as you are always blaming someone else for your situation, things will never improve for you. the moment you take responsibility and work on the things within your abilities the closer you get to putting your finances in order.
I would rate this book a 4/5. Although the balanced money formula isn’t a budgeting method that I will be adopting any time soon, it’s a good formula and I can see why it’s helped so many people over the years.
All Your Worth has some great principles and there are many questions written throughout the book which will really help get you thinking about your relationship with money. You’ll identify the areas in which you are failing with your budget and the reasons why. In addition to telling you where you’re failing, the authors give you practical tips on what to do to overcome your issues.
I like that the authors encourage you to live a balanced life. Yes, it’s important to pay off your debts and save towards your future, it’s equally as important to enjoy the fruits of your labour. If you’re struggling in the area of your finances, or just want to know a better way to manage your money, I would recommend you give this book a read.
Have you read this book before? What did you think of this book? Was I being too critical? What rating would you give it? Comment below.
In January 2020 I started a Finance Online Book Club where we read and review one personal finance book every month. So far in the book club we’ve read and reviewed the following books:
You can see the complete 2020 Reading List in the resources section here.
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Wife and mum of three boys on a journey to achieve financial freedom. Earn more, spend less and invest the difference.
In this blog post I’ll be reviewing Smart Money, Smart Kids by Dave Ramsey…September 20, 2020