Book Review

Book Review – The One-Page Financial Plan by Carl Richards

Adam Books, Reading 2 Comments

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I have to say that I absolutely loved this book. The One-Page Financial Plan by Carl Richards is a masterpiece in simplicity. His ideas aren’t necessarily new and the book covers a lot of the same ground as many others. BUT Richard’s ability to distill important ideas in to simple, memorable, and teachable images is a gift. It’s incredibly accessible to the average person and convey’s lessons in a single image I could spend an hour trying to convey.

The drawings alone are more than worth the cost of admission.

Carl covers a lot of the basics, and I think this is the perfect book to gift to a recent college graduate or young person early in their career. It should help distill some basic lessons and get them on the right path.

His main focus isn’t on tactics or strategies. It’s not about the “how” but about the “why” which is usually key when helping people build the right habits.

As he describes,

“your one-page plan simply represents the 3-4 things that are the most important to you: some action items that need to get done along with a reminder of why you’re doing them. Creating a financial plan is a process. My wife and I look at our plan often – whenever we need to make a big decision, it will be there to guide us – but I’m sure we’ll be adjusting often.”

“Creating a plan is one of the best ways of giving yourself something that everyone wants more of: time.”

Much like, Your Money or Your Life, Richard‘s starts with defining what is important and what your current financial position looks like. From there, he focuses on where you want to go, and the steps you need to take to get there.

Similar to James Altucher, the book suggests letting go of outcome-based goals and focusing on the process of living the lives we want to live.

I highly recommend the book, especially to any young people recently out of college. If you want to see more before purchasing, check out his great blog over at Behavior Gap. For more book reviews head over to our Books Page.

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Notes:

Part 1 Discovery

Chapter 1 The Most Important Money Question

Why is money important to us? Why uncovers deep desires and fears that awe are often too busy or too scared to think about.

When asking why:

  • Set aside time
  • Get out of the house
  • Let go of the past
  • Adopt a “no shame, no blame” attitude
  • Skip over goals – for now

Navigating money discussions:

  • It’s impossible to overestimate money’s role in our relationships
  • We all have baggage
  • Know when to talk about money
  • Money seems to be the last thing we talk about

The book describes Carl’s own goals, which as the name implies, easily fit on a page:

Art04_Carls1PagePlan_vs2_sample

Chapter 2 Guess Where You Want to Go

We’re scared of uncertainly, but the future is always uncertain. All we can do is course correct as we go. Be flexible.

  • Let go of expectations about the future
  • Let go of outcomes we can’t control
  • Let go of worry
  • Let go of measuring against others

Chapter 3 Get Really Clear About Your Current Location

Create a personal balance sheet.

Part 2 Spending and Saving

Part 4 Budgeting as a Tool for Awareness

“Budgeting isn’t just about numbers. It’s about awareness. Budgeting = awareness.”

Part 5 Save as Much as You Reasonable Can

“If you didn’t start early. Start now. Stop waiting for the golden ticket; just start saving.”

  1. Be more mindful of the money flowing in and out of your hands.
  2. Save one-time windfalls
  3. Automate savings
  4. Set short-term goals.

Don’t be surprised if you have more goals than resources.

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Part 6 Buy Insurance

Not going to delve in to this.

 

Part 7 The Best Investment I Ever Made: Borrowing and Spending Wisely

Borrowing for a home is ok.

Part 8 Invest like a Scientist

  • Diversify your portfolio
  • Keep the costs low
  • There is a correlation between risk and reward

There’s no one size fits all answer, but Richard’s does provide a basic default portfolio of 60% stocks (40% domestic, 20% international) and 40% in fixed income. This is a basic 60/40 portfolio.

Part 4 Avoiding the Big Mistakes

Don’t buy high and sell low.

Chapter 9 Hire a “Real Financial Advisor”

Advisers should:

  • Diagnose before they prescribe
  • Open about conflicts
  • Transparent about compensation.

Chapter 10 Behave, For a Really Long Time

Behave, for a really long time

Behavior trumps skill and congnitive biases are your enemy.

  1. Have a plan
  2. Automate good behavior
  3. Remember, remember, remember
  4. Leave it aloneArt44_SpeculatingInvesting_sample

As I mentioned above,  The One-Page Financial Plan by Carl Richards is a fantastic book and a must read for the personal finance community and any young person you want to set on a solid path. Pick up a copy.


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Comments 2

  1. TheMoneyMine

    Hey Adam –
    I didn’t know about this book or author, until I realized I had seen the ‘behavior gap’ sketches before and I like those!
    Thank for sharing your thoughts on the book and Carl Richards’ blog, this is an interesting discovery.

    Have you found something in the book that would make you do, or consider doing, things differently?
    Nick

    1. Post
      Author
      Adam

      I have to admit it didn’t really change any of my personal goals or process. The book isn’t revolutionary in what it covers and at this point I’ve read dozens of personal finance books. It’s hard to find new ideas.

      But I think it might be the best book for beginners I’ve ever come across mainly for the illustrations. I could write 10,000 words that don’t do what a few of those drawings do for really instilling the basic principles. I’ve been gifting this book to my cousins that are graduating college recently.

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