All Your Worth - Elizabeth Warren

DevastatDevastat Posts: 35Member
edited January 2012 in Personal Finance
Has anyone read this? I am a total newbie in budgeting, just started using YNAB (my first budget begins on 1st of May) and recently luckily also stumbled onto this book and started reading it few days ago. I think it is an amazing complement to the YNAB software.

Written by a Hardward Law Professor, it is very well written for people who are not very educated in finances. The principles in the book really help me in creating my monthly budgets. I think that the life balance of '50% of what you need, 30% of what you want and 20% savings' seems like a really good principle and you can see how your financial balance is when looking at your budget from this perspective.

Haven't gone thru it all yet, but would already absolutely recommend anyone to read this book!
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Comments

  • maryeamaryea Posts: 587Member
    I think I've read that one..probably still have it around here...thanks for the reminder. Yes, it's a good book. When I read your post I decided to look at my budget percentages as they were about that but we have gotten a little off due to some obligations we have taken on that we shouldn't have. We are saving about 25% though (it varies each month), but our wants are only 11% so I think our commitments/have to haves have gotten too high. Need to see if I can get out of any of them before long. I'd like to spend more for wants! :D
  • DevastatDevastat Posts: 35Member
    Checked my life balance for my first ever starting budget (starting tomorrow 1st of May) and it was Must have 47% - Wants 28% - Savings 24,8%, so close enough to the 50-30-20 that the book is suggesting to have, so I am quite happy!
  • Frank GrimesFrank Grimes Posts: 1Member
    Hi,
    Got to agree that the 50-30-20 concept helped enormously. I just have three master categories in YNAB of Needs, Wants and Savings and I can see how I'm doing in the 'pie' in the ynab reports section.

    She gives a very informative presentation that really explains how good people ended up in this mess. The Coming Collapse of the Middle Class (2007) It's an hour long but I though it great background information.
  • nibonibo Posts: 186Member
    Frank I didn't even think of using the reporting tools Pie Chart to see my ratio! Thanks for the tip. :)
  • DevastatDevastat Posts: 35Member
    I am now half-way through the book - really amazing stuff. This book should read by everyone. Thanks a lot for the link Frank I will be very glad to listen to it!
  • icecloneiceclone Posts: 3Member
    I have this in my kindle as well. Great stuff to combine with YNAB. I also have 3 major categories now, just needs, wants and savings.
  • JaxiaJaxia Posts: 235Member, Beta Tester
    I've never heard of this book, but after reading these comments I went to check out the reviews -- now I really want a copy! Thanks for sharing.
  • litterbuglitterbug Posts: 3,646Member, Beta Tester
    Oh, that Elizabeth Warren. If I'd known she had written a book on personal finance I would have gotten it long ago! She's one of the smartest, most sensible people I've ever seen on TV. I just reserved the book at the library online.

    BTW, she may run against Scott Brown in Massachusetts when he runs for reelection.
  • gileslewisgileslewis Posts: 81Member
    http://www.getrichslowly.org/blog/2008/10/27/the-balanced-money-formula/

    This was the ideal for the article I wrote...
    http://ukmoneymonitors.blogspot.com/2011/10/how-to-categories-tags-your-spending.html

    Time to read the whole book just ordered from the US, it'll take a few weeks to arrive in the UK but worth it :o
  • cdubcdub Posts: 168Member
    I didn't know she wrote a finance book. I just added it to my my Audible wishlist... I'll be getting it as soon as I get new credits.

    And yes... I hope she whups Scott Brown.
  • cdubcdub Posts: 168Member
    I reorganized everything into Needs, Wants, and Savings categories last night. I like it. Very simple. I'll be getting the book from Audible tomorrow when my credits come in.
  • dmdunca44dmdunca44 Posts: 197Member
    I've been very impressed with Elizabeth Warren. She is so articulate; she can explain complex ideas in terms I can understand.

    I do have a question about "savings" (it may be answered in the book -I've only begun to read it).

    Exactly what constitutes "savings"?

    I set aside money each month for the annual property taxes. I don't consider that "savings", but rather an annual fixed expense. Ditto insurance premiums. But is that "savings"?

    Then I also set money aside for things that I will need but don't know when or how much. Like the vet, or a repair bill, that sort of thing. Is that "savings"? Or is that simply a lumpy "need"?

    I'm not saving for retirement because I'm retired. So I don't really understand the definition of "savings"....

    Any thoughts?
  • gileslewisgileslewis Posts: 81Member
    Hi

    What is savings?

    As ever there are lots of way to look at 'savings' and it's personal, so you have to find an answer that you believe/relate to. My current view of savings in my budget is...

    SAVINGS
    kids
    longterm
    emergency

    emergency (tag): I use this as an extra buffer, as I get some income in equity and only gets releaised when I sell some stock, so I put it in 'emergency' fund and use it to balance the budget catergories (or in ynab speak whack-a-mole) when needed.

    ONE-OFFS
    holiday
    xmas
    lumpyIrregularStuff

    Some of the other things you mentioned, about lumpy spend or things that you know will happen but dont know when or how much but you want to be ready for, so I save for holiday and xmas, I also have large DIY items like a new front door that I'd put in the 'lumpyIrregularStuff' I could have a 'houseRepair' sub-catergory, but I already have a 'DIY&garden', under my master NEEDS catergory.

    Have a look at my rather rough article http://ukmoneymonitors.blogspot.com/2011/10/how-to-categories-tags-your-spending.html for what the full catergories look like.

    Oh, yes I should say that I dont have retirement down under savings as the pension contribution is taken at source, along with tax, so if you are in the USA you may want to have a sub-catergory in 'one-offs or savings' for tax :-)

    All the best
    Giles
  • dmdunca44dmdunca44 Posts: 197Member
    giles,
    I'm enjoying your blog. I especially (not to get too far off topic) related to the last paragraph. I've found that if I get too caught up in categories, I find myself agonizing whether an item should go into this or that, instead of the big picture. So my own goal is to keep the list of categories as short as I can (I'm trying to get it to 20 or fewer) and not worry too much about whether that take out pizza was "eating out" (Entertainment) or "food" .
  • alicianavyalicianavy Posts: 20Member
    Thank you so much for posting this. I bought the book and I LOVE it.
    I've gotten personal finance books before and found that while the advice was sound it didn't really apply to me.
    This one actually makes me feel like it was written with me in mind!
    So thank you thank you thank you!
  • GoodThymingGoodThyming Posts: 6Member
    Thanks for recommending this book. I think it is a great complement to YNAB and is really a big refinement to Rule 1. It works well with the "give every dollar a job" idea because it gives me a picture on how those jobs should be balanced out for good, sustainable money management and wealth building.

    I think the "Savings" category with the book is kind of fuzzy because you could have savings in "Must-Haves" and "Wants" and I don't think that the book makes that clear. The "Savings" category is broken into 4 steps--1. building $1k emergency fund, 2. paying off "steal from tomorrow debt" (pretty much credit cards), 3. savings 6 months of expenses as a larger emergency fund, and 4. saving for lifetime wealth creation and dreams. As I understand it from reading the book, step 4 is "Retirement, Home Ownership, Dreams" savings. The dreams part of it is really the fuzziest, but it seems to be BIG things like a vacation home, paying for a child's higher education, paying for a wedding, paying for a dream vacation.

    I plan to approach it that way, but also have smaller savings as a subcategory of "Must-Haves" and "Wants." For example, I have to pay annual fees for my professional license. This is a "Must-Have" because I need it to keep my job and losing it could thus risk my health and safety. I know when this license fee is due and how much it will be. In my master category of "Must-Haves" in YNAB, I have created a sub-category of "Savings - License Fee" so I can make it a predictable part of my budget and set aside money each month so I am ready when I must pay the expense. I think you could do something similar with annual property taxes or annual car registration fees (if having a car is a "Must-Have" for transportation where you live).

    "Wants" is a really flexible category and could change from month-to-month (or even week-to-week). Still, I would like some predictability built into it. For example, I buying gifts for others is a "Want" as is my Audible.com subscription. If there are three birthdays in one month, I'd like to have already set aside something for that "Want" rather than giving up on my other "Wants" for that month such as having to suspend my subscription. So in "Wants", I have a sub-category of "Savings - Gifts" and I can set a little aside each month and be ready for when a birthday comes along.

    Anyway, I am still working on meshing YNAB with "All Your Worth" so I am sure I will have some kinks to work out, but I think they could work really great together.

    Thanks again for recommending the book!! :D
  • cdubcdub Posts: 168Member
    Ok this book is awesome. I've been implementing the Must Haves, Wants, and Savings since November. I've even created just 3 master categories and organized everything into that.

    It is simply amazing. Before I started following the methods in the book I was always overspending in YNAB by $600 to $1000 every month. Now I've been SAVING an extra $1000 every month and NEVER overspending. (overspending I would use loosely though because I was still saving every month before... but was saving too much to my emergency fund that I kept on going into the red)

    The key is using CASH for the Wants. In my master category of Wants I have:

    1. FOOD n FUN CASH - this is where the bulk of my old dollars went from the old system. I calculated an amount from our old spending and reduced it a little bit... and we use this category for everything from Groceries to Restaurants to clothes... etc etc etc. We even have a tin can where we stash some extra 20s for the times when we need more money. You do feel a little silly at first whipping out $200 in cash to pay for groceries (2 hungry kids) but that goes by quickly. The best thing is that there is so much left to track.. how much more do I have in my FOOD n FUN budget? Look in my wallet. I always scoffed at the cash method... but it really makes my life easier. No tracking cash want expenses. NO NEED!

    2. Cell Phone (just switched to Republic Wireless from Verizon... saving $80+ a month) Unlimited everything for just $19/month per phone. TOTAL.
    3. Gardener
    4. Tivo & Audible
    5. Political Donation
    6. Subscriptions
    7. Telephone & Internet
    8. etc etc

    That's it. Then I have savings and everything else.

    The coolest thing about organizing it into different categories... is that I can look at my "MUST HAVES" Master category total and instantly know the full dollar amount that I'd need to at least have minimally per month to keep making all of my payments.... this is a great tool to figure out how much of a Emergency Fund you need.

    Using YNAB, All Your Worth, and a little inspiration from Dave Ramsey I should be debt free except for the mortgage by this time next year. YAY! :)
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