I’ve been a big fan of The Barefoot Investor since a colleague introduced me to him way back in 2006. That’s when I was working in architecture and searching for a way out. I wanted to grow my wealth, so as to be able to live life on my own terms and the Barefoot Investor book gave me a simple blueprint to do that.
Not a get rich quick scheme mind you. But a solid financial plan that if followed would mean never having to worry about money again.
And you know what? That’s pretty much where we’re at 11 years later.
So I was pretty excited to read the updated edition of “The Barefoot Investor 2017 Update: The Only Money Guide You’ll Ever Need.”
And I wasn’t disappointed. How many personal finance books have you read the can make you laugh and cry, while being snappy and to the point?
The Barefoot Investor Book Review
Scott Pape aka The Barefoot Investor is all about common sense money principles to get everyone building wealth and treading their own path.
Personal finance really isn’t complicated. In fact, he reckons you should be able to write down your financial strategy on the back of a serviette. Which is true of the one in the book.
There are 9 steps to implement which are:
Step 1 – Schedule a monthly Barefoot date night
Step 2 – Set up your buckets
Step 3 – Domino your debts
Step 4 – Buy your home
Step 5 – Supercharge your wealth
Step 6 – Boost your mojo to 3 months
Step 7 – Get the banker off your back
Step 8 – Nail your retirement number
Step 9 – Leave a legacy
Simplicity is at the heart of his strategy. Automate as much as possible (savings, additional super contributions), set up separate accounts (buckets) for different purposes and focus on the getting the big financial stuff sorted so you can focus on enjoying your life and not sweating the small stuff, like coffee or dinner out.
In fact, there are two popular money things missing in this book. One is frugality, as he’s an advocate of conscious consumption rather than tracking every cent.
The second is budgeting. He doesn’t follow a budget himself, saying they’re set up to fail and make you feel like a loser.
He shares his bucket approach as a strategy for setting up your finances in a way that means you don’t need to rely on willpower or track your spending. Basically your pay check is automatically divvied up into three buckets:
- Blow: expenses and some splurge money
- Mojo: safety money
- Grow: long term wealth
This setup, allocated across 6 bank accounts that you set up in Step 1, covers your day to day living expenses plus some splurge money, takes care of your emergency fund, as well as saving for big stuff like home deposits, renovations, holidays etc and growing your long term wealth.
It’s all on autopilot and all you need to do is pull out the right ATM card depending on what you’re buying. Of course, you’ll know which one that is, because you’ll have labelled it!
What The Barefoot Investor Gets Right
Firstly, Barefoot gives you a reason why you should bother going to the effort of sorting out your finances. It’s to take responsibility and look after those you love. Simple as that.
Secondly, what is awesome about this book is that the advice is simple and straightforward. Your eyes definitely won’t glaze over as you read chapters of financial gobblygook. Like his dinner date suggestions, the book is very digestible.
Forget all the buzzwords, figuring out stock picks or investment jargon, The Barefoot Investor drills down to what’s actually important and the key things that need to be done to get on the right financial path.
Thirdly, the biggest impediment to managing personal finances is actually failing to take action.
Barefoot’s solution is to schedule a monthly date night and work through the steps over a good meal out and a glass of wine.
The upshot of this strategy is that:
- The task is broken up into manageable chunks;
- You’re committed to a specific time to take action and;
- Since it’s a date night, you’ve got something to look forward to.
The Barefoot Investor approach is totally no nonsense. If you want a book to soothe your hurts and massage your ego, this one probably isn’t it.
If you’ve made financial mistakes or found yourself in financial straits, the message of this book is ‘pick yourself up, implement these strategies and get your finances on track’. No ifs, buts, or ‘you simply don’t understand, my situation is special.’
In that regard, he’s a very toned down version of Mr Money Mustache. And very Aussie. In good way.
He reckons most people can get themselves financially sorted in 1 year and financially successful in 6 years.
The Only Money Guide You’ll Ever Need?
I was really enjoying the book until I got to the chapter on growing your wealth. At that point my eyes started glazing over and I realised that there is no such thing as the only money guide you’ll ever need.
The Barefoot Investor is not a fan of investment properties. Providing solid evidence for why housing isn’t a great investment over the long term, he talks about not using the past as an indicator of the future.
Until he gets to the bit about shares.
While the property market is totally at risk of collapsing (or at least the bubble bursting) the stock market isn’t and it will continue to grow forever and ever.
Which is a bit contradictory.
The shares versus property debate is a bit like talking about politics or religion. You don’t do it in polite society. Both camps have very strong opinions as well as opposing statistics.
The Barefoot Investor is in the shares camp. He recommends against buying an investment property. That’s fine. But that advice isn’t going to suit every situation and every individual.
Which means, The Barefoot Investor Book isn’t the only money guide you’ll ever need as it boldly claims. It gets a ton of things right, but a healthy dose of skepticism and curiosity is essential with all things and your finances are no exception.
If you’re interested in investing, get educated on the debate and make up your own mind. Really tread your own path.
Is The Barefoot Investor Book for me?
That said, I don’t think you can beat The Barefoot Investor book if you’re just getting started with personal finance. I would totally give this book to every teenager I know for Christmas. Yup, I’m the ‘cool’ auntie who gives educational presents!
If you’re looking for an alternative approach to budgeting, or even just the simple ‘pay yourself first’ approach, then this book is definitely for you.
Also, it’s worth checking out Barefoot’s Donald Bradman Retirement Strategy if you’re nearing retirement age and freaking out about how you’re going to fund it without a million dollar nest egg.
And even as someone who already had a handle on my finances, I still got value from the book. For example, the chapter covering insurance actually answered what is and isn’t necessary.
So unless you’re looking to become a property investor, I would recommend checking out The Barefoot Investor book.
Have you read the book? What’s your take? Do you think there is such a thing as ‘the only money guide you’ll ever need’? Got any other questions?
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