The Money Plan Book

Chapter 1

It seems like we have two options when it comes to personal finance:

1. Just wing it. Don’t worry about how much money you make or spend. Just live life to the fullest and whatever happens happens. The issue with this strategy is that it’s easy to go overboard. How do you go overboard in the field of personal finance? Well… Consumer debt would be one way! Because if you train your brain to think that it can get anything it desires right away, sooner or later, you’re going to buy something you can’t afford. « Not a problem, say the banks, we’ll give you the money… just pay us back whenever (with interest of course). » Sooner or later, « winging » personal finances leads to an accumulation of debt. And if by chance you can stay away from debt, you’ll end up not that far away from debt, which is 0. No net worth at all. Imagine working for 10 years and being in the same spot financially as when you started. How frustrating would that be?
2. Live on a budget! (see how the exclamation mark is there just to attempt making something boring interesting). Yes, it is wiser to plan your finances. Of course, this is personal finance book, so if you have the willpower to use a budget, I won’t tell you to stop. But budgeting done wrong leads to headaches and frustrations: can we go to the movies tonight? Wait, let me fire my spreadsheet… Well, if we amortize the expense over the next 7 months and if we increase the percentage of the deductible of… and it’s gone. Nobody wants to go to the movies anymore. Budgets kill spontaneity. Living on a budget means writing down expenses, categorizing them, convert big expenses into monthly payments on a saving account, etc. etc. It’s no fun living on a budget.

So it seems like you either live on a budget and become miserable or you (more likely) drop it and go back to option 1, which leads to financial disaster. Kind of terrible picture I painted here, didn’t I? Well, unless the problem is defined, it’s hard to think of a solution. The problem is: How do I live a life in which I’m in control of my finances instead of a life in which my finances, either through thirsty creditors or through a tyrannical budget, control me?

This book is about finding a middle ground between carelessness and tyranny. You have better things to do than financial planning, but you still know that it would be a reasonable thing to do. Yet you don’t want to have the fun sucked out of your life either. This book is about being responsible while allowing spontaneity.

I have divided it in 4 parts, or 4 Steps, each based on the previous one.
Step 1 is about getting the overview of your finances and handle the day to day. We’ll focus on ease of maintenance rather than on exactitude because, after all, you have better things to do.
Now I want to be honest with you: there is some work to be done upfront. But the maintenance will be minimal. We are talking between 5 and 30 minutes per month and an additional 1-2 hours at the beginning of each year for your yearly planning.
Yes we will use spreadsheets but we are not going to be too attached to how exact the numbers are. We will be very flexible with our planning because we are not accountants. And for the accountants in the readership, well, hopefully this will be fun heresy for you. We will design a plan, your plan, that achieves one single goal: make sure you always have enough on your account to avoid going into debt or requiring assistance.
Step 2 is about giving you tips and strategies to free more money to put toward your goals. Please note that these goals can be entirely frivolous. A goal can be: I want to drive a new car every 2 years. Or: I want to eat in every 3 Michelin stars restaurant in the world. I’m not going to dissuade you from that. It’s perfectly OK to spend money on things you want to spend money on. You’re an adult ; you don’t have to be reasonable all the time. Here again, we won’t discuss penny pinching lame tricks. We will rather focus on low effort/high rewards tips because, after all, you would rather go hiking than planning your finances.

If you have more long term goals, you’ll need to know what to do with the money you’ve freed in Step 2. Step 3 provides a biased overview of the different investment opportunities. Yes, I did write « biased ». Because, although I’ll tell you all about the advantages and drawbacks of cash, bonds, real estate, gold and even Pokémon cards, I will be devoting much more pages to stocks than to any other asset.
Step 4 wraps everything together by inviting you to think about your financial life plan. What’s a financial life plan? Glad you asked! A financial life plan is simply a way to roughly assess how your financial situation will evolve as you go through different stages of your life. The standard financial life plan looks like this: Get a decent job at 22 and buy a small apartment at 25. Spend more or less everything on fancy objects or experiences until you get some kids before 35. Then sell the apartment and buy a house. Get promoted (hopefully) to afford the bigger mortgage, the Playstations, and violin classes. After that, it’s just 30 years of cruising until retirement, during which you’ll babysit your grandkids and go on cruises. Hopefully you’ll have managed to save enough money to afford a robot nurse to take care of you in your final years. Otherwise, your kids will pitch in, no problem /s.
There is actually nothing wrong with that plan. That’s what most people do. But you’ll see that there are other options that might be accessible to you.
I hope that these 4 Steps will help you designing a better financial plan, even if you have better things to do. Hopefully, it will as much fun reading it as it was for me writing it..
But first, let me tell you how it all started…