Book Review - A Man is Not a Financial Plan

Joan Baker's latest book is a wake-up call for all women who have not started an investment plan yet. Most women tend to focus on the immediate concerns of this day, this week and this month, while perhaps also planning for holidays and lifestyle purchases - including improvements to their homes.

She says that many women end up poor in their middle years or later life, even though they have worked hard and bahaved responsibly. Older women are especially vulnerable. Most women over sixty-five live on their own, and women alone are likely to be poor. Baker's book also points out that some women get stuck on 'buts'. 'But I'm too old / too young.', 'But my partner won't like it'. Don't depend on a present partner for your future income.

Because it is difficult to earn income or create wealth if you leave it too late, it is important to plan for your future security and independence now. Baker says: "Don't feel helpless if you are young and poor and with little available for surplus - starting early is the best wealth-creating strategy of all." Compound interest works magic.

The first step is to decide that you need to start a wealth creation plan. Write it down and promise yourself that you will create the wealth you will need.

The second step is to learn all you need to know about how wealth is created. Baker says you have to invest in order to create enough wealth for financial independence and freedom from the need to work. Learning to invest is not as difficult as many women believe, as it is mostly jargon. The basic principles are mainly common sense, and this book aims to give you all the understanding you need to become a successful investor.

The vital third step is to change your attitudes to how you deal with money. Develop new habits that make you richer rather than poorer - then take action and start your investment programme. Taking care of your money and your financial future is an act of love: wealth allows you to look after those you love.

Being wealthy is not about having a big income. Baker says that many women confuse having a high income with being rich. Wealth is about having capital which earns you a passive income, and it is passive income (that you do not have to work for) that allows you to live the life of your dreams. Then you are free to spend your time on what is important to you, and you have enough income to do so.

Although having a lot of income is not in itself being rich, income is critical to becoming wealthier, and ultimately, financially free. Income must be used wisely and well. Automatic payments into a saver account each payday help accumulate money for investing. An increase in income is a great opportunity to increase the money siphoned off without effort.

A person's attitude to a pay rise, or a windfall distinguishes the successful from the unsuccessful. The unsuccessful are likely to look at the extra income and start to think what they can do with it: another overseas holiday or a shopping expedition. Those who will not achieve financial freedom think only of consumption.

Investing to grow your wealth is all about creating a surplus. No matter how much or little income you have you will need to avoid consuming all of it. The amount left, the surplus, needs to be put to work to create wealth.

To create some surplus funds you can either lower your spending, increase your income, or both. Most people can identify some area where savings can be made, and the money invested. Making those first few steps, developing a little bit of wealth to get things going, is the greatest hurdle. Many women could become financially free just by spending less and investing the remaining money well. This book gives many useful methods to achieve a cash surplus. Usually it is best to clear any existing debt before starting on an investment programme.

Baker's book describes all the different investment options available in plain language. It will help you decide what will suit your situation, and your personality, and how to work put an investment strategy you will feel happy with.

Joan Baker's book for women is written in an easy style, and most women would benefit from many of the ideas which are explored in it. Then they just need to follow the advice and take action to protect their futures.

A Man is Not a Financial Plan by Joan Baker, $29.95 is available through the Good Returns Book Shop (www.goodreturns.co.nz/books, email books@goodreturns.co.nz or call 0800 345 675)

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