{"id":32798,"date":"2021-04-18T18:31:32","date_gmt":"2021-04-18T22:31:32","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=32798"},"modified":"2021-04-26T23:21:57","modified_gmt":"2021-04-27T03:21:57","slug":"the-barefoot-investor-book","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/the-barefoot-investor-book\/","title":{"rendered":"The Barefoot Investor Book Principles to Know"},"content":{"rendered":"\n

What is Scott Pape’s book The Barefoot Investor <\/em>about? Are Scott Pape’s personal management principles universally applicable?<\/p>\n\n\n\n

In his book The Barefoot Investor<\/em>, Scott Pape offers guidance on how to manage your money<\/a> so that you can eliminate debt and start building wealth<\/a>. Though The Barefoot Investor <\/em>book is written for an Australian audience, the basic principles are universally applicable. <\/p>\n\n\n\n

Here is a brief overview of Scott Pape’s book The Barefoot Investor<\/em>.<\/p>\n\n\n\n\n\n\n\n

The Barefoot Investor<\/em>: Book Overview<\/h2>\n\n\n\n

In his book The Barefoot Investor<\/em>, Scott Pape provides easy-to-follow step-by-step money management advice<\/a> for Australian families. His advice sets off with establishing regular date nights with your significant other to discuss household finances and lay the financial foundation for your future.<\/p>\n\n\n\n

Here is a quick summary of Scott Pape’s bestselling book The Barefoot Investor<\/em>: The Only Money Guide You’ll Ever Need<\/em>.<\/p>\n\n\n\n

Date Night #1: Open New Bank Accounts<\/strong><\/h3>\n\n\n\n

On this first date night, you\u2019ll open new bank accounts that allow you to avoid banking fees.<\/p>\n\n\n\n

  1. Set up two checking accounts with banks that offer online interfaces and don\u2019t charge fees, including for ATM transactions.<\/strong> Nickname one account \u201cDay-to-Day\u201d and the other \u201cTreat.\u201d You\u2019ll learn how to use these in Step 2.<\/li>
  2. Set up two high-interest savings accounts. <\/strong>Label one \u201cHappy\u201d and one \u201cFire.\u201d<\/li>
  3. Set up an account at a separate bank that you won\u2019t be tempted to use, called your Backstop account. <\/strong>Choose a savings account with a high interest rate, and deposit $2,000 in it to start with. <\/li><\/ol>\n\n\n\n

    Date Night #2: Get a Better Deal on Your \u201cSuper\u201d Fund<\/strong><\/h3>\n\n\n\n

    On this date, you\u2019ll ensure you\u2019re regularly directing money into a \u201csuper\u201d account (Australia\u2019s retirement savings plan) or an equivalent U.S. employer-sponsored plan that isn\u2019t skimming off a large percentage of your deposits.<\/p>\n\n\n\n

    Opt for a low-cost super or similar retirement savings account. For example, an account that charges 0.02 percent annually versus 1 percent annually can save Australians $226,484 (AUD) over 30 years.<\/p>\n\n\n\n

    Investigate the annual fee on super(s) by googling the name of the super and \u201cPDS,\u201d or \u201cProduct Disclosure Statement.\u201d If you\u2019re being charged more than 0.85 percent per year, choose another super to invest in. <\/p>\n\n\n\n

    Date Night #3: Choose Insurance Wisely<\/strong><\/h3>\n\n\n\n

    On the third date, you\u2019ll scrutinize your insurance choices and take action to support your financial well-being and your family\u2019s. <\/p>\n\n\n\n

    Here are two pieces of advice to follow when choosing and managing insurance:<\/p>\n\n\n\n

    1. If losing it won\u2019t affect your financial situation, don\u2019t insure it. <\/strong>For example, if you damage your phone beyond repair, you\u2019ll be able to get a new one without putting yourself at a financial disadvantage, so don\u2019t insure it. <\/li>
    2. Negotiate your annual insurance premiums down. <\/strong>Companies want to retain your business. If you call them and tell them you\u2019re thinking about switching, they\u2019ll likely be willing to negotiate a better deal for you. <\/li><\/ol>\n\n\n\n

      Australians can purchase insurance for income protection, life, and disability through their super fund. Parents with young children should aim to insure 10 to 12 times their annual income. In Australia, you can do this by calling your super fund and asking for three pieces of information:<\/p>\n\n\n\n

      1. A quote on 12 times your annual income for combined life and total permanent disability insurance.<\/li>
      2. A quote on 75 percent of your annual income until the age you plan to retire.<\/li>
      3. How much additional money you\u2019ll need to put into your super to cover these new insurances.<\/li><\/ol>\n\n\n\n

        Date Night #4: Allocate Your Income<\/strong><\/h3>\n\n\n\n

        On the fouth date, you\u2019ll put money from your take-home pay into three main categories:<\/p>\n\n\n\n