I have long held the view that there are two kinds of financial conversations: those discussed in public and those that discuss what’s really going on. In my practice dedicated to moving couples through their money dynamics, I focus less on what is said about finances and more on spending behaviors.
For anyone who wants to add working tools to their financial toolset, J.D. Roth’s book, Your Money: the Missing Manual, directly addresses the topics and resources that put spending and talking on the same page. J.D. Roth is the man behind one of our favorite personal finance blogs, Get Rich Slowly.
Roth has often been referred to as the regular-guy-turned-financial-guru-for-the-rest-of-us. His intelligent conversations about money come from his own experience of being in debt and getting himself out of it. In Your Money, he puts the emphasis where I believe it needs to be – on cash flow. He dares to ask the fundamental question, “Do you spend less than you earn?” If you make that the basis of your ritual, then growing your money from there puts you on the road to true financial freedom:
“When you spend more than you earn, there’s never enough money to go around. You end up spending money you don’t have – using credit cards, taking out loans – which leads to more debt, which puts you deeper in the hole.”
If someone had written a book on this topic at the height of the credit swap debacles of 2004 and later, it would never have been published.
What makes such fundamental basics of cash flow seem overly simplistic? I won’t get into the political aspect but I will address the philosophical undercurrent. Tell someone to live within their means and they don’t know what their means are, they internalize this as a demand to restrict themselves, and they feel powerless.
I share Roth’s mission to educate people about the basics of cash flow, to share the importance of spending within your means, and to do what he does so well in Your Money—turn the reader on to the deep satisfaction that comes from spending only what you earn.
Recurrent spending within your means, without fail, turns cash flow positive. When the cash flow tide is turning positive, there’s a high feeling that comes with it. I have yet to meet someone who gets a taste of that success hold back from taking his or her financial growth to the next level. There is an intrinsic feeling of goodness and bliss that comes from honoring the agreement you have made to only spend what your income can hold. That righteous feeling fuels a desire to do more. It’s like diet and exercise: “I just lost 10 lbs! Tell me what to do to lose another 10 lbs.”
Roth’s approach to frugality is like a spiritual practice. It is a ritual of getting yourself back on track when you are off track and this lifestyle he believes will result in you being “wealthier and happier.” He moves from cutting costs into the real power realm of increasing your income. This is a critical piece where Roth reminds us that cash flow is a craft. The focus can be on reducing spending while also increasing your income and that this is a game to play that requires your attention to mastering it.
Roth’s “Your Money” addresses the first concern of reader of “where do I start?” and walks them through how to make responsible spending decisions. He gives practical advice on how to achieve financial freedom but also reminds us that:
“Financial success is more about mastering the mental game of money than about understanding the numbers. The math is simple: it’s controlling your habits and emotions that’s hard”
By emphasizing that this really is an emotional mastery over your money, he is able to suggest tips and tricks to help you to stay on track when you feel most overwhelmed or in the grip of overspending.
Roth demystifies the credit card industry, shares his knowledge of personal investing, retirement and tax planning. As the title suggests it truly is “the Missing Manual”. It is a must read for anyone newly entering the workforce or someone who is looking for a fresh perspective to give a boost to your financial health. Under Roth’s guidance I truly believe that you can be “wealthier and happier”.
J.D. Roth is the creator of the well-known personal finance blog Get Rich Slowly, and was recently named most inspiring money blog by Money Magazine. His new book Your Money: the Missing Manual, is in stores now.
