Scott Pape has been voted “Australia’s most trusted finance expert.” He’s the money guy for Channel Seven and Triple M, and writes two weekly national newspaper columns. He has advised AFL and NRL teams about money, and consults to the Australian government on financial education in schools. Scott lives on a farm in country Victoria with his wife, two sons and three dogs.
Scott Pape is a well known and trusted personality in Australian finance. His third book “The Barefoot Investor” uses the tag line “The only money guide you’ll ever need”. It’s a bold statement but I think it hits the mark, at least for 95% of the population.
The book starts off with the somber story of the Black Saturday fires in Victoria, Australia. The Black Saturday fires claimed the life of 173 people, the highest fatality count in Australia’s history. Countless properties were destroyed while the fires burnt through 1,100,00 acres of bush. Scott was personally affected by the fires, having lost his family farm. In the prologue when talking about the rebuild process Scott uses the analogy of personal finance and wealth building being the same as nature’s easy-to-understand pattern: plant, grow and harvest. Like many other points in the book, Scott hits the nail on the head. Start early, put the work in and reap the rewards later.
This book is not like many other finance books I have read, in that it gives you 8 very clear steps to follow (over a few dinners and wines) to guide you towards financial freedom. Scott’s writing style is very casual and easy to read and he uses stories, illustrations and humor to keep this from being a typical dry finance book. The book is initially broken into 3 parts, emulating natures pattern of Plant, Grow and Harvest. From there it is further broken into the aforementioned 8 steps, or as Scott will suggest dinner dates. The reason for the dinner dates is actually a very clever way of solving one of the more difficult issues families face with their finances, getting your partner on the same page with your financial goals.
Each dinner date or step has a call to action at the end, with the idea being that you do not move on to the next chapter until you have completed the task. Some of these tasks can be done immediately on your smartphone and the book guides you through each process, others require a little more setup but it is all achievable for anyone, regardless of their financial literacy.
I particularly liked Step 1 as it was something fresh that I had not heard of before but I think is fantastic idea to get both one on one time with your spouse and get talking about your finances to ensure you are on the same page.
One of the big takeaways for me personally was in Step 2: Setting Up Your Buckets which talks about arranging your bank accounts to better allow you to control your money. Scott gives clear instruction in how he believes you should set up your accounts and funnel your income into those various accounts. Whilst I did not set mine up exactly as he proposed (I use offset accounts against my mortgage rather than “high” interest bank accounts) it made me consider what I currently do and make a positive change for my personal finance. His advice also serves the adage of paying yourself first.
Scott recommends shares are the best vehicle to wealth. Whilst where is a lot of other personal finance experts will tell you that property is the way to go I personally I believe a little from column A and a little from column B is best as it adds further to your diversification. Obviously this will depend on your personal situation as shares do provide a lower entry point and are something you can build on over time.
When Scott talks about shares he suggests a listed managed fund (LIC) is going to give you your best returns, again, some will agree, others will disagree. This will largely depend on how active you want to be in the share market and how knowledgeable you are. I started out investing into companies I believe would have long solid growth and returns however that was at a time when I had more time to research, now I buy ETFs and LICs. Scott’s thoughts are in line with the greatest investor of all time, Warren Buffet, who when asked about what he will recommend is done with his estate upon his death said:
My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors…
And I tend to agree with this.
There is some great advice in the book about how to payoff your debts quickly and some very good advice on how to build your MOJO account, which I call an Emergency Fund. It also goes into some great detail on Australian Age Pension and how its not too late to live comfortablely in retirement not matter what stage of life you are at.
In conclusion, whilst I don’t think there is anything new or mind blowing in what Scott is suggesting in the book. He covers the basics very well and in an easy to read and enjoyable way. He encourages you to act on his advice. I am sure Average Joe could pick up this book and take some sort of action to improve their financial situation and that in itself is a huge achievement, any sort of action by others prompted from your work is a win. Maybe they will follow the entire book step by step, and I hope they do as the advice is extremely sound for a person in any position.
Thanks for reading my review, I would love to hear your view on the book in the comments below. If you do not have a copy a would like to purchase one, it can be found on here. If you choose to purchase from this link The Spreadsheet Dad will receive a small commission. Which will make me very happy 🙂
The Spreadsheet Dad