All Your Worth- The Ultimate LifeTime Money Plan, by Elizabeth Warren & Amelia Warren Tyagi is one of the first personal finance books I read and it’s still one of my favorites. My now mother-in-law had it with her on a long weekend at the cabin and I read it there in one sitting. This is a classic personal finance book in that it covers the basics of getting your spending in order and then organizing you finances.
When I read this book I was feeling very strapped financially and was immediately drawn to their Balanced Money Formula. This is really the highlight of the book. This framework is used to help you understand where your money is going, tackle your debt, and then build your financial future. Warren and Tyagi start the book by leading you through six steps:
Step One: Count All Your Worth
Here the Balanced Money Formula is introduced as you divide your expenditures into Must-Haves, Wants, and Savings. The authors take you through the reasoning behind the formula and what should be included in each of the categories. The revolutionary concept for me was the idea that you always have room in your budget for Wants. Even if you are trying to be extremely frugal, it is important to leave room for the fun things in life.
Step Two: Escape from the Thinking Traps
Are excuses keeping you from getting your finances in order? This step takes you through the common excuses of, ‘but housing is too expensive’ or, ‘but I have kids’ and helps you face reality. Figure out the triggers and traps that are keeping you from getting your finances in balance and learn to work around them.
Step Three: Count the Dollars, Not the Pennies
If you need to get your finances in order, start by worrying about the big stuff. Cutting your housing costs will get you a lot farther than giving up your morning coffee. This step takes you through the biggest budget items and helps you think of ways to get these costs down. This section covers scenarios where your budget is just a little out of line, but also discusses what to do if you budget need ‘major surgery’.
Step Four: Can’t Afford Fun, Can’t Afford Your Life
This step discusses how to manage the Wants part of your budget. There is room for fun in your budget, but this is also an area where it is easy to go overboard. Therefore, it is important to set limits for your Wants budget and know your personal triggers that send your spending overboard.
Step Five: To Build Your Future, Pay Off Your Past
This step is all about getting your debt. It takes until step five to start paying off your debt because Warren and Tyagi want you to first understand where your money is going. Now it is time to figure out how much debt you have and understand why your life will be better debt-free.
Step Six: Build Your Dreams A Little At A Time
With your debt paid off you can now start thinking about the future. This takes you through the steps of saving $1000, paying off debt, creating a security fund, then start a lifetime of wealth creation. Like some other books, Warren and Tyagi use a 12% return expectation for the stock market which I do not believe is realistic. However, this book is more about getting your spending in order and not an investment book.
In addition to the Six Steps, there are chapters on money in relationships, buying a home, and ‘financial CPR’ or what to do when things get really bad due to a job loss or divorce.
Is this book for you?
If you have ever asked yourself, ‘am I saving enough?’ or, even, ‘am I saving too much?’ All Your Worth is for you. It is also for you if feel like you never have money for fun things or if you need a basic personal finance book to help get your finances in order. If classic budgets with a line item from everything from toiletries to clothes leave you feeling frustrated, the Balanced Money Formula may be the answer for you. Once you have the basics in order you can move on to other books for more on investing and growing your wealth.