Introduction 1
About This Book 1
Conventions Used in This Book 2
What You’re Not to Read 3
Foolish Assumptions 3
How This Book Is Organized 4
Part I: Getting Your Finances in Order 4
Part II: Strategies for Building Wealth 4
Part III: Paths Paved with Gold 5
Part IV: Managing Your Wealth 5
Part V: The Part of Tens 6
Icons Used in This Book 6
Where to Go from Here 7
Part I: Getting Your Finances in Order 9
Chapter 1: Gathering the Building Blocks 11
Shattering Money Myths 12
Understanding Your Relationship with Money 13
Asking yourself how you think about money 14
Changing your thinking 15
Making a Plan 16
Choosing Your Path to Wealth 17
Staying There When You Get There 18
Things Wealthy People Know 19
Chapter 2: Understanding Your Money Personality 21
Figuring Out How You Feel about Money 22
The planner 22
The spender 23
The needster 23
The Lord (or Lady) Bountiful 25
The hoarder 26
Changing How You Feel about Money 27
For the planner: Focusing on flexibility 27
For the spender: Discovering yourself 28
For the needster: Unlocking emotions 28
For Lord (or Lady) Bountiful: Compromising 29
For the hoarder: Growing up 30
Knowing What You Won’t Do for Money 30
Living your values 31
Understanding trade-offs 31
Minimizing Your Risk 33
Knowing what you’re getting into 33
Developing a long-term outlook 34
Starting Your New Life with Money 34
Chapter 3: Setting Your Financial Goals 37
Identifying What’s Important to You 38
What you want in the next five years 39
What you want for the future 40
What you want now 41
Putting Your Goals in Writing 42
Starting with the general 43
Making your goals SMART 43
Keeping your goals in mind 46
Staying on Track 47
Chapter 4: Working Out Finances with Your Spouse or Partner 49
Spill Your Guts: Sharing Your Financial Story 50
How much you know 50
What you need to know 51
Why you need to know 52
Getting the most out of your financial partnership 53
You Like Potato and I Like Potahto: Identifying Your Differences 53
Talking about your expectations 54
Discussing your goals 57
Go Team! Setting Priorities Together 58
Finding a mutual comfort zone 58
Focusing on the positive 59
Part II: Strategies for Building Wealth 61
Chapter 5: Living below Your Means 63
Spending Money You Don’t Have 64
The instant gratification factor 65
Who are you keeping up with again? 66
Changing Your Spending Habits 67
Anticipating Changes in Your Means 69
Losing an income 69
Dealing with a struggling economy 70
Planning for new expenses 71
Chapter 6: Managing Debt and Freeing Up Your Money 75
Understanding Your Credit 76
The credit bureaus 76
Your credit score 77
Good Debt versus Bad Debt 80
Figuring out what your debt costs you 81
Getting a handle on your debt 83
Organizing Your Budget 84
Getting started 85
Creating your budget 86
Keeping it flexible 87
Freeing Up Your Money 87
Saving money with your car 87
Saving money at home 88
Saving money when you’re shopping 89
Avoiding Fees and Extra Charges 91
Overdraft charges 91
Maintenance fees 92
Late fees 93
Chapter 7: Starting on Your Savings Plan 95
Understanding Why Saving Matters 96
Unexpected expenses 96
Major life changes 97
Developing a Saving Attitude 98
Finding pleasure in saving 99
Saving for specific things 100
Changing your life 100
Figuring Out Where to Start 101
Setting your priorities 101
Paying yourself first 102
Making it automatic 103
Putting it beyond temptation’s reach 104
Filling your emergency fund 104
After your emergency fund is full 105
Chapter 8: Getting the Most from Your Job 107
Allocating Your Paycheck 107
Using direct deposit to augment your savings 108
Taking advantage of pretax deductions 109
Pensions 111
Stock Plans 112
Stock options 112
Employee stock purchase plans 113
Restricted stock awards 113
Restricted stock units 114
Using What You’ve Earned 114
Holiday, vacation, and personal time 114
Raises 115
Bonuses 115
Other perks 116
Changing Jobs 116
What to do with your 401(k) 117
Severance pay 118
Health insurance 119
Part III: Paths Paved with Gold 121
Chapter 9: Starting Your Own Business 123
Before You Jump In 124
Starting from Scratch 126
Determining the kind of business you want 126
Assessing your skills 127
Figuring out what you’ll need 127
Building it into the black and beyond 130
Buying a Franchise 131
Weighing the pros and cons 132
Focusing on funding 133
Determining the best opportunity for you 134
Taking Over an Existing Business 135
Reviewing financial statements 136
Keeping an eye on contracts and leases 136
Paying attention to potential or ongoing litigation 137
Investigating other areas 137
Chapter 10: Inventing a Better Mousetrap 139
Coming Up with Your Big Idea 140
Pairing problems and solutions 140
Checking out your idea 141
Getting Paid for Your Big Idea 142
Seeing the value in your idea 142
Outcommercializing the competition 144
Licensing versus producing and selling outright 145
Protecting Your Big Idea 147
Patents, trademarks, and copyrights 147
Confidentiality 149
Recordkeeping 150
Chapter 11: Inheriting Wealth 151
Dealing with the Emotional Impact 152
Understanding what you feel 152
Taking your time 154
Thinking of your inheritance as yours 155
Managing Your Inheritance 155
Recognizing the tax implications 156
Breaking out that list of goals 156
Matching goals and strategies 157
Blowing it — or at least some of it 157
Chapter 12: Winning Wealth 159
Coping with Sudden Wealth 160
Building Wealth from Winnings 162
Taking your time 162
Getting professional advice 164
Talking to your family 164
Implementing a management plan 165
Treating Gambling as What It Is 167
Understanding the odds 168
Taking the right attitude 169
Chapter 13: Investing for Wealth 171
Developing Your Investment Philosophy 172
Determining your risk tolerance 172
Getting advice from the big guns 175
Choosing whom to listen to 178
Taking control of your investments 179
Investing in the Stock Market 179
The importance of diversifying 180
Cultivating patience 182
Things to look for 183
Things to avoid 183
Getting a broker 184
Doing it yourself 185
Avoiding Big Mistakes 186
Hidden fees 187
Misrepresentations 188
High-pressure sales tactics 189
Ceding control to your broker 189
Chapter 14: Joining the Landed Gentry 191
Building Wealth in Your Home 192
Knowing what you can afford 192
Understanding your mortgage options 195
Building equity — and keeping it 197
Considering Investment Property 200
Figuring out your plan 200
Understanding the market 202
Dedicating your time 203
Developing your professional network 204
Exploring Real Estate Investment Groups 204
Understanding Real Estate Investment Trusts 205
Things to look for 206
Things to avoid 207
Part IV: Managing Your Wealth 209
Chapter 15: Going to the Pros 211
Choosing a Financial Planner 212
What to look for 212
Where to look 213
Meeting prospective planners 214
Knowing what you’re paying for 216
Choosing an Investment Broker 218
What to look for 218
Figuring out the fees 221
What to stay away from 222
Choosing an Attorney 223
What to look for 223
Where to look 224
What to avoid 225
Choosing an Insurance Agent 225
Independents versus captive agents 225
Where to look 226
Choosing a Tax Preparer 226
What to look for 227
What to avoid 228
Chapter 16: Going for Growth versus Going for Income 229
Determining the Right Mix for You 230
Factoring in your risk tolerance 232
Assessing other factors 232
Understanding Investment Risks 233
Low-risk investments 233
Moderate-risk investments 234
High-risk investments 236
Keeping Your Balance 239
Reassessing your goals 239
Avoiding common (and expensive) mistakes 240
Chapter 17: Minimizing Uncle Sam’s Share 245
Filling Out Your W-4 Form 246
Selecting your filing status 246
Claiming single/zero 248
Claiming allowances 249
Figuring deductions and adjustments 251
Keeping Records 252
Knowing what’s deductible 253
Investing in accounting software 253
Creating your own spreadsheet 254
Crunching the Numbers 254
Are you better off itemizing? 255
Will you run up against the Alternative Minimum Tax? 255
How can you offset capital gains? 256
Avoiding Common Mistakes 257
Missing deductions you’re entitled to 258
Setting yourself up for penalties 259
Doing It Yourself or Hiring a Pro 260
Chapter 18: Covering Your Assets 261
Insurance Basics 261
Understanding coverage and limitations 262
Weighing deductibles and premiums 263
Evaluating insurance companies 263
Homeowner’s Insurance 264
Auto Insurance 265
Collision 266
Comprehensive 266
Liability 266
Insuring against the Inevitable 267
How much life insurance you need 268
Term life versus whole life 270
Disability Insurance 273
Your employer’s plan 274
Private disability insurance 275
Social Security disability 277
Long-Term-Care Insurance 277
Insurance You May Not Need 279
Car-rental insurance 279
Travel insurance 280
Life insurance for your kids 281
Chapter 19: Planning for Your Heirs 283
Putting Your Wishes in Writing 283
Figuring out what you have to leave 284
Choosing an executor 285
Divvying up your estate 286
Paying final expenses 288
Using Trusts in Estate Planning 289
Defining trusts 290
Recognizing the advantages of trusts 290
Getting Professional Help 293
Starting early 293
Getting the right kind of help 294
Knowing what it’ll cost 295
Storing Your Estate-Plan Documents 295
Chapter 20: Keeping Your Finances in Good Health 297
Keeping It Simple 298
Engaging the autopilot 298
Cleaning up the clutter 299
Taking the universal view 300
Letting your money work for you 301
Giving Your Finances Regular Checkups 301
Rebalancing your portfolio 303
Weeding out what you no longer need 303
Part V: The Part of Tens 307
Chapter 21: Ten Traits of Millionaires 309
Seeking Independence 310
Living Life, Not the Lifestyle 310
Working Hard — And Long 311
Staying Positive 311
Overcoming Failure 312
Being Organized 312
Building a Network 313
Being the Boss 313
Striking a Balance between Money and Your Life’s Work 314
Growing, Growing, Growing 315
Chapter 22: Ten Ways to Find More (Of Your Own) Money 317
Keeping Track of Your Spending 317
Distinguishing Between “I Need” and “I Want” 318
Assigning Your Own Value to Purchases 320
Avoiding Bargains That Really Aren’t 320
Spending Now to Save Later 321
Getting Rid of Credit Card Balances 322
Eliminating Hidden Fees 323
Maximizing Tax Deductions 324
Using Coupons, Rebates, and Rewards Programs 325
Finding Lost Money 325
Chapter 23: Ten Ways to Make Your Money Work Harder 327
Paying Yourself First 327
Making Your Money Earn Its Keep 328
Socking Away Money in CDs and Money-Market Accounts 329
Maximizing Matching Funds 330
Finding Free Money 331
Saving for Major Purchases 331
Funding Traditional IRAs 332
Taking Advantage of Roth IRAs 332
Saving for College with 529 Plans 332
Taking the Long View 333
Chapter 24: Ten Ways You Can Tell You’re a Millionaire 335
What Got You Here Stays with You 335
You Work Because You Want To 335
You Focus on Yourself — Not on What Others Have 336
You Update Your Goals 336
You Stay Informed and in Control 337
You Say No 337
You See the Benefits of Risk 338
You’re Prepared 338
You Enjoy the Abundance in Your Life 338
You Count Your Blessings 339
Index 341
