Remember When the Music

It didn’t take much for me to fall in love with Elizabeth Warren. Her progressive politics, her earnest concern for the plight of all Americans, her frustration with policy decisions that routinely reward big finance over honest people, her ability to shut down detractors with facts and heart, her near-obsession with the stories of bankrupt families in an effort to figure out how we can help them… she just makes me swoon.

Warren’s memoir, A Fighting Chance, left me quite smitten with the Massachusetts senator. It also lead me to an even earlier work of Warren’s entitled All Your Worth that has the potential to transform the way most Americans handle their money for the better. Written with Warren’s daughter Amelia Warren Tyagi, All Your Worth is a financial how-to for the average working American. The two Warren girls set out strict but clearly outlined (and thus, easy to follow) rules for the way we should spend our money in order to maximize the value of both our saving and our spending. I don’t usually write about (or read about for that matter) financial books, but I couldn’t fail to provide some humble promotion to a book as rare, useful and comprehensible as All Your Worth (and much more practical than the lottery or a Mr. Money Mustache lifestyle). Plus I think a book like this, one that is so unfaltering in its commitment to helping everyday people, proves yet again why Mrs. Warren would be a wonderful leader of this country if she ever decides to take the Presidential plunge.

The basic formula set out by our authors is a 50-30-20 balance between our Must-Have expenses, our Wants spending, and our Saving, respectively. Challenging the way we conceptualize need in 21st century America, Elizabeth and Amelia define items in the Must-Have category as things you cannot cut out, the bills you would still pay without fail if you lost your job or faced a major financial downfall. So no, cable TV, an internet connection, and dinners out do not fall into this category. But beyond tightening the circle of need, Warren and Warren Tyagi explain methods to downsize on those Must-Haves that seem fixed in stone. There’s a very thorough beginner’s guide to refinancing your mortgage with a large emphasis on questions to ask a lender when shopping for new loans. There’s advice on how to tackle daunting credit card debt – lots of advice. There’s straightforward methods for lowering your insurance costs, exploring every possible option to get those Must-Haves to 50% of your monthly take home pay or less. And there’s clear and simple explanations as to why 50% is the magic, practical balance.

Then come the Wants. Trips to the movies, a trip to the local pub, subscriptions to HBO, vacations overseas, birthday and Christmas gifts. All those things, big and small, that make life a little more pleasurable or exciting or relaxing after the mortgage and the doctor’s bills are paid. What’s more, the Warren ladies make it super simple to track these types of expenditures. Just use cash. I know, it can be difficult to pay for everything you want with cash due to the proliferation of so many online marketplaces. And true, maybe that credit card company wants to reward you with goodies for a certain level of spending. But the only way to have a fast and hard idea of where you stand with your budget is to use good, old-fashioned cash for the things that aren’t budgeted for, the bright little spots of fun in your spending. I haven’t been one to use cash ever since I received my first debit card. I used to cringe at the thought a pocket full of twenties despite the eye rolls when I told people I only carried plastic. My mother, the kind of woman who is infamous for her ability to render exact change from her wallet, has stopped asking me for money when she’s at the register and needs a spare one-spot. But reading All Your Worth forced me to challenge my assumptions about this longstanding method of financial transaction. When looking at my bank account statements, it’s really a headache to parcel out where my spending diverges from my spending on wants. And of course I won’t stick to a Wants budget if it isn’t easy, or downright effortless, to do. So I’m trying cash for the first time in ages, just a budgeted amount I put in my wallet each week. If there are any leftovers, I’ll put that cash to the side in a little rainy day fund, ensuring I’ll have something to pull on when I want to buy a pricey concert ticket, take a vacation, or shower my mom with a really thoughtful Mother’s Day gift. The more I think about it, the more doable it seems. I may be required to pay with a card every now and then, but it won’t be difficult to remember to detract a certain amount from my weekly cash allowance when plastic purchases are made so sparingly. So far, it seems simple as pie.

Finally, there’s the savings category. I was actually a little surprised by the low budgeting – only 20% – to savings. But All Your Worth really stresses the importance of having a good chunk of Wants spending to enjoy life – and saving smartly to make your 20% grow it something much more than the face value of what you initially put in. The world of investing seems impossibly daunting to me. As often as I see my elderly housing clients barely subsisting on their monthly Social Security checks, I’ve kidded myself into thinking that smart saving will be enough to supplement that inevitable fixed monthly income. But the Warren ladies bring the world of investing out into a more accessible light, with overviews of what type of stock options to seek, defining all those acronyms like IRAs, explaining all the means of growing a retirement plan. They don’t even need to devote that many pages to their savings advice because it’s reduced to the simplest, most user-friendly tidbits that readers need to know before their money is off and running. After 15 minutes of research on my bank’s website (and of course reading All Your Worth), I set up a retirement account that I’m confident is a small step towards a more comfortable life when my working years are over. And once a down payment on a house is out of my pocket, even more of my savings will be invested in the type of investment options that are safe and just plain smart for someone my age. Thanks Warren girls!

If nothing else, All Your Worth gave me more confidence in myself as a financial powerhouse. Maybe that’s strong language, but I feel like I can get there someday. I know what to look for when mortgage shopping, something that was previously so scary as to make me reconsider my dream of home-ownership. I know how much money I should keep in the bank and how much to invest. I know that I’m doing what I can on a daily basis to make managing my money easy and effortless. I know how to still enjoy myself without a wracking sense of guilt every time I spend money on me. I know how to have difficult financial conversations with my husband even. All Your Worth lays out an incredibly easy plan for reducing debt and reducing worry, for building wealth and building financial happiness. The book is really more of a kick in the butt, than anything else, reminding us of our personal responsibility in our own financial security but also highlighting the often obscured ways we can exercise that responsibility. It’s unnerving to hear Warren hearken back to the days when there weren’t foreclosures in every neighborhood because the bank wouldn’t even think to lend you the money on a home you could not afford. While the financial rules and regulations certainly don’t make it easy for people to hold on to their hard-earned money, we as educated consumers can do just fine avoiding the loopholes and debt that banks and credit card companies prey upon. And if there’s one person that can elucidate everything a consumer needs to know about his or her money, I don’t think it could possibly be anyone other than Elizabeth Warren.