Smart Couples Finish Rich – David Bach

Have you ever read “Smart Couples Finish Rich” by David Bach? This book is one of the first personal finance books I can remember reading back in my early 20’s. The book is copyrighted in 2001/2002, right after 9/11 and the tech crash of the early 2000’s, so it’s an interesting trip back through time.

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This book and the original, Smart Women Finish Rich, both helped to inspire the speech I gave in my Public Speaking undergraduate course on saving and investing.  Given that the book is a bit over 15 years old, and the fact that it had such a big impact on me in my early investing life, I thought it appropriate to revisit some of the lessons it teaches.

First, A Bit About Bach

David Bach, the author of this book, was previously a senior VP of a major New York brokerage firm and founded The Bach Group. He started seminars that covered the same topics as his books – Smart Women Finish Rich and Smart Couples Finish Rich. He’s been featured as an expert in multiple notable publications, and is still publishing books to this day.

David Bach
Photo Credit – Amazon

Interestingly, he started out by saving just 1% of his income, but over time ramped that up to 20%. What does “over time” mean? This article from Business Insider says that he got to that percentage over the course of 15 years. Although this isn’t enough for the FIRE (Financially Independent, Retire Early) crowd, it’s certainly more than the 5.7 percent that the average American puts aside. Apparently, he only started saving and investing in his mid-20’s at one percent of his income, and then brought up his savings rate from there.

A Bit About The Books

On his books – I actually own the first two books that he wrote (Smart Women and Smart Couples Finish Rich), but no others. I’ve taken several of his other books out of the library. They have very familiar content – if you’ve read one, you probably don’t need to read the others.

But if you’ve never read a Bach book and you happen to find this one at the library or a used book sale, I’d recommend picking it up if you’re just starting your personal finance and investing journey. His books are very readable – he sprinkles stories liberally among various basic financial lessons. They’re great books for people who are just starting to get interested in personal finance, who haven’t yet been introduced to the miracle that is compound interest, or if you just want a fun and quick money read. If you’re deep into personal finance or have spent years reading finance books like I have, there’s not going to be anything new here.

If you’re going to actually buy a first book by Bach, I’d probably recommend you grab The Automatic Millionaire.  I took the original out of the library a while back, and although it just repeated the same lessons as Smart It was recently updated and likely has more up to date information than some of his older books.

UPDATE – I found a copy of his new book at the library, so I’ll be reviewing it shortly! 

Lessons From Smart Couples Finish Rich

As I mentioned above, I read this book in the very early 2000’s. My husband and I were married in September of 2001, so this book was a perfect way to financially start off our married life. Bach gives nine lessons to help smart couples finish rich (TM):

  1. Facts and myths about couples and money. Bach reviews five separate myths and facts about money. This includes the myths that if you love one another you won’t fight about money; it takes money to make money, you don’t make enough to invest, taxes and inflation are under control (ha ha ha), and that everything will work out OK even if you don’t talk about money. He also provides a money quiz that you can take as a couple to see how money savvy you are.
  2. Figuring out the true purpose of money in your life. In this chapter he talks about how to get down to what money really means to you. What are your values – separately and as a couple? Is it security? Freedom? Family? Making a difference? This is separate from setting goals, which really are what allow you to live your values. This exercise helps to align your goals with your ultimate values, and make sure that your decisions are getting you closer to where you want to be.
  3. Plan together – win together.  “Failure to plan is planning to fail,” is essentially the motto of this chapter. Here Bach shares a strategy for getting financially organized through a hanging folder system. Nowadays this would probably be a set of instructions on how to use Dropbox or something similar. He then shares seven rules for creating a purpose driven financial plan, where you align your values with your overall financial plan
    1. Make sure your goals are based on values
    2. Make them specific, detailed, and with a finish line (also called SMART goals)
    3. Put your top five goals in writing
    4. Start taking action within 48 hours
    5. Enlist help – share your goals with others
    6. Get a rough idea on how much each goal will cost
    7. Make sure your goals match your values as a couple (seems repetitive with #1)
  4. The couples’ latte factor.  This is where Bach talks about his famous (and much maligned) Latte Factor (TM). It’s a concept I covered when talking about snowballing your way to wealth, where the small amounts you spend every day can add up to huge amounts over time. Although some people criticize this (I don’t buy lattes!), the idea is powerful. Certainly, there are some people who don’t spend frivolously. But I, and probably you, know plenty of people who “never have any money” but have constant lunches out/vacations/new cars/new clothes/etc.
  5. Build your retirement basket. Save and invest for retirement – pay yourself first. Here Bach talks about how pre-tax contributions will “cost” you less than you contribute. He also encourages you to research your investment options, like I did when I did my in-depth analysis of my 401k. He covers all the usual retirement plans: 401k, IRA, ROTH, SEP IRA’s, Simple IRA’s, and so on.
  6. Build your security basket. This is usually called an “emergency fund” by ordinary folks. He recommends somewhere between three and 24 months of expenses be set aside. Reading back on this it’s funny to see what interest rates used to be. Four percent on a money market checking account? Elsewhere in the book he talks about getting 7% interest on a CD. I wish! He also covers wills, health insurance, life insurance, disability insurance, and long-term care here.
  7. Build your dream basket. You shouldn’t just invest for retirement and security, according to Bach. You should also set aside some of your income to fund your dreams. Here he covers some of the basics of mutual fund and index fund investing.
  8. Learn to avoid the ten biggest financial mistakes couples make. What are those mistakes?
    1. Getting a 30 year mortgage (if you’re a reader of the side, you’ll know I agree with that one)
    2. Not taking credit card debt seriously
    3. Trying to “get rich quick” by day trading (do people do this anymore?)
    4. Buying stocks on margin (I can’t believe this is common enough that it’s a top mistake)
    5. Not starting a college-savings plan soon enough (totally agree with this one – you need a college compact)
    6. Not teaching your kids about money
    7. Not signing a prenup (I, Vigilante wrote about this before)
    8. Not having a greater purpose in life
    9. Not figuring out who’s responsible for what
    10. Not getting a financial advisor (he then goes into eight rules for hiring an advisor. I don’t care for this advice, personally, but then again I’m a DIY gal through and through).
  9. Increase your income by 10 percent in nine weeks. I hate this chapter, and I hated it back when I read it. Will your company give you a 10% raise within two months because you clean your desk? Likely no. I’ve only ever worked for large companies. Asking for an off-cycle raise would get you no where. If you want a big jump in income off-cycle, you need to go to a different company (and then you’ll probably be losing bonus/stock).

Does Smart Couples Actually Make You Rich?

Like any book, it won’t make you rich unless you take the lessons to heart and actually execute on them. Will the advice work? Yes. If you follow the lessons Bach teaches, you will be better off than most of your peers. Will you be able to retire at 30? No, for that you need to go seek out different sources of information.

Overall it’s a very readable book – a good one for newly married couples who aren’t that interested in money yet. Back when I first read it (and Smart Women Finish Rich), a lot of the information was new to me. Nowadays, though, it’s all the basics I’ve known for years. So if you’re already very knowledgeable about personal finance, this is a book to skip. Also, I don’t know how updated the version currently available is. My version talks about 7% CD’s, a red-hot job market, and the “new!” ROTH IRA’s and 529 plans. So it’s somewhat outdated.

Have you read this book, or any of the other “finish rich” books? If so, what did you think? Or do you have some thoughts on the lessons Bach teaches? Let me know in the comments.

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19 thoughts on “Smart Couples Finish Rich – David Bach”

  1. I also read a lot of Bach’s books back in the day. Of all the advice he gave, I have implemented one of his takeaways to this day–organizing your files. He recommended a filing system to organize your financial data–Automotive, Banking, Insurance, Retirement Accounts, Real Estate, Wills, Taxes. I still have my documents organized this way! 🙂 Thanks for the great review. A blast from the past!

    1. The organization tips certainly are helpful, particularly if you don’t have any existing organization of your financial documents. I’ve noticed that these older books are getting outdated, although it does look like he revises and relaunches them every once in a while. I’m planning to review the new version of Automatic Millionaire. Did you also find most of the books to be pretty much the same?

      1. Yes! I feel like his advice and underlying philosophies don’t really change much, book to book (I guess that’s a good thing!). But I don’t think I took anything different away from Smart Women Finish Rich or The Automatic Millionaire. After I read the first book, I could sort of scan the rest because they’re so similar!

  2. The very best book is the millionaire next door. I also enjoyed the Ben stein/Phil Demuth books. Those books introduced me the Monte Carlo analysis. I find personal finance books get dated and repetitious. I get most of my info from blogs now.

    1. The Millionaire Next Door is hands down my favorite personal finance book. I still have the copy I bought many years ago, and I’ll occasionally reread it even today. Although it was written a while ago the lessons are still applicable. I think it’s really hard to find good, new personal finance books that don’t just rehash the same concepts.

  3. Troy @ Market History

    I’ve cut down on reading personal finance books. Despite the different angles on money, they’re all pretty much regurgitating the same thing: save money, don’t get in debt, invest your savings, etc.

    At some point, it’s not a matter of knowing what to do. It’s about DOING it. These books will only help the complete novice.

    1. They were good for me when I was 19/20, and starting to learn about money. But I agree once you’ve read a few it’s hard to find new information. There’s a lot of novices out there-most people, I believe-which is why these books sell so well

  4. We own “Smart Women” and “Automatic Millionaire”. I must have read the latter first because it resonated with me more. Maybe it was the first time the simplicity of automating everything struck me.

    What I like most about his writing is that it’s very accessable. Great review. You’ve inspired me to re-read both books. Thanks!

    1. The Automatic Millionaire is a great introductory book to the power of automating your investments. Especially if you haven’t read a lot on the topic before. It can be great for those starting out, and it’s very readable (even for people that don’t read a lot of books). Hope you enjoy the trip down memory lane when you give them a reread!

  5. You got to admit, they guys does have a good business model with his books. Repeating the same thing, and people still buy more of your books. Why did I not come up with this…..;-)
    Did not read the books myself, I prefer to read blogs of many different people and find out what works and why.

    1. I know, it’s a brilliant idea! I see it all the time in the “personal finance guru” space, where someone basically repackages the same advice/information/stories in a slightly different way. Great business plan, right?

      I love reading books personally, because I find they can go more in-depth into a subject than a blog. Plus I’m an avid reader and prefer non-fiction, so I can always be learning. I obviously also love reading blogs, because I find them much more personable than the books. Learning the basics or advanced technical topics from books is great, but learning how real people put those concepts into action is extremely helpful and interesting.

      1. I’m the typical millennial, have the attention span of a goldfish. No idea how I ever managed to get a master degree…..books are not my thing. That is why I love Mrs CF, she reads the books, I get the summary. Works like a charm 😉

  6. A lot of the concepts discussed in “Smart Couples Finish Rich” seems to follow Tony Robbins’ “Money: Master the Game”. Essentially, the goal is to have a retirement fund, a fun fund, and dream fund. If you can save money in each of these funds, you will eventually be able to achieve your goals and dreams.

    Thanks for sharing Liz 🙂 Have a good one

    1. I would recommend Money-Master the Game way above this book. I listened to it on an eight hour work trip, and I really enjoyed the interviews he had with the different successful people. This book is much more basic and fluffy

  7. Automatic Millionaire is the first personal finance book that I read. It was mind-blowing and put me on the right track. I hear the criticism of the latte factor but I don’t really get it. It’s not really just about buying lattes, it’s about being intentional with your spending and not frivolously spending on things here and there. They do add up.

    1. I think sometimes people just miss the point of the example. It can also be that someone makes a high income and so the “lattes” aren’t what’s hurting them financially-it’s much bigger purchases. But I agree that it’s the examples of saving small amounts over a large period of time, and starting young, that first got me interested in saving and investing in my early 20’s

  8. Automatic Millionaire is the book that helped get my finances in order, and I don’t even agree with the whole book. The latte factor I could do without (what I can’t do without is coffee!). Same with the financial advisor. Same with the anecdotes and inflated rates of return.

    So what did I like? Pay myself first, automatically. As long as I’m doing that I don’t worry about a budget. It fits my preferred lifestyle of not sweating the small stuff. I’m not sure if it works as well for someone who has a low salary and can’t afford to max out a 401k, but it works for me.

    Probably the best part about the book is that it’s accessible and thoroughly convinced my wife (who is not as interested in personal finance) to max out her 401k.

    1. I agree his books are very accessible-that’s probably part of what makes them so popular. I think the latte factor can be really powerful for those with a lower income or those who think they don’t make enough money to save anything. But if that’s not your situation then it’s less useful.

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