By Sheryl Smolkin
If one of your New Year’s resolutions is to finally get serious about your family finances, How to Eat an Elephant by financial planner Frank Wiginton is a book you may want to take a look at.
For many years when Wiginton’s clients have approached him to make a financial plan he has asked them to bring in a series of documents. Clients often said that the amount of work they had to do and the quantity of information they needed to pull together was overwhelming.
To help them overcome this fear and stress, he began breaking down the required information into smaller, much more manageable bite-sized pieces – i.e., “small bites of the elephant.”
This was the genesis of the “twelve step program” in his book covering topics ranging from goal setting, debt management, and insurance to retirement savings, estate and tax planning. Wiginton suggests that by using this guide and doing about four hours a month of “homework” readers can develop a realistic financial roadmap.
Each chapter includes a breezy discussion of the topic, “Frank thoughts” from the author and anecdotes about how using these techniques have benefitted certain individuals. At the end of each brief chapter summary you are directed to easy-to-use web tools that help you to collect the information and use the strategies described in the previous section.
I particularly like that Chapter 1 asks readers to “blue sky,” prioritize and price a list of 50 things they want to do right now. Then by identifying the major things that must happen to accomplish each goal, reviewing the list regularly and sharing goals with others they have a better chance of making their goals a reality.
Chapter 2 teaches you how to create a net worth statement and by Chapter Three, Wiginton finally deals with the dreaded “b” word – budgeting. That’s where he gets into “needs vs. wants” and ways to break “the spending habit.” Ideas like using cash only, saving 10% and re-negotiating mortgages and telecommunications bills are not new, but seeing them in one comprehensive list is helpful.
When it comes to retirement planning, Wiginton says the first step is to determine what you want to do in retirement and what it will cost. Then he presents various retirement savings options and the tax implications of each one.
Wiginton notes that you may actually need less money than you think to retire because:
- You will pay lower taxes when you no longer are employed.
- For many people, expenses are lower once the mortgage is paid off and the kids have left home.
- People tend to spend less with age.
For example, when people are 60 to 70 years old they tend to be a lot more active than when they are 70 to 80 and the trend grows more pronounced with age.
As a result, in calculating what clients need, he usually reduces the amount of spending required by 15 or 20% around age 75 and by another 15 to 20% at age 85. However, he says that increasing costs of long-term care for seniors do have to be factored into the equation.
This is an engaging and clearly written book that runs to 274 pages of smallish print. There are no quick fixes but if you are prepared to work through it “one bite at a time,” by the end you will have a much better understanding of your finances and a plan that will help you achieve your personal financial goals.
The book is available in paperback or for Kobo and can be ordered for about $16.00 from the Chapters/Indigo website.