Smart Couples Finish Rich by David Bach

Smart Couples Finish Rich: 9 Steps to Creating a Rich Future for You and Your Partner by David Bach is a personal finance book published in 2001.

Money is the leading cause of divorce, and it’s no surprise given that many couples avoid discussing finances until they’re arguing about them. Bach’s book addresses this issue by emphasizing the importance of couples working together on their finances. 

Too often, couples assume they’re on the same page without actually discussing their goals and plans. Being aligned with your partner on financial matters is crucial. When couples collaborate on their finances, they can achieve their goals much faster than if they try to tackle them alone.

Step 1 – Common Myths

“Working together compounds results; not doing so compounds mistakes”

• Love prevents money conflict → Love does not eliminate conflict
• It takes money to make money → It requires discipline and patience
• We don’t earn enough to invest → Anyone can invest
• Taxes and inflation are under control → They constantly fluctuate
• Avoiding money talk is harmless → Avoidance leads to more problems

Step 2 – Determine Money’s Purpose

• Life values guide money decisions
• Core values rarely change, even as life circumstances evolve
• Focus on who you want to be, not just what you want to do or have
• Identify your top 5 values
  • Not goals or possessions
  • Ex: freedom, security, family, growth, service
• Review spending → does it align with your top values?

Step 3 – Know Your Starting Point

• Create file folders
  • Tax Returns
  • Retirement Accounts
  • Social Security
  • Investment Accounts
  • Savings and Checking Accounts
  • Household Accounts
  • Credit Card Debt
  • Other Liabilities
  • Insurance
  • Family Will or Trust
  • Children Accounts
  •  Real Estate and Other Investments
• Determine your goals
  • Make sure they match your values as a couple
  • Make sure they’re specific, detailed, and have a timeline
  • Put them in writing
  • Start taking action within 48 hours
  • Get a rough idea of how much money it will cost to achieve them
  • Enlist help

Step 4 – The Latte Factor 

• The real problem is spending, not income
  • People underestimate daily waste
  • Even $5 per day becomes millions over time
• Small, frequent purchases add up (lunch, parking, snacks)
  • Consumer culture promotes constant spending
  • Many “needs” are really wants
• The issue isn’t ability – it’s awareness and habits
  • Most people actually would save
  • Track your daily expenses

Step 5  – Your Retirement Basket

I will substitute here Retire Before Mom & Dad by Rob Berger.

Step 6 – Your Security Basket 

• Safeguard 1 — set aside a cushion of cash 
• Safeguard 2 — both of you must write a will or set up a living trust 
• Safeguard 3 — buy the best health coverage you can afford 
• Safeguard 4 — protect those who depend on you with life insurance 
• Safeguard 5 — protect your income with disability insurance 
• Safeguard 6 — if in your 60s, consider long-term care coverage

Step 7 – Your Dream Basket 

• Don’t fall into the “I don’t have a dream” trap
• Intentionally design a meaningful, enjoyable life
• Match dreams to time horizons & where to put money
  • Short (≤ 2 years) → money market account
  • Mid (2-4 years) → bond funds, balanced funds
  • Long (4-10+ years) → growth-oriented investments (index funds)

Step 8 – Avoid the Mistakes

I will substitute here The Dumb Things Smart People Do With Their Money by Jill Schlesinger.

Step 9 – Plan a Money Date 

• A designated time to discuss and work on your finances together
• Should be low-stress and even fun
• Purpose: evaluate current position & measure progress towards goals
• First Money Date
  • Clean out and organize money files
  • Easy to put off but very rewarding once completed