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Quickie Book Review: "The Net Worth Workout"

December 13th, 2008 at 07:33 am

There is a book I have been meaning to write about, but I thought I should go back and re-read it first to do it justice (since it's been awhile since I read it). However, after reading BA's (as usual) thought-provoking post about earning vs. saving [url]http://ba.savingadvice.com/2008/12/12/overtime-festivit..., I decided to go ahead and just do a quickie write-up, since it sounds like it might be of interest to several folks.

"The Net Worth Workout" is written by Susan Feitelberg, a financial adviser for JPMorgan Chase and competitve athlete (triathlons and road races). Given her interest in both finance and sports, it is natural that she wrote a book comparing financial health and physical health. She breaks financial health down in to 4 quadrants:

Earning = Metabolism (Maximizing earning strengthens and speeds up other quadrants)

Spending = Calorie Intake ("Junk" spending decreases wealth; "nutritious" spending" increases it)

Saving = Strength Training (Like weight lifting, smart saving builds financial muscle)

Investing = Cardio Fitness (Like cardio work, investing increases other components' capacity)

Early on in the book, she draws a simple diagram which is a circle divided in to the 4 quadrants, with the words Earning, Spending, Saving, and Investing written and arrows going from one quadrant to another in a circular pattern. The point she makes so excellently is that in order to have "financial health" you have to focus on all 4 quadrants. You cannot just focus on 1 or 2 and ignore the others. They all build on and enhance each other, and you need them all. It's all about balance.

For example, if you focus just on earning more, but always spend all of your earnings, you are not going to get anywhere. And if you focus on fabulous returns on your investments, but have very little invested either because you don't earn much or don't save enough of what you earn, you are not going to get very far.

She encourages you to identify your strengths and weaknesses in each area. I'm sure all of us are stronger in some areas than others. I'm strongest in the spending and saving areas. Thanks to reading this book, I was encouraged to help my husband out with his business as much as possible, and to always do some work myself for pay (to boost our "financial metabolism"). And it was immediately after reading this book that I called and set up an appointment with a CFP to discuss our investments; DH & I coordinated our tax-deferred retirement savings (came up with a "couple's asset allocation"), and chose mutual funds that fit with our goals and our conservative investment style, and we have stuck with it.

Towards the end of the book is a section that might be encouraging to folks during these recessionary times. She explains that, if you have been strengthening all 4 quadrants, if you face a serious setback in one area, you can rely on your strengths in the other 3 to get you through. Specifically, if you get laid off for a long period of time, you can lean more heavily on your smart spending habits, your savings, and your investments, and they will carry you through until you can recover in the "injured" earning quadrant.

I can't say that I thought this book was perfect. As with any PF book, don't we always find things to quibble about? For example, I didn't completely agree with her spending categorizations ... she called "ATM/Bank Fees" condiment (nice but not necessary) spending, while I would call it junk spending ... (completely unnecessary and wasteful).

But overall, I thought the book was very good. It has certainly helped me, even tho I am most definitely NOT a competitve sports type.

For someone who IS involved in competitive sports, it should be really informative. If you know someone who is an athletic type but just doesn't "get" personal finance, then I would strongly recommend this as the book that just might get through to them!

4 Responses to “Quickie Book Review: "The Net Worth Workout"”

  1. Ima saver Says:

    good post!

  2. homebody Says:

    A long, long time ago on the internet, someone wrote an excellent post "It Takes Time To Be Frugal". I think there is a tipping point with earning and time where you are too tired or don't have the time or inclination to be frugal. Everyone needs to find that point. What is the point of earning more if you spend it on convenience food or cleaning/yard people, etc. I found that was my problem with earning more and am trying hard to do both at this point.

    Maybe you should go out for that Sunday brunch tomorrow, aren't you moving to San Diego soon?

  3. monkeymama Says:

    Sounds like a very interesting analogy. Thanks for sharing!


  4. Broken Arrow Says:

    You are much too kind, but thank you for sharing your book review and insights!

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