The Barefoot Investor
Guides you through steps for financial freedom and wealth-building.
Summary of 7 Key Points
Key Points
- Financial health checkup
- Domino your debts
- Mojo money: The emergency fund
- Growing your wealth
- Buying a home
- Insurance and wills
- Retirement planning
key point 1 of 7
Financial health checkup
According to the ‘Barefoot Investor’, a financial health checkup involves thoroughly analyzing your current financial situation and making necessary adjustments to improve your financial wellbeing. It begins with calculating your net worth, which is accomplished by subtracting all your liabilities (loans, credit card debts, etc.) from your assets (cash, investments, property, etc.). This provides a clear picture of your current financial standing.
The next step in a financial health checkup is understanding where your money is going. You are advised to keep track of your income and expenses, categorize them, and evaluate if your spending aligns with your financial goals. If it doesn’t, you are urged to make some adjustments to your spending habits.
Post this, the process involves creating an emergency fund, which can cover at least three months’ worth of living expenses. This fund is meant to shield you from unforeseen financial shocks and provide you with a sense of security. After establishing an emergency fund, you are encouraged to reduce your debts as quickly as possible, focusing first on high-interest debts…Read&Listen More
key point 2 of 7
Domino your debts
Dominoing your debts is a strategy that involves focusing on paying off your smallest debts first while maintaining minimum payments on larger debts. Once the smallest debt is paid off, you then use the money you were using for that debt to tackle the next smallest debt. This gradually increases the amount you’re able to pay towards your larger debts, hence the term ‘domino effect’. The aim is to lessen the burden of debt and eventually become debt-free. ..Read&Listen More
key point 3 of 7
Mojo money: The emergency fund
Mojo money, as described in the book, is essentially an emergency fund. It is intended to act as a financial buffer in case of unforeseen circumstances or emergencies. The main idea behind having mojo money is to have the peace of mind that you are covered financially in case something unexpected happens. This could be anything ranging from losing your job, having an unexpected medical bill, or even handling an unplanned travel expense. ..Read&Listen More
key point 4 of 7
Growing your wealth
Growing your wealth, as detailed in the content, is about more than just making more money. It’s a more comprehensive approach that includes saving, investing, and minimizing debt. The first step is to create a financial plan, which is a roadmap for your money that includes your financial goals, your current financial situation, your income and expenses, and your savings and investment strategies. This plan is your guide to financial success and should be reviewed and adjusted regularly…Read&Listen More
key point 5 of 7
Buying a home
Buying a home, as explained, is a significant financial decision and should be approached with adequate planning. Instead of focusing on the immediate benefits that a house provides, it’s crucial to consider the long-term financial implications. Even if a house provides comfort, security, and a sense of ownership, getting into a mortgage without a proper plan can lead to financial distress…Read&Listen More
key point 6 of 7
Insurance and wills
Insurance and wills are vital aspects of financial planning. The perspective in the book emphasizes the importance of having a life insurance policy. It isn’t just recommended for individuals with dependents, but for anyone who wants to ensure that, in the event of unforeseen circumstances, the financial impact is lessened. The book encourages considering both comprehensive and term life insurance policies, depending on personal circumstances and financial capabilities…Read&Listen More
key point 7 of 7
Retirement planning
Retirement planning, according to Barefoot Investor, involves taking steps to achieve financial independence so you can choose when and how to retire. The perspective in the book emphasizes on the importance of starting early to invest in retirement funds, creating a budget and sticking to it. The author also highlights the significance of having a clear vision of your retirement and breaking down your retirement goals into smaller, achievable steps…Read&Listen More