As the title suggests, Money School is a book to educate the reader about their finances. The disclaimer here is that its author, Lacey Filipich, is not a qualified financial advisor. She is a chemical engineer turned financial educator and entrepreneur. Her motivation for writing the book is to teach people about achieving financial independence (FI) and becoming time rich (TR) using her own tried and tested formula.
There are a lot of books and online information around about financial freedom that focus largely on ‘Mindset’. Not this one. This is a practical guide that gives the reader the exact steps to achieving monetary goals, and that is what makes financial freedom according to Filipich, realistic and achievable.
Thinking about financial freedom at a time when Coronavirus is wreaking havoc on the economies of countries world-wide may seem a little out of step with an anxious public whose main concern is merely survival. There was already an unsustainable debt bubble world-wide waiting for a trigger to burst it, and COVID-19 was the ‘Black Swan’ that no-one saw coming. However, the book does focus on accumulation of four main reliable assets; cash, bonds, shares and property. If we are in for an economic rollercoaster ride, there could be bargains to be had in the last three of those assets.
Cash and interest rates mentioned in the book are still relevant but there is an ominous warning in the book, apparently unintentional considering it was written before the COVID-19 pandemic. In February 2018, the Australian government quietly introduced bank ‘bail in’ laws. At the moment that means bank deposits up to $250,000 are guaranteed. However, in the event of financial crisis, APRA may be able to use your personal cash deposits.
Filipich emphasises the importance of starting a ‘buffer fund’ as early as possible and using that to use her strategies to gain financial independence. She gives practical strategies and realistic time frames but there’s no getting out of the fact that you have to save, and the earlier in life the better. These strategies are aimed at a younger demographic, however Filipich does mention her own mother who started in her 40s. Her mother retired in her 60s but Filipich mentions that she was ‘only’ earning $100,000 per year at that time. There are examples of people earning less in the book and getting to FI, but readers are encouraged to earn as much as possible and put away as much as possible.
There’s also lots of examples of what can go wrong and the cons as well as the pros of all investments. None of the advice is misleading, just honest and practical. It will be interesting to see if Filipich’s advise will weather the current global COVID-19 crisis.