By Michelle Singletary
Sunday, January 1, 2006
Kids do say the darnedest things.
I once promised my daughter Jillian that I would do something the following day. (Honestly, I don't remember what it was she wanted me to do.) By the end of the day, I knew I couldn't keep my promise. So I warned Jillian, who was 4 at the time, that I would have to try again the next day.
"Tomorrow, Jillian, tomorrow," I said.
The next day, with a firmness that no little person who can't dress by herself should have, Jillian said, "Mommy, today is tomorrow."
What a simple but profound phrase. It made me finally act on my word.
I think about what my daughter said when I see surveys that find one of the top resolutions people make for the new year is to get their finances straight.
How many tomorrows have you been promising that you will start handling your money better? When it comes to your finances in 2006, adopt the mantra, "Today is tomorrow."
Of course, you'll need more than just that mantra. You'll need help. To that end, I'm recommending for the Color of Money Book Club's January selection "Smart and Simple Financial Strategies for Busy People" by Jane Bryant Quinn (Simon & Schuster, $26). It will be available for purchase online Tuesday and in bookstores Jan. 9.
Quinn has written a book keeping with the KISS theory. You know, "Keep It Simple, Stupid." Except in this case, Quinn thankfully drops the stupid part. She knows we aren't stupid. The fact is, the world of personal finance has become complicated, and our best defense is to keep our financial lives super simple, she says.
"If a salesperson shows you a gee-whiz but complicated financial product, you can be sure of two things: You don't need it and it's overpriced," Quinn writes. "You can get the same result with something easier, wiser and lower-cost."
What you get with Quinn is advice and wisdom from someone who has been writing about personal finance for decades. She spent 27 years writing a syndicated newspaper column. She worked 10 years for CBS News. Quinn currently writes a regular column for Newsweek and Good Housekeeping. She helped develop the top-selling computer finance program Quicken.
Quinn delivers on the promise that her book is designed for people who want reliable, unbiased information, not a lot of details.
"I didn't realize this when I started reporting on finance and investments," she says in the book's introduction. "I dug into details, tried new things, tested every approach. I put my own money (meager savings back then) into some of the bright ideas and products that the 'experts' praised."
And what did she find out?
"As time passed and I tracked results, I saw that those products were mostly guff," she says. "On the surface, they looked convincing, exciting, and even no-lose. Underneath, they were just a way of making banks, brokers, and insurance companies rich at my expense."
Quinn's money rules make it easy for you to begin a financial plan. For example, she says, automate everything you possibly can about your finances.
Rather than bothering with a detailed budget, just automate your savings, she recommends. Deliberately move money out of your checking account into a savings account you don't touch.
"You'll almost certainly spend all the rest of your pay, but your daily expenses will adjust themselves, magically, to the amount of money in your account," Quinn writes. "You will budget mentally, without having to write everything down."
When it comes to investing, she suggests three types of funds: target retirement mutual funds, which invest your money based on when you think you might retire; life cycle funds, where you choose the balance of stocks and bonds you want based on your age and stage of life; and index funds, which are designed to copy the performance of a particular market index such as the S&P 500.
Some of Quinn's advice will surely be criticized by many in the financial world. But it's refreshing to read a financial book that doesn't give you a bunch of options. Quinn specifically lists the best savings plans, retirement plans, mutual funds and insurance products to make your life easier.
Want to cut through the clutter of financial choices?
Keep it simple, Quinn repeats again and again.
"Financial firms love to make investing look complicated, so you'll need their help," she writes. "But all good financial advice springs from the same short list of principles that you already know: Save more, borrow less, pay attention to taxes, invest regularly, diversify, limit risk, and hold down fees."
Make today your tomorrow and get this book. It will be the first step in turning your promises into a chance at prosperity.
If you are interested in discussing this month's book selection, join me online at http://www.washingtonpost.com/ on Thursday, Jan. 26, at noon Eastern Standard Time. Quinn will be my guest and will take your questions.
To become a member of the Color of Money Book Club, all you have to do is read the recommended book. Then we chat online with the author. In addition, every month I randomly select readers to receive a copy of the book, donated by the publisher. For a chance to win a copy of "Smart and Simple Financial Strategies for Busy People," send an e-mail to firstname.lastname@example.org . Please include your name and address so we can send you a book if you win.
Clarification: In a recent column in which I answered a reader's question about a 401(k) plan, I specified that earnings are taxed if the money is withdrawn early. The fact is if you cash out money from this type of tax-deferred retirement plan, all the distributed money is taxed, including your contributions, not just your earnings.
On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org. Join her tomorrow night at 7:10 p.m. on "Insight" on WHUR, 96.3 FM.
By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.
Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.