Book Review
Title: "Why Smart People Do Stupid Things with MONEY: Overcoming Financial Dysfunction"
Author: Bert Whitehead
Publisher: Sterling, 2007; 240 pages; $19.95 list ($13.57 on Amazon.com)
This book is not new. But the concept and the content are so refreshing against the backdrop of finger-pointing, financial anxiety and knee-jerk non-solutions to our individual and collective financial dramas, I thought it warranted some exposure, especially to the real estate-minded folk of America. "Why Smart People Do Stupid Things with MONEY," by Bert Whitehead, is a 100 percent timely, holistic and insightful guide to understanding and rehabilitating financial dysfunction and setting the stage for long-term financial wellness.
At the outset, Whitehead, one of America’s loudest proponents for noncommissioned, fee-only financial planning, discusses the beginnings of the current national financial crises, without excessively blaming either institutions or individuals. He then uses the recent developments in our national economy — from the virtual disappearance of employer-funded retirement funds, to the emergence of personal finance media, to the ever-increasing complexity of the tax code — to make the case for why we must each individually seek out and leverage our insights about our own financial personalities, tendencies and behavior patterns into a responsible plan to prevent and resolve financial problems.
I appreciated Whitehead’s holistic and empowering approach, a clear contrast from the hollering, chiding voices of other popular financial personalities. Self-assessment plays a key role in Whitehead’s system, which includes questionnaires and matrices to help you pinpoint where your own financial persona lies on spectra such as risk assessment, greed vs. fear, savings/spending inclination tendencies, and whether you fall into a common financial personality type (nester, traveler, entrepreneur and "bon vivant" — French for "one with refined tastes") or one of the more extreme personalities (scrooge, gambler, miser, shopaholic).
The first section of the book is devoted to zeroing in on the nature of your financial dysfunction and tendencies; however, the various categories rang very true to my own experience advising all sorts of different financial types. I feel strongly that anyone who would pick up the book would find themselves and their flavor of financial "issue" addressed.
For those left-brainers whose eyes just glazed over, the entire second section of the book focuses on roadmaps, strategies, financial life cycles and other tools for implementing what Whitehead calls Functional Asset Allocation — his own investment theory that simplifies traditional financial planning by optimizing assets in terms of the functions they serve to real people, not computer models. …CONTINUED
For example, most financial advisers shy way away from discussing or advising clients on real estate matters, because homes as assets don’t always pencil out as well as other investments might. Whitehead, on the other hand, recognizes real estate as one of only three primary asset classes, and points out that property ownership not only protects against inflation, but that "a great deal of your home’s value is in your enjoyment of it. … For professional money managers, it doesn’t exist. It is also usually the largest and most profitable investment a family has." This is still true today, despite what the headlines would have you believe.
Whitehead’s willingness to take on entrepreneurs and real estate (a population and a topic often flat-out ignored by financial planning advice books) is typical of his out-of-the-box approach. The book occasionally veers into brief "commercials" for Whitehead’s fee-only financial planning network of advisers, but I personally found it forgivable, mostly because the commercials were finite and the approach was so interesting, I was glad to not have to go to great lengths to find a local pro with the same perspective.
Overall, "Why Smart People Do Stupid Things with MONEY" was a quick dose of a fresh view on how our relationships with money got off track, complete with usable tools and solutions to get them back on.
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.
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