Nathan Tesler
Why the Barefoot Investor isn’t working for you Wildcard

Like millions of others, you’ve probably read the Barefoot Investor. You might have even attempted to put it into practice, scrawling words like “splurge” or “expenses” on the front of your bank cards.

There’s a reason the book has dominated the bestsellers list for years. Some of its ideas are solid, based on age-old advice about money. And it’s helped to fill the financial literacy void for those of us who never learnt about money at school or from our parents.

But the whole time I was reading “the only money guide you’ll ever need”, I felt like it was written for someone else — someone much older than me, whose only ambition in life was to own a house. Not a young person, living in a super-expensive city in the middle of a housing affordability crisis.

The book outlines 9 steps to achieving financial freedom. Let’s go through them one by one.

Step 1: Schedule a monthly Barefoot date night

Like most things in the book, this was written for a certain type of person: someone in a long-term, traditional relationship where you share a bank account. Personally, I don’t know a lot of couples under 40 that do this.

Even so, thinking and talking about money is always better than doing nothing and hoping for the best. So kudos to the Barefoot Investor for trying to spread that idea.

Step 2: Set up your buckets

Here’s where I think 90% of the value in this book is. The advice is: don’t put every dollar you have into one account. Our brains just can’t deal with money that way, and you’ll end up spending all your savings and going nowhere.

The book advocates creating three buckets (basically, accounts):

  • A “Blow” account for your spending and expenses
  • A “Mojo” account as a buffer for emergencies
  • A “Grow” account for long term savings

This is sound advice based on centuries of common sense about money, even if the names are a bit stupid.

Step 3: Domino your debts

Okay, so far so good. Credit cards and buy-now-pay-later services can charge a lot of interest, but more importantly, they encourage you to spend more and save less. Prioritising paying off debt before focussing on savings is also solid advice.

Step 4: Buy your home

Whoa — that escalated quickly. How did I go from cutting up my credit card to suddenly buying a house? Didn’t we just spend the whole of last chapter getting out of debt, and now we’re diving headfirst back into it?

This is where things start to go off the rails, and into territory that seems like a million miles away from anything most of us can relate to.

Unfortunately the average home in Sydney is over $1 million, so if you want to save the 20% deposit you’re looking at $200,000 at least. He’s pretty light on details about how you’d go from being in debt to having nearly a quarter of a million dollars in cash, but good luck!

Step 5: Increase your super to 15%

Now we get into real old-folks tips on how to save on tax by putting it into your super. Contributing more to super is widely considered to be a good idea, but the problem is that it’s practically impossible to get anyone under 40 to care about retirement. To be honest, most of us aren’t even sure the planet will be around when we get there. I napped through this section.

Step 6: Boost your Mojo to three months

Back to some good advice — the book suggests having three months’ worth of spending money in your “Mojo” account. I’m a really big believer in this one. Having a buffer and some emergency money can have a massive impact in your life.

Step 7: Get the banker off your back

And… we’re back. More baby boomer advice for how to pay off your home loan. Things like “don’t get a fixed rate loan” and “make extra repayments”. I’ve got a good idea for how to not have a banker on your back — don’t borrow 15 times your annual salary from him.

Step 8: Nail your retirement number

You’ve almost slogged your way to the end of this 280-page book and now you’re approaching retirement. It’s now time to figure out how much you need for super and put more money in there. Thanks gramps, I’ll get right to that — once I figure out how I’m going to pay next week’s rent.

Step 9: Leave a legacy

Welp, you’ve made it. You’ve accumulated as much wealth as possible, and now it’s time to give it away. If there was ever a more perfect example of how out-of-touch the 1950s worldview is — it’s this.

So to sum it all up. The Barefoot Investor is a great, easy to read guide for someone who’s on the old-school traditional life path (steady partner for life, dreams to own a house and 2.5 kids) and wants a reasonably easy blueprint to follow.

It’s pretty tone-deaf for the average person in their twenties who has a side gig and is struggling to save up money for a holiday, let alone a million dollar home.

If you’re on the traditional path, we wish you the best of luck. But if you’re looking for the simple, tried-and-tested money advice (like separate accounts for spending, expenses and savings) without all of the old-school nonsense (like mortgage repayment tips), Wildcard might be right for you. Find out more here.

Note: This article isn’t financial advice and doesn’t take into account your personal situation — please make sure you do your own research.

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