Financial Freedom With "Wealthflow"
By Alison Hunt, The Motley Fool, April 18, 2005
I've recently finished reading Financial Freedom Using The Wealthflow System by Duncan R Glassey.
Unlike the recently reviewed How to Become an Automatic Millionaire and Smart Women Finish Rich, both by David Bach, Financial Freedom does not tell you exactly what to do. Instead, it makes you ask yourself numerous questions regarding your attitudes to money and what you want to achieve in your life.
Glassey calls this his 'Wealthflow' system – a 'cyclical' process which links your life objectives with quantifiable results. Rather than a providing a quick fix, he believes that it allows people to develop a plan to effectively lead a better life.
Glassey tackles this in seven chapters:
- Progressive Life Planning and Management – Sets the tone by asking about your, your parent's and your partner's attitudes to money, money habits, work ethics, goals and future plans.
- Cash and Credit Management – Asks how you handle your money, budgets, mortgage, bills, debts, credit cards, etc.
- Risk Management – Do you have adequate protection, such as life insurance and emergency funds; do you understand the features and benefits of your policies?
- Savings, Investments and Risk Integration – Do you save a tenth (10%) of your income each month? What is your risk profile? Do you invest for the long term?
- Retirement Management – Do you know the details of your pension(s)? Do you save for the long term, too? At what age will you retire?
- Tax Planning and Mitigation – Asks about ISAs, mortgages, self-assessment taxation, how much income tax you pay, pension tax-free lump sums, and so on.
- Estate planning - Is your Will up to date? Do you know the nil-rate band for inheritance tax? Have you planned for the financial security of your dependants?
After answering these questions, you should have a good idea of which areas of your financial life you're happy with, which you aren't, and which you're a bit shaky on. There are various tools to help, plus advice on debt management, spending advice, and so on. You can use what you've learnt to improve communication with any advisers you may use. But, perhaps most importantly, you should have opened your eyes to what you want from life, and be able to start taking steps to achieve this.
The book is filled with stories, proverbs and case studies to entertain and motivate. There's a particularly useful one on the importance of understanding your pension – especially if, as many people hope, you intend to retire early!
All in all, this book won't be useful to everyone who aims to sort out their financial future, especially as it's geared slightly towards those who use professional advisers, which most Fools steer well clear of. Indeed, if you're the kind of person who responds best to being told exactly what to do, you should choose a David Bach-type book. It will explain in no uncertain terms what you need to be doing now to ensure a comfortable (or even wealthy) retirement.
But if you're interested in a more 'holistic' approach, where understanding why you do things and making changes to your whole life are important, and making money isn't your main concern, you may find the 'Financial Freedom' approach is right up your street.
Buy the Book
You can buy 'Financial Freedom: Using the Wealthflow System' from Amazon:
You may also be interested in these two books by Maria Nemeth:
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