All Your Worth

Free Press

The rules of the game have changed.

Somewhere in your bones, you already know this. Hard work and good intentions are no longer enough. Security, comfort, lasting prosperity -- you want it, you work hard for it, and yet the worry remains. Real financial peace seems so hard to achieve.

You can't count on good old-fashioned hard work the way your parents did. Go to school, get a good job, do your work, don't go crazy with spending, and everything will work out, right? Not anymore. That advice may have worked in your parents' day, but today you have to be smart with your money. Not just a little smart, but super smart. You have to learn the new rules -- the rules nobody told you and nobody talks about. And you have to learn them fast.

Just for a moment, forget what you know about money. Forget about your bills. Forget the size of your paycheck. Forget your shopping trips and the shoes you just bought. We want to give you a new perspective on your money, a different way to think about it. We want you to explore new possibilities.

What if we told you that this book could show you how to cover your bills, without worry or fear? No more bounced checks. No more anxiety about how you'll make it through the month. Just the power to pay your bills on time, and then to relax in security and comfort.

Now, what if we told you that on top of showing you how to conquer your bills, this book could show you how to have some money for fun? No living like a Scrooge. No asking yourself every minute, "Can I really afford this?" Just some cash in your pocket for plain old just-because-you-feel-like-it fun.

And now, suppose we told you that in addition to all of this, you could still have money to save? Money to get ahead, each and every month. Enough money so that you could finally start to dream a little -- and make real progress toward those dreams. Enough to build some real wealth.

And what if we said you could do all this without counting pennies, without carrying around a calculator, and without thinking constantly about money? In fact, after a little up-front work, you could stop thinking about money altogether, and spend your days focusing on the things that really matter.

Would you keep reading?

At this point, you may be thinking, "Aw c'mon. I've looked at these financial books before. All windup and no delivery. They take your $26 and leave you no better off." All those get-rich-quick schemes that assume you have thousands of dollars lying around, just waiting for the right investment. All those chapters on how to buy stock options, how to choose a vacation home, how to plan your estate so that your kids can inherit millions without paying taxes. Who are they kidding?

Or maybe you bought one of those "Billionaire Tells All" books, which promised to unlock all the secrets to becoming fabulously wealthy. And here you are, still trying to figure out how the heck you're supposed to "make your money work for you."

And then there are the lectures on what they think your problem is. "Stop taking expensive vacations." "Shift to a better mutual fund." But what if you haven't taken a real vacation in ages? What if you don't have two nickels for a mutual fund, or maybe you aren't quite sure what a mutual fund is?

We'll let you in on a secret: Those books are not written for you. They are written for people who already have plenty of money, people who don't worry about making ends meet. Oh sure, the store is glad to take your money, but those books are written for people who are already rich and who want to get just a little bit richer. So, where is your book?

Right here. All Your Worth is for anyone who ever worries about money. For anyone who works hard and plays by the rules, but discovers that the rules have changed. For anyone who wants to build wealth, but isn't sure how to get started. In short, this book is for anyone who wants to get control of his or her money once and for all, to stop worrying and start living a richer, fuller life.

If you have already solved all your money problems, if you are secure about your future and never worry about money, if all you want is a book to help you get a little richer, then keep shopping. This isn't your book. But if you are like the rest of us, and if you are ready to take charge of your money, then this is your chance to make some profound changes in your life.

We want to be clear right from the start: We are not going to tell you how to get rich working ten minutes a day. We are not going to claim that you can live like a millionaire on $20,000 a year. And we are not going to pretend that you can retire at age 32. We figure you are too smart to believe that kind of twaddle anyway.

We are also not going to say that if you'll just shift to generic toilet paper and put $5 a week in the bank, all your problems will instantly disappear. A few pennies here and a few pennies there, and the next thing you know, you will be debt-free, investment-rich, and lighting cigars with Donald Trump. Nope, we're not selling that brand of snake oil.

In fact, you won't get any count-your-pennies advice here. And for a very good reason: Penny-counting advice is downright dangerous. That's right--dangerous. Trying to count every penny won't solve your financial problems. But it will distract you from the real issues. (It will also provide you with lots of opportunities to fight with your loved ones and make everyone miserable!) This book skips the pennies and goes straight to the heart of the matter -- getting real control over your dollars.

Here's a little secret that the other financial books won't tell you: Savvy money managers don't spend a lot of time looking for ways to save a few pennies. They charge right ahead to the big-ticket items, looking to make high-impact changes in the shortest period of time. They don't sweat the small stuff. And neither will we.

We're going to work on the big stuff, not the pennies. This means that what we're going to do is completely different from those other books. But we'll do it anyway. Why? Because it works. It will take some effort at first, but once you get going, you can manage your bills and start some serious wealth creation.

How can we be so sure this will work? Because All Your Worth isn't based on gut reasoning or lucky guesses. It is based on more than twenty years of intensive research, drawing on the experiences of literally thousands of people from across the country.

This book doesn't waste time lecturing you on problems someone dreamed up. It focuses on the real issues that regular people struggle with every day. And it offers workable, lifetime solutions designed to help ordinary people get control over their money once and for all.

One of us (Elizabeth) is a professor at Harvard Law School. I have spent decades writing academic books and teaching an entire generation of law students about the rules of money. I have gone before the United States Supreme Court, the White House, and Congress to talk about those rules. I have raised so much noise on television, on radio, and in the newspapers about financial trouble in America that I was named one of the Fifty Most Influential Women Lawyers in America. But I have spent a lot of my time out of the spotlight, giving advice to people -- friends, family, folks who participated in our various studies. These "What can you do right here, right now" conversations have become a big part of my life.

The other of us (Amelia) is a financial consultant, with an MBA from the Wharton School at the University of Pennsylvania. I started my career as a consultant with McKinsey & Company, where I advised some of the largest corporations in America. Then I left the big-business world to cofound HealthAllies, a new kind of company dedicated to helping families get more affordable health care. Today I spend my time writing or speaking on the radio about finance, and working with people who want to get control of their money.

We are also mother and daughter, two women who come from a long line of hardscrabble Okies. Shortly before I (Elizabeth) was born, my father lost the family's life savings to a crooked business partner. During my growing-up years, Daddy sold carpeting at a department store and worked as a maintenance man for an apartment complex. I got my first job at 9, rocking a neighbor's colicky baby in the afternoons so his mama could get a few hours of sleep. By age 11 I was taking in sewing, and at 16 I worked the mail desk at an insurance office. My college financial aid applications classified my family as "poor," although I never thought we were any worse off than our neighbors.

I was married at 19, and Amelia was born three years later. She spent her early years tagging along while I went back to school. We lived on a budget that was so tight that I still remember crying with relief when my mother-in-law offered me one of her dresses to wear to a job interview. (She was seven inches shorter than I am, so you can imagine how ungainly I looked!)

I (Amelia) spent a lot of my childhood in a moving van, as my mom moved from place to place, finishing law school and then taking teaching jobs at various colleges. First New Jersey, then Texas, then Michigan, then Pennsylvania, and finally off to Massachusetts. I ended up going to nine public schools over twelve years, so I certainly know what it's like to adapt quickly! I headed back to Pennsylvania for graduate school, where I met the man who would later become my husband. He and I now have a 3-year-old daughter, which makes me a working mother of a preschooler. (That also makes Elizabeth a grandma -- her favorite job so far!)

Together we have written one best-selling book about families and money, The Two-Income Trap. That book told the story of how the new rules of money have trapped millions of decent, hardworking families, who struggle financially every day. We showed that even though today's families are working harder than ever, many are in worse financial shape than their parents were.

The book caused a sensation. Within days of publication, the phone started ringing -- reporters, advocacy groups, even a presidential candidate called. Mostly they wanted to talk about ways the law could be improved to help families. We explained the policy recommendations in The Two-Income Trap, and then we walked on with hopeful smiles on our faces, cheered by the idea that we might have helped bring about some important changes.

But there were other conversations, ones that didn't leave us smiling. For some people, The Two-Income Trap did more than raise some public-policy issues; it touched a raw nerve. We would be going about our business, and then, out of the blue, someone -- a neighbor, a caller to a radio program, a mom dropping off her son at preschool -- would pause and say quietly, "You're not just talking about money, you know. You're describing my entire life." And then the voice would drop to an urgent whisper. "No one knows how much I worry about money. What should I do?"

Of course, we gave the best answer we could. But how much could we really say in the grocery store checkout line or in the ninety seconds allowed to a radio caller? Over time, those conversations began to haunt us. Whenever we had a quiet moment, we would think about the people who had asked us for help. Sure, America needs policy changes, and in time maybe we'll get some laws that make more sense. But in the meantime, what should people do?

At first we thought the answer would be really easy -- just find a couple of good books we could recommend. So we started looking for a great book that would help ordinary people get control of their money.

And we looked.

And looked.

Everywhere we went, we found pretty much the same thing. Plenty of books on the difference between bull and bear markets, and lots of tips on how to find a great deal in potato futures. In other words, we found oodles of advice for people who are financially secure and just want to make a little more money. But what about people who aren't so secure? What about the people who stopped us in the grocery store, the mothers at the preschool, and the guys at Home Depot? Where was the advice for them?

It didn't exist. So we developed All Your Worth.

So what is the secret to riches? Why do some people get ahead, while others constantly struggle? Our research led us to a very simple and incredibly powerful financial principle that you won't hear anywhere else -- balance.

What is balance? Doctors recommend it all the time. A balanced diet, with grains, proteins, and plenty of fruits and vegetables. A balanced lifestyle, with enough work, enough play, enough exercise, and enough sleep. This book will help you get your money in balance, to find that same long-term, sustainable approach to your finances.

A lot of budgeting starts at the edges and works in "Cut back here" and "trim over there." That's a little like planning a diet by saying "cut out cookies" and "no sugar in your coffee." This approach may (or may not) work for slight modifications, but it is not a comprehensive lifetime plan. And if you don't have a master plan, then trimming a few expenses in one place while you overspend elsewhere won't do you any more good than cutting out doughnuts while you gorge on cupcakes.

We start by approaching your money in a whole new way. No complicated lists. No spending diaries. Instead, we will help you analyze your spending by dividing it into three simple categories. There is one category for your regular monthly bills, a second category for the money you can spend "just for fun," and a third category for savings. And just like a balanced diet that lets you choose between chicken and fish, All Your Worth lets you make lots of choices within each category -- so long as the overall category doesn't get too heavy or too light.

When your money is in balance, you have designed your finances so that you always have enough to cover your needs. This means that you always have enough to pay your bills without worry.

Balance also means that you always have something in your pocket for a little fun. This isn't about giving up doughnuts and nacho chips forever. This is about enjoying life, each and every day.

And, most important, balance helps you build wealth and create a brighter future for yourself. Day by day, dollar by dollar, you build real riches -- with a plan that's easy, steady, and strong.

When your money is in balance, you always have enough to pay your bills, have some fun, and save for your dreams.

And here is the best part of all. Once your money is in balance, you can stop worrying about it. Managing your money becomes automatic. And so it moves into the background of your life, where it belongs.

Balancing your money isn't about making money the King of Your Life. You know and we know that money isn't the goal in itself, and the pursuit of money is no substitute for putting together a real life. But we also know that if you don't have a solid, workable plan, then money (or the lack of it) can take over your life. It is a great irony: If you don't think smart about money, you'll wind up thinking about money all the time. But once you get it right -- once your money is in balance -- you can think a lot less about your finances and a lot more about the things that are truly important. All Your Worth is about making the most of your worth in every sense of the word -- making the most of your financial worth and your worth as a human being, so you can live the kind of life you want to live.

All Your Worth is a simple, easy-to-follow process. There are six steps. Step One will introduce you to the principles of balance, and help you evaluate where you stand today. You will then set some simple, measurable goals for where you want to go. Steps Two through Six will show you how to meet those goals, so you can get your money in balance and start creating some real wealth. At the end of this book are three additional tools that focus on critical areas in your finances, special relationships and special times that can profoundly affect your financial well-being. We'll cover money and your marriage; buying a home; and staying in control if you find yourself in tough times.

Each of the steps builds on the one that came before, so you should read them in order. And be sure to complete all the steps. Skipping a step can cause you to miss something you will need later on.

Once you start going through the steps, you will never think of your money in the same way again. You will develop a whole new approach to spending and saving. We guarantee this will transform your finances. And by the time you reach the last step, you just might transform your life.

Will It Work?

At this point, the skeptic in you is probably asking: Will this really work? Is this another get-rich-quick book? Is this the same fix-the-problems-that-I-don't-have advice? Is this just one more setup for failure? Or could this really help me change my life?

All Your Worth will work. It won't give your skin a rosy glow and it won't put hair on a bald head (sorry, Dr. Phil!). It will take some thinking and a little effort to set up, but it will help you get your financial house in order. It will let you smile in the daytime and sleep easy at night. And it will work for more than a week or a month. It will work forever.

This plan works because it is a lifetime strategy. It isn't based on a quick fix. It isn't a cheap paint job on a crumbling old house or a crazy crash diet. This plan makes sense when you are 20 and when you are 80. It's a plan that works for single people and for couples with more kids than they can count. You will build a solid foundation that accounts for all your worth, and you will create a plan you can live with for life.

So what have you got to lose? Do you want to keep worrying, or are you ready to try something new? Are you ready to start on your path to a lifetime of riches? Are you ready to make the most of all your worth?

Copyright © 2005 by Elizabeth Warren and Amelia Warren Tyagi

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Excerpted from All Your Worth by Elizabeth Warren Copyright © 2005 by Elizabeth Warren. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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