Smart Women Finish Rich: 9 Steps to Achieving Financial Security and Funding Your Dreams

Smart Women Finish Rich: 9 Steps to Achieving Financial Security and Funding Your Dreams

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by David Bach

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Completely Revised with Updated Tax Law Information, Income-Building Strategies, Online Resources, Success Stories, and More
With hundreds of thousands copies in print around the world, Smart Women Finish Rich, by renowned financial advisor David Bach, has shown women of all ages and backgrounds how to take control of their financial future and…  See more details below


Completely Revised with Updated Tax Law Information, Income-Building Strategies, Online Resources, Success Stories, and More
With hundreds of thousands copies in print around the world, Smart Women Finish Rich, by renowned financial advisor David Bach, has shown women of all ages and backgrounds how to take control of their financial future and finish rich. Whether you’re working with a few dollars a week or a significant inheritance, Bach’s nine-step program gives you tools for spending wisely, establishing security, and aligning money with your values. Plus, in this completely revised and updated edition, David Bach includes critical new long-term investment advice, information on teaching your kids about money, Internet resources, and new ways to attract greater wealth–personal and financial–into your life.

Editorial Reviews

From the Publisher
“Inspires women to start planning today for a secure financial future. Every woman can benefit from this book . . . Bach is an excellent money coach.” — John Gray, author of Men Are from Mars, Women Are from Venus

“David Bach is the one expert to listen to when you’re intimidated by your finances. His easy-to-understand program will show you how to afford your dreams.” — Anthony Robbins, author of Awaken the Giant Within

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The Crown Publishing Group
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Wendy sat in my office, perched on the edge of her chair, alert, inquisitive, and a little bit embarrassed. An experienced and highly successful real estate agent, she had come to me for a financial consultation—and the facts of her situation were hardly reassuring. Although she earned well over $250,000 a year and was able to put two kids through private school at an annual cost of $15,000 each, her personal finances were a mess. A self-employed single parent, she had less than $25,000 saved for retirement, no life or disability insurance, and never bothered to write a will.

In short, this intelligent, ambitious businesswoman was completely unprotected from the unexpected and utterly unprepared for the future. When I asked Wendy why she had never done any financial planning, she shrugged and offered a response I'd heard countless times before: "I've always been too busy working to focus on what to do with the money I make."

Looking across the restaurant table, I could see the sadness in my mother's eyes. A good friend of hers had just gone through a bitter divorce. Suddenly, after more than three decades of marriage to a wealthy surgeon, the friend now found herself living in a tiny apartment, struggling to make ends meet as a $25,000-a-year secretary. Like many formerly well-off women, she had never paid much attention to her family's finances, and as a result her estranged husband was able to run rings around her in the settlement talks. It was a terrible thing—all the more so because it could have been prevented so easily—and it made me wonder if my mother was similarlyin the dark. So I asked her. "Mom," I said, "do you know where the family money is?"

I thought it would be an easy question. After all, my father was a successful financial consultant and stockbroker who taught investment classes three nights a week. My mother had to be up to speed on the family finances.

At first, however, she didn't reply. Then she squirmed slightly in her chair. "Of course I know where our money is," she finally said. "Your father manages it."

"But where is it? Do you know where he's got it invested?"

"Well, no, I don't. Your father handles all that."

"But don't you have your own accounts, your own line of credit?"

My mother laughed. "David," she said, "what do I need a line of credit for? I have the best bank in the world—your father."

The reason I've started our journey with these two stories is that I know you are a very special woman—the kind of woman who believes in herself. Specifically, you believe that you possess the abilities and the intelligence to have the kind of life you feel you deserve. (If you didn't, you would have never picked up this book in the first place.) You also believe—correctly—that money is important and that you need to learn more about accumulating and protecting it. Finally, I know that you are someone who recognizes that it takes more than a single burst of enthusiasm to improve yourself and develop new skills; it also takes commitment and education.

That is why the first step of our journey is all about getting motivated to educate yourself now and on an ongoing basis about your money and the role it plays in your life. I believe that no matter what your current situation is—whether you are already wealthy or living paycheck to paycheck—a little education combined with motivated action can go a long, long way.

I also know from working with thousands of women that, sadly, neither Wendy the real estate agent nor my mother are at all unusual. Yes, women have long owned nearly half of the financial assets in this country. Yes, most women work and nearly half of them are their family's main income earner. Yes, the statistics about divorce and widowhood are appalling. Yet, despite all this, the sad fact is that shockingly few women know even a fraction of what they should about the state of their own personal and family finances.

By the same token, very few people know all of the fundamental principles about money that you are about to learn. And most important, even when they think they do, they rarely follow the principles on a consistent basis. This last point is a key one, for as you will discover in the course of our journey, it is not what we learn that makes a difference in our lives but what we do with what we learn.


What we're going to do in this chapter is familiarize you with what I call the financial facts of life. By the time you have taken in all the facts, you will understand fully why it's essential that you take charge of your own financial future. Moreover, you will be totally motivated to get started learning how to do it.

The first fact of financial life to understand is that while planning ahead is important for everyone, it's more important for women. Indeed, though in many ways we live in an age of equality, there is no question that . . .

Fair or not, women need to do more financial planning than men.

As I said in the introduction, compared to previous eras, this is a great time for you to be a woman. In terms of opportunities and resources, you couldn't have picked a better time to begin a journey to a secure a financial future. And it's more than just a matter of economics. Because of advances in both technology and public attitudes, women are not only living longer than ever before, they are active longer. In my seminars, I often joke that today's 80-year-old women are drinking "green juice" and doing aerobics every morning. I know my Grandma Bach was like that. Up to the age of 86, she hiked five miles a day and went dancing three nights a week! In her mid-80s, my grandmother enjoyed a life that was more active, socially and physically, than mine was at 30!

But if the good news is that we live in an age in which the barriers that held women back for so long seem finally to be falling, the bad news is that there are still many obstacles to be overcome. For one thing . . .

Women still typically earn 25 percent less than men.

For another, women are less likely to have a steady income stream over the course of their lifetimes. In some cases, that's due to discrimination, but it's also due to the fact that responsibilities such as child rearing and caring for elderly parents cause women to move in and out of the workforce a lot more than men do. In all, over their working lifetimes, women spend a total of 11 1/2 years off the job on average, versus only 16 months for men.

What's more, according to a recent study by the U.S. Department of Labor . . .

Women are the ones hurt most by corporate downsizing.

That's because it takes women longer to find new work, and the replacement jobs women get are often part-time posts that offer less pay and fewer benefits.

As a result of all this, your accumulated pension benefits probably are going to be lower than those of your male counterparts—that is, if you have a pension at all. While half of all men get one . . .

Only about one woman in five over the age of 65 receives a pension.

But it's not simply that as a woman you'll have fewer benefits to look forward to. It's also that, as a woman, you'll have to make them go further. Specifically, you probably are going to live longer than most of your male counterparts (by an average of about seven years, according to the National Center for Health), which means that you are going to need even more retirement resources than they will. And not just for yourself. Because of your longer life expectancy, chances are that the financial burden of caring for elderly parents will fall on your shoulders.

What All This Adds Up to Is One Big Ouch!

This, in a nutshell, is why long-term financial planning is more important for women. Compared to men, you've got to be more farsighted, start saving earlier, and stick to your plans with more discipline. Fortunately, doing all this is not only possible, it's actually relatively easy. The trick is simply recognizing that it needs to be done—which leads us to the other basic fact of financial life: Ignorance is not bliss. Quite the contrary . . .

It's what you don't know that can hurt you!

A wise woman once said, "It's not what you know that can hurt you but rather what you don't know." I'd like to extend that thought a bit and suggest that what generally causes the most suffering and pain is what you don't know that you don't know.

Think about that for a minute. In our everyday lives, there are really only a few categories of knowledge.

* What you know you know (e.g., how much money you earn each month)

* What you know you don't know (e.g., what the stock market will do next year)

* What you know you should know (e.g., how much it will take for you to be able to retire comfortably)

* What you don't know you don't know (e.g., that in 2001 the government made over 400 amendments to the tax code, many of which could directly affect how much you will be able to afford to spend on child care, college tuitions, medical expenses, and your own retirement)

It's this last category, by the way, that causes the most problems in our lives. Think about it. When you find yourself in a real jam, doesn't it always seem to be the result of something you didn't know that you didn't know? (Consider the "prime" Florida real estate you bought that actually was in the middle of an alligator swamp.) That's the way life is—especially when it comes to money. Indeed, the reason most people fail financially—and, as a result, never have the kind of life they want—is almost always because of stuff they didn't know that they didn't know.

This concept is incredibly simple, but it's also tremendously powerful. Among other things, it means that if we can reduce what you don't know that you don't know about money, your chances of becoming financially successful—and, most important, staying financially successful—can be significantly increased. (It also means that the more you realize you don't know as you read this book, the happier you should be, because it shows you are already proactively learning!)

So how do we apply this concept? Well, I think the best way to reduce what you don't know that you don't know about money is to learn what you need to unlearn. That is, you need to discover what you may have come to believe about money that isn't really true. Or, as I like to put it . . .

Don't fall for the most common myths about money.

Whenever I conduct one of my Smart Women Finish Rich seminars, I generally begin the class by suggesting that the reason most people—not just women—fail financially is that they have fallen for a bunch of money myths that are simply not true. As we're learning the facts, I think it's important to spend a little time exploring these myths and learning to recognize them for what they are. The reason is simple: By doing this, you lessen the chances that you'll ever be taken in by them.


The most commonly held myth about personal finances is that the most important factor in determining whether you will ever be rich is how much money you make. To put it another way, ask most women what it takes to be well off, and they will invariably say, "More money."

It seems logical, right? Make more money and you'll be rich. Now, you may be thinking, "What's wrong with that? How can it be a myth?"

Well, to me, the phrase "Make more money and you'll be rich" brings to mind certain late-night TV infomercials, with their enthusiastic pitchmen and slick get-rich-quick schemes. My current favorite is the one in which a guy wearing a gold necklace smiles into the camera and says you can earn a fortune while lying on the sofa watching television. Without getting into the question of whether his particular scheme makes any business sense, let me suggest to you that the basic premise of his pitch—namely, that the key to wealth is finding some quick and easy way to boost your income—is simply not true. In fact, what determines your wealth is not how much you make but how much you keep of what you make.

I'll take that even further. I believe that most Americans who think they have an income problem actually don't. You may not believe that. It's possible you feel you have an income problem yourself. Perhaps you're thinking right now, David, I'm sorry. I don't care what you say—with my bills and expenses, I'm telling you I have an income problem.

Well, I'm not saying that you might not be facing some financial challenges. But I would be willing to bet that if we were to take a good look at your situation, we'd find that the problem really isn't the size of your income. Indeed, if you're at all typical, over the course of your working life you will likely earn a phenomenal amount of money. If you find that hard to believe, take a look at the Earnings Outlook chart (see p. 22).

The numbers don't lie. Over the course of their lifetimes, most Americans will earn between $1 million and $3 million!

Based on your monthly income, how much money does it look like you will earn in your lifetime? It's well into seven figures, isn't it? Don't you think you deserve to keep some of that money? I do—and I bet you do too! Unfortunately, most of us don't keep any. In fact, the average American works a total of some 90,000 hours in his or her life—and has nothing to show for it at the end! The typical 50-year-old in this country has less than $10,000 in savings!

How do we explain that? It's simple, really.

The problem is not our income, it's what we spend!

We'll go into detail on this concept in Step Four. For now, just trust me on this one. It's not the size of your income that will determine your financial well-being over the next 20 or 30 years, it's how you handle the money you earn.

From the Trade Paperback edition.

Copyright 2002 by David Bach

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What People are saying about this

Harry S. Dent
Finally, a financial planning guide that addresses the unique issues that women face today. But what I like the most is that David starts with the most important principle: aligning your money with your values.
(Harry S. Dent, Jr., bestselling author of The Roaring 2000s)
John Gray
Inspires women to start planning today for a secure financial future. Every woman can benefit from this book . . . Bach is an excellent money coach.
Barbara DeAngelis
Finally, a book for women that talks about money in a way that makes sense. David Bach is not just an expert in managing money--he's the ultimate motivational coach for women. I can't recommend this book enough. It's a must-read.
— (Barbara DeAngelis, Ph.D., bestselling author of Real Moments)
Anthony Robbins
David Bach is the one expert to listen to when you're intimidated by your finances. His easy-to-understand program will show you how to afford your dreams.
— (Anthony Robbins, author of Awaken the Giant Within)
Laurie Beth Jones
David Bach is a financial genius with a passion for helping women get rich. Read this book—and prosper.
— (Laurie Beth Jones, bestselling author of Jesus CEO)

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Smart Women Finish Rich 4.2 out of 5 based on 0 ratings. 38 reviews.
GennyGD More than 1 year ago
I am currently a 19 year old college student and I feel this book has prepared me on dealing with finanes in the correct way. Money may not come with instructions but this book sure has it. Im so glad I found it at the right time! I even let my dad borrow it and he says that he only wished he had this book sooner. I recommend to book to anyone not just women!
ChrissyB More than 1 year ago
I like how David Bach doesn't assume that the readers are idiots and he writes to them as if anything is possible once they are armed with the information he is providing. I found this book to be very empowering with great tips that anybody can use. I identified several suggestions that I could apply to my finances. I thought this book was far superior to a Suze Orman book and a good compliment to the book 'Get a Financial Life.'
Stevie_Lynn1966 More than 1 year ago
For many years I've ignored my finances and kept my head buried in the sand. I'm so glad I decided to read "Smart Women Finish Rich." David Bach makes taking charge of your money interesting and challenging. I am asking myself the questions he wants me to ask. I am taking the steps he tells me to take to organize me and my husbands finances. It isn't pretty...but I'm going to face this head on. I can't change my current situation until I truly know what I'm facing. With Mr. Bach's help, I know what I'm facing. Great book! I suggest it to any woman who wants to finish rich.
Guest More than 1 year ago
Women have disadvantages when it comes to handling money, says author David Bach. Having been brought up to believe that finances are a man's responsibility, some women don't even know their family's income. Although his book is addressed to 'smart women,' Bach's goal setting and investing guide is helpful to men, also. He does love his bullet points and numbered lists: in addition to the 'nine steps' of the subtitle, there are 'three myths,' 'ten biggest mistakes' and more. But, the lists help make his recommendations memorable and easy to use. Bach implies that he is revealing revolutionary techniques, but actually his advice is basic wisdom that emphasizes values and adopting sensible practices. We recommend this book to you if you find it easier to talk about sex, religion and politics than about money or if you're only making minimum monthly payments on your credit card ¿ so try not to get turned off by Bach's ever-wise grandmother (is she for real?) or his constant promotion of his books, trademarked seminars and other services.
Guest More than 1 year ago
Bach is a brillant writer, who makes the 'chore' of financial planning exciting and reasonable for anyone to jump in and get started. The personal situational stories interspersed throughout the book is a nice way to see the theories applied to life. I am in the middle of step seven myself, I am just sorry that I did not find this book sooner.
Guest More than 1 year ago
I bought this book when I was frustrated to buy my own house and invest my money at the same time...After 1 month of just finished reading the book... I got it all!!! I am 26 and single achieving my own goals in life. This book is nothing but true and applies to reality and practicality. Even my brother read it and bought one for his girlfriend. Made my parents proud. And now am setting a good example to my friends as well. EXCELLENT!!!
Guest More than 1 year ago
I first read this book three years ago at age 35 and I continue to buy this book for my family and friends. David helped me see the importance of paying myself first! I now possess a 401k which in 3 years is at the same amount of my husband's 401k of 10 years! In three years I went from contributing 3% TO 15% to my 401k. I also now have a modest savings account, life insurance,Roth account and two credit cards with zero balances! All this and I don't even live by a budget! David taught me to become more money aware and spend according to my values! David gave me the courage and knowledge to take the necessary financial babysteps that are now giant leaps to a secure finacial future,and is allowing me to donate to charities and fund my dreams of world travel.
Guest More than 1 year ago
Bach's book is astounding! I'm an English teacher who doesn't have a whole lot of financial or math 'know-how'--and I didn't even struggle to understand this book! Bach explains very complex, financial ideas in a way that speaks to anyone. His use of anecdotes also helped motivate me to do something about my finances now, while I'm still young! Anyone who is looking to put their financial house in order needs to read this book.
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