Smart Women Finish Rich

Written by Keri Brenner

Even if you haven't saved a penny, you can still build a healthy freedom fund, says Daviddavid bach Bach, author of Smart Women Finish Rich. Here's what you need to know.

Teaching your kids about money may be the best no-load, no-sweat investment you can make, says financial adviser David Bach.

"Parents always want the best for their kids," says Bach, author of Smart Women Finish Rich. "Some mothers put off saving money for retirement to pay for college costs for their kids.

"I say to these mothers, instead of putting away all this money for college, why not start teaching kids about money right now? These kids go to college and then get themselves in credit card debt, then they get a job, and they don't even know how to save money for retirement."

How to Find a Good Financial Adviser:
Never hire an investment adviser who brags about performance.
Ask a rich friend or acquaintance for a referral.
Go to your first meeting prepared with copies of your investments paperwork.
At the first meeting, you talk; he or she should listen.
Make sure the adviser's payment is fee-based, not commission-based.
Go to an adviser with a strong support team, such as in the major investment firms.
Check out a prospective adviser's background thoroughly.

Bach, 43, of San Francisco, was a principal of The Bach Group, which manages $700 million in individual investments. He has written several best-sellers including The Automatic Millionaire and Start Late, Finish Rich.

"Right now in this country, we've got someone turning 50 every seven seconds, and about half of these people have less than $25,000 in savings," Bach says. "A study done three years ago said one in two Americans has less than $10,000 in savings."

Although many women are spurred to learn about money by major life events such as widowhood, divorce or starting their own businesses, Bach says anyone of any age or income level can accumulate wealth by learning the principles he teaches.

"The key is to take action," he says. "This is not just another `feel good' program. It's a feel good, but take action program."

He says people need to think of financial planning in three parts, which he calls three "baskets." Those are: The "security" basket, which is making sure you have adequate insurance and a safety net of three to 24 months worth of expenses to cover you in case you lose your job; the "retirement" basket, which involves building a $1 million retirement nest egg; and the "dream" basket, which is a fund to cover pleasures and recreational pursuits to pay for fun in the short term.

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The First Rule of Saving: Pay Yourself Firstwomen and money

But the most immediate lesson for people, Bach has found, is a phrase that most people have heard many times but often don't quite understand: Pay yourself first.

"Pay yourself first means, for a woman, that for every $1 of income, you put away 12% in a pretax retirement account such as a 401(k) at work, a SEP-IRA if you're self-employed, or a deductible IRA," says Bach. "You don't have to pay taxes on it and it just grows. That's how you get rich.

"And you pay yourself first before you pay the Visa bill, the car bill, or anything else."

He follows the wisdom of others featured in the book, The Millionaire Next Door. As the authors discovered, most wealthy people save 15% of their gross income every year.

Bach also has a detailed plan for choosing a financial adviser. By far, the most important part of the plan is to thoroughly research a potential adviser's history before you hire the person. If you have an adviser in mind, see if he has had complaints filed against him with the National Association of Securities Dealers.

Where to find an adviser? Bach says don't ask your best friend who is struggling financially, ask a rich friend or acquaintance for a referral.

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Finish Rich, Live Richidentify your values
Bach's own investment advice is to look for value and hold onto your investments for the long term.

He says day trading, or buying and selling stocks within the same day or week,  or even month, is little more than gambling, and is not the way to acquire wealth over time.

Bach, who started buying stocks at age 7 under the tutelage of his grandmother, a self-made millionaire, says "finishing rich" is not just about money. It's about living according to one's values and creating a life rich in service to others.

Identifying values is key, he adds. Bach learned how to write down his own values and set goals by attending a series of seminars by human potential guru Tony Robbins. He credits the seminars with his transformation to published author and media personality.

That came when Bach first voiced his desire to write Smart Women Finish Rich at a Robbins seminar in 1996 where participants were stating their goals and dreams. By the end of the session, a woman in the group who had worked on Robbins' books had volunteered to help Bach write his book proposal. Eight months later, Bach was assisting in Robbins' Wealth Mastery seminars.

Bach says he has grown up fast in the past year to the ways of the publishing and media world. His biggest financial blunder, he says, was signing contracts too fast early on, without building in protection and compensation for future growth or success. Now, he says, he has his attorneys thoroughly review all contracts before signing.

Bach, a San Francisco native who attended the University of Southern California, is enjoying his new life. He loves his role as teacher and coach to women and men, and parents in particular. "People deserve to both finish rich and live rich," Bach adds. "It's not just about money. Finishing rich is about money, but living rich is about living a life according to your values.

"It's about being a better person and adding more value to this world," he says. "You can use money as a tool to do that. That's what it's all about. It's about giving back."

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