When it comes to your finance, do you strive to be average?
Do you spend more than you earn? Or have an emergency fund that is closer to 0 than an amount that could actually help in an emergency?
If you answered “Yes” to either of the above questions, then you may be closer to average than you realize. And unfortunately, that isn’t where you want to be.
Above Average Finance, written by blogger James Pollard from Personal Finance Genius, takes a look at many different aspects in personal finance and discusses what is needed to be better than average. I had the opportunity to interview James to get more background about the book, why he wrote it, and who he hopes it will help.
Take it away James!
Above Average Finance Interview
What was your motivation behind writing Above Average Finance?
Over the past few years, I’ve read a lot of fantastic finance and investing books, but most of them were too specific or focused on a single concept. There’s the book that’s all about budgets, another all about getting out of debt, and another about setting up automatic savings. I knew that the people who really needed the help with their finances weren’t going to read dozens of books. I wanted to have something like ten books in one, all while keeping it short. I took the most important concepts that someone should know and boiled them down into the book. I cover everything from day trading to financial advisors to getting out of debt to credit cards.
What is your background? Did you come from the finance industry or are you self-taught?
I’m both, actually. I was a financial advisor for a short period of time, and I also worked for a major bank. However, I also devoured finance books and courses like it was nobody’s business. I studied investing and finance after work for about three hours per night for a few years before writing the book. Working in financial services gave me a good grasp of technical concepts, and also opened my eyes to how poorly people manage their own money. At the end of the day, it was the self-education that really enhanced my life. I strongly advise people to go the self-taught route, if at all possible.
Who did you write this book for? Who do you think would benefit the most from it?
I wrote this book for the person who isn’t afraid to hear the truth. I wrote the book for someone who is already interested in finance and investing, but wants more big-picture content and less specifics. I started the book off with my comments about setting goals. If someone is motivated to look at the big picture (what do they want out of life?) and commit to achieving it, the book is a great choice.
The general theme of the book is that being average isn’t going to lead you to a strong financial life. Why do you feel that this is the case?
I think that it’s certainly possible to have a strong financial life while being average, but I like to have strong odds. I also believe that there’s a lot more to life than just average living, and if someone wants to have great life experiences or material things (there’s nothing wrong with having stuff), he or she will probably need money. There’s a part of the book where I stress how important it is to increase your income. Too many people focus on scrimping and saving every penny. Sure, they might have “above-average” savings, but I’d rather match their savings while having a higher income and having a better life experience.
Throughout the book, you bring up themes about the benefits of psychology when it comes to handling your finances. Why do you believe this is such an important concept?
I’m actually a psychology major, so the psychology behind money and investing is extremely important to me. One of my biggest advantages when I was working in financial services was the ability to predict and analyze human behavior. I knew people got upset during market downturns, and I was able to understand and respond appropriately to their behavior. If people are aware of their own psychological tendencies when it comes to money, the damaging impact of their own behavior will be minimized.
Which topic that you cover in the book do you think can make the biggest impact in someone’s life?
Without a doubt, the topic of increasing one’s income. Sure, it’s great to save, and you obviously must live below your means. But you should always be looking to expand those means. I caught a lot of criticism from others for seemingly bashing compound interest. A lot of finance books harp about compound interest, and don’t get me wrong, it’s powerful stuff, but I want to reach my goals faster. In the book, I explain that compound interest needs time, an investment yield, and money invested in order to work. You can’t control time and you can’t control the market’s yield, but you can control the amount of money you invest. I tell everyone that compound interest is awesome, but it cannot accelerate wealth quickly. You’ll be better off than the average person if you save and invest, but it’ll take decades for most people to propel their wealth into the stratosphere. Income comes first.
Finally, why should someone read this book?
I believe that someone should read this book in order to get a big picture view of investing. I want people to put the book down and realize they need solid investing goals, a plan to actually invest, and knowledge of several psychological pitfalls that come attached to money. They’ll be able to emulate successful investing behavior and make the decisions that are best for them. If none of that stuff excites them, they should read the book for the very last two paragraphs alone. It’s a big reality check, letting you know not to take wealth accumulation so seriously.
Thanks James! If this interview piqued your interest, you can buy Above Average Finance from Amazon.
Have a great weekend everyone!
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