Set for Life by Scott Trench

I had his book on my list to read for quite a while. While it was a book that I thought could be insightful — after especially after enjoying the book God and Money by John Cortines so greatly, it was a little different than I expected. I did enjoy some of the things within the book and liked some of the goals and points but felt they didn’t closely align with what I’m seeking to do.

The book started off by talking about work and the typical 9–5 job and what that means for people. Long commutes are often a resulting effect of the jobs that people have. I forget what the average commute was said to be but I think it’s close to 30 minutes. Here’s what the author had to say about commute times based on some recent data:

Those with long commutes tend to have:

Higher blood pressure
Less likely to be happy
Higher levels of stress and anxiety
Tend to be poorer, fatter, less happy, more stressed, and less productive

The book was organized in a natural way that focused on making money first and then managing it and being a good steward of the things that God blesses us with. All things are important in my mind but I don’t think that the average person places enough importance on the fourth. If we dwell on and spend extended time on things that are trivial, we will be “stealing” energy from areas that could be better served by having that energy. While this is most definitely not something that is going to be easy at first, with practice I believe it can become natural.

5 tactics to earn more money:

  1. Put yourself in a high-achieving environment
  2. Read and self-educate forever
  3. Focus on continual improvement
  4. Instantly make trivial decisions — we need to simply make a trivial decision quickly and pick something reasonably quick and putting that decision behind you as there is no significant impact.
  5. Put yourself in position to get lucky
Photo by Fabian Blank on Unsplash

This book, of course, is all about being set for life financially. Because of that, the author wanted to be sure to define that for us. As for the equation, I believe that’s just finances 101. Earn more than you spend. Something very important that I do not see a lot of people do is determining a desired lifestyle and actually quantifying it. To understand our goals deeper, we must know how much it’ll cost — and not just financially.

Financial freedom is a state in which a person has enough income from return on assets that they no longer need wage-paying work to permanently sustain their lifestyle.

Financial freedom equation: ASSETS multiplied by RETURN must be greater than LIFESTYLE

The author spent a little bit of time sharing the 4 levels of finance. They are general enough that they should encompass all of us. It’s important to be honest about our levels and truly analyze them over time. I now keep and create a monthly spending plan that allows me to do 2 things. First, I’m aware of where every dollar goes and where every dollar comes from. Second, I can quickly make adjustments if an opportunity arises or I want to understand if something like a luxury trip is a good idea for me. The goal, of course, is to become financially free. A great complementary book here would be Robert Kiyosaki’s Rich Dad Poor Dad, Cashflow Quadrant. Passive income is the only way to become financially free in a responsible way. Sure, you could win the lottery but ultimately, if all you do is bury it as the third servant did in Jesus’ parable in the book of Matthew… what good is that? That is NOT how you become a good steward of all God’s resources.

4 levels of finance:

1. Cash flow negative — level of freedom, lowest

Lose much control over how time is spent

2. Cash flow neutral — level of freedom, modest

Reliant on paycheck or small customers, increase net worth but no real wealth, repeating this phrase gets them motivated, “the best possible outcome in my life should I continue with my current career is that I end up in my boss’s office one day or one very much like it doing work like that 9–5 every day of the week.”

3. Cash flow positive — level of freedom, high

Live below their norms, can take advantage of opportunities when they are found, resulting in an ever decreasing reliance on others. Actively want to improve their own lives and seek the counsel of others. The best way to assist them is to point them to resources, education, and opportunities that will allow them to employ their savings for a good investment return. Their cycle is — Earn. Save. Invest.

4. Financially free — level of freedom, highest

Cash flow requires minor work or no work. Have control over how they spend their time.

This is something that I had not thought in depth about. I look to remain aware of price changes and trends at a macroeconomic level but this data figure is especially important to me. If people are retiring at 60 years old and living until 85, the cost of living will likely double during that time. If you don’t plan for that, your retirement balloon will evaporate much more rapidly and you might be left needing to decrease your lifestyle.

Consumer Price Index suggests inflation averages 3.2% annually, prices double about every 20 years.

Any investor ever who has been investing for a long period of time and has experienced great success will emphasize the first core tenants. You are investing the money for a reason, why spend it? Simple. Don’t. The fourth core tenant about effort was something I had realized for myself in various areas of my life. The author emphasized that unless we are a financial broker on Wall Street, for example, why are we watching the stock market?

Photo by Chris Liverani on Unsplash

Unless we have millions and millions in our portfolio, we are not earning much money for our time and it is much more economically wise to allow someone else to manage your investments. I think many people forget about this 7th tenant. If lots of people talk about how great real estate is, many others may seek to ride the wave but without passion and knowledge, they are unlikely to experience success.

The 7 core tenants of investing:

  1. Never spend the principle
  2. Re-invest most of the investment return
  3. To invest, one must have capital
  4. Effort correlates with the return only if you are in control of the investment
  5. Investment returns are impacted by knowledge
  6. Do not confuse volatility with risk
  7. The best investments are specific to the investor’s personal situation

Photo by Helloquence on Unsplash

I’m glad that I worked my way through this book but it did not leave me very impacted by it. I have studied many others on the topic of financial independence, investments, and money management so perhaps that is why. Nonetheless, I did like the book and would recommend it to people striving for financial freedom and in need of a well-constructed plan.

I gave this book a 2/5

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