Title: Your ultimate personal finance guide
Author: Johan Gouws
Publisher: Penguin
ISBN: 9781776391899
Your ultimate personal finance guide is the kind of book that one is not really supposed to read from cover to cover. Which is exactly what I did, albeit for the purposes of reviewing the text. For the typical interested reader, however, there will most likely be chapters that are of less interest and can be glossed over, depending on their individual needs. Not being a guru on the topic of finances myself, I do have a penchant for engaging in the reading of self-help books, and have studied a number of these publications over the years, both in my native tongue of Afrikaans as well as in English, and particularly a number of which focused on the topic of personal finances. I was therefore in the fortunate position to be able to compare my impression of this publication with similar publications over the years. After a careful reading of Johan Gouws’s new book, there is a lot of criticism that can be aimed at the publication, but all of this is somewhat nullified when one is reminded in the title that this book is presented as a guide. It can never be a one-size-fits-all or the final word on the topic of personal finances. In fact, the book emphasises that, while broad universal financial principles do exist, cognisance must be taken of the fact that people differ in their dreams, ideals, personalities, aspirations, perspectives and approaches, all of which must be taken into consideration where financial planning and management are undertaken.
The book is divided into two parts, with part one titled “Your money profile”, followed by a more detailed part two under the title “Your financial plan”, with the two parts spanning a total of 22 chapters and 369 pages. It is a comprehensive guide. There is a brief list of references, but no index. An index might have been a helpful addition, as a particular concept might be of interest to a specific reader, who might want to know where it is used in the book. The table of contents, it should be noted, is at least detailed enough to bridge this gap to a large degree. Gouws begins his first chapters with a scrutiny of the concept of money. He does not get too philosophical about the topic and also does not address it from a perspective of macroeconomics or any political interpretations. What is being emphasised in these opening chapters is that humans assign value to money. And because human beings have vast differences in personality, interests and temperament, it so happens that our interpretation of the concept of money, and ultimately our approach to money, differs dramatically from person to person, and there is no one-size-fits-all approach to financial planning.
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And because human beings have vast differences in personality, interests and temperament, it so happens that our interpretation of the concept of money, and ultimately our approach to money, differs dramatically from person to person, and there is no one-size-fits-all approach to financial planning.
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It could possibly be argued that the topic of technology is not thoroughly discussed in this publication. Money in itself is a technological development, and, coupled with inflation, hard currency is fast on track to be replaced by digital money as well as crypto. With crypto, even more possibilities exist that might disrupt traditional financial markets and household economies in the future. This has not always been the case, as money used to be pegged against particularly gold, but governments had to print more money to fund their excursions, particularly continuous conflicts and wars (as per the military industrial complex); the monetary system has developed into a system where governments and banks can print endless amounts of money, all under the banner of “wealth creation”. In doing so, the value of hard-earned cash is diminished by means of inflation over time, particularly for people in retirement, ie, people with no recurring income in the form of a salary. In the process, the fact that most people in retirement end up dependent on family and the government to survive is simply shrugged off as poor financial planning on the part of those individuals. The book does touch on inflation, but avoids the obvious question of whom the financial system ultimately benefits most, and why. For example, it is explained that “the South African Reserve Bank formally adopted an inflation-targeting policy that sought to keep CPI inflation within a 3 to 6 per cent band” (243). It then proceeds to provide very vague explanations for this, such as that this inflation target “improves coordination” in terms of monetary policy and “ensures greater price stability” (apparently). The text almost too easily assumes that the global monetary systems currently in use are the only options available. While one can understand that this is not a book on politics, macroeconomics or economic history, there is a bigger context that one feels is missing at times.
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The text almost too easily assumes that the global monetary systems currently in use are the only options available. While one can understand that this is not a book on politics, macroeconomics or economic history, there is a bigger context that one feels is missing at times.
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Of particular interest for many readers would perhaps be the chapter on the topic of investments. Much like the rest of the book, the chapter dealing with investments is largely concerned with definitions of basic concepts and explaining broad processes and principles. There is not much written on investment philosophy, and what is written emphasises the role of risk appetite and diversification. These are very basic principles, but it does get to the core of what is most important to be aware of when conducting any financial planning. Due to greed and inflation, people often resort to speculative assets or fall prey to scammers, all of which is briefly addressed. There is also a chapter dedicated to debt, something that many people are trapped in. Almost all personal finance books are written with the assumption that all people will eventually get married and have children. Perhaps, someday, somebody can write a book on personal finances for single people – it does appear to be a growing constituency.
One of the questions that arises is whether a publication such as this has any value for retired people. The answer is an unequivocal yes, precisely because readers can choose which chapters they want to read. People in retirement do not stop investing. It is only their approach to investing that might change over time. In addition, estate planning, insurance and taxes are issues that are applicable to all people, irrespective of age, and each of these is allocated their own chapter in the book. There is also a lot of emphasis placed on the role of assistance in the form of financial advisors. There is even a whole chapter discussing the issue of financial advisors. If there is one aspect of the book that can easily be explored much further, even to the point of being a stand-alone book, it is the issue of financial advisors. Human relations are an emotional topic, and emotions are often the biggest threat to successful financial planning and execution.
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Having a plan, even if it is not a good plan, is always preferable to having no plan, particularly when it comes to personal finances.
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Mastering the art of personal finances is a lifelong journey. Every person has their own unique personality and psychological traits, as well as personal history, that impact on their approach to money. In addition, markets are ever changing, and technological developments continuously disrupt established practices. In the volatile landscape of economics, subject to the diverse nature of human behaviour and interactions, there are no quick fixes or magic wands available. While financial planning and management can be a cumbersome exercise, they can also be an adventure. In Your ultimate personal finance guide, the key, as in much else in life, seems to be self-exploration and self-knowledge. Defining your own ideals, vision and boundaries, identifying strengths and addressing weaknesses can set one on a path of success. Having a plan, even if it is not a good plan, is always preferable to having no plan, particularly when it comes to personal finances. Your plan might be as simple as leaving all your personal finances in the hands of an advisor, or it might be a far more hands-on approach. Irrespective of which path is taken, self-education can go a long way in making better-informed decisions. Plans can be adjusted; in fact, they should continuously be re-evaluated and tweaked, as and when needed. In this regard, Your ultimate personal finance guide is an excellent resource to get a grip on some of the most basic fundamentals of personal finances.
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Skatryk: leef ons wérklik beter? ’n Onderhoud met Johan Fourie