Financial Karma: Real Life Strategies to Help You Control & Save More of Your Money - Robert S. Laura, 2004.
Laura recognizes that one of the biggest stumbling blocks in typical personal finance books is estimating expenses and creating a budget. It's time-consuming, usually inaccurate, and becomes a source of discouragement when the inevitable unexpected expenses creep in. I've read a ton of financial self-help books and that has always been a problem for me. To this day I've never had a budget that really worked, and the only way I've found to get a real handle on our expenses is to use software to track them and analyze them after the fact. (Now that we've been using Quicken for 14 years, we've got a lot of data--and STILL patterns can be difficult to discern, because of those "unexpected" differences.) So Laura's approach is very refreshing. He tells us to focus on the financial decisions we make and to start changing the direction of our "financial karma" by trying to line up our expenditures with our values and goals.
Laura assigns one big, time-consuming exercise related to expenses, but instead of an estimate of amounts, it's a worksheet to identify which are basic needs versus lifestyle choices, which match values or goals, and which are in excess. The other exercises and examples in the book are pleasingly brief and simple.
There are some great concepts here. For example, this is one of those obvious-once-you-think-about-it insights that I don't remember hearing anywhere else: "Just as you buy a house, a car, or groceries, you must also buy financial security." And he distills an interesting idea from a life-insurance salesperson's talk, The Common Denominator of Success: the habits of financially successful people did not come naturally to them, and they don't like doing those things any more than regular people do! That's a very liberating thought.
Financial Karma has a number of features that would work for beginners in frugality, but are essentially useless for those of us who have been serious about saving money for years. My late friend Valerie and I used to compare notes on all the "500 Money-Saving Tips" books which we'd check out when they came through the library, and we hardly ever found anything helpful because the recommendations involved stopping things we would never dream of doing in the first place. Laura's example of getting money at the office ATM ($2 charge) to buy an afternoon coffee reminded me of those books. I've only used a for-fee ATM a couple of times in my life, in emergencies, and I kicked myself for lack of foresight. If you're looking for ways to save money, read something by Amy Dacyczyn. Similarly, I've been lucky enough never to "get" the difference between cash, checks, and credit cards, a common pitfall which Laura tries to combat. (It's all money--to me it feels the same to charge a $20 purchase as to fork over a bill. If it feels different to you, getting over that may be helpful to you.) So if you are like me, parts of this book will seem obvious or even silly. But for someone who's had difficulties realizing where their money goes, it should very helpful.
One of the neatest ideas along those lines is the credit card envelopes included in the book. Since you have to open the envelope to use the card, it's a great opportunity to catch yourself before you make a financial decision you might regret. One is for your emergency card--you write down the specific conditions under which you'd use it. The other, for a regular expenses card, invites you to list the financial goals you've developed with the aid of the book on one side, and has "Is this a basic need or a lifestyle choice?" on the other. Very cool!
I do question Laura's choice of the word "karma" to describe his concept. My objection is three-fold. First, karma as a religious term is ideologically unappealing to me personally, for reasons I don't have room to go into here (essentially, I think it's a blame-the-victim rationalization of the ways life is unfair). Secondly, karma as a popular concept is very vague and can mean whatever you want it to mean; Laura does his best in the second chapter to nail down his own meaning for the purposes of the book, but it's very easy to lose track of his own particular interpretation. Finally, I'm not sure it's a word that much of his potential audience will be familiar or comfortable with, yet he assumes that readers have a basic understanding of the term and doesn't even start with an overview of what it means.
Financial Karma is independently published, and aside from a bunch of spelling/grammatical/punctuation mistakes which I understand will be fixed in future editions, it's very nicely produced (not always the case with such books). There's an accompanying website, www.financialkarma.com, which offers customized versions of the credit card envelopes, among other features.