After 26 years of uninterrupted economic growth, possibly the longest stretch of any developed country in modern history, you’d expect Australians to feel pretty relaxed about their pocketbooks. Yet the biggest-selling nonfiction title on record in Australia concerns — of all things — personal finance.
In a country of 24 million people, Scott Pape has sold more than one million copies of “The Barefoot Investor: The Only Money Guide You’ll Ever Need” since its publication by Wiley in December 2016 (a third updated version comes out on July 2). Even more extraordinary than those sales figures is the devotion of Mr. Pape’s followers. They use terms like “splurge card” (a debit card for everyday luxuries), “mojo account” (for when you feel like quitting your job) and “fire extinguisher funds” (emergency reserves) with an enthusiasm not normally associated with fiscal responsibility.
Part of Mr. Pape’s appeal probably comes from the fact that so many Australians are happy to have more money than they’d expected, but it’s also a function of just how Australian he is.
This is surely the only money guru who begins his book with the image of a charred sheep nearing death, one of the casualties of a devastating wildfire that destroyed his farm outside Melbourne in 2014. But his message, that money is a means to an end, and that that end is the ability to live the way you want, has universal appeal. “At some stage you’re going to face your own financial fire,” writes Mr. Pape, who at the time of his disaster was a TV talking head on investment strategies. “The goal of the Barefoot Investor can be summarized in one word: control.”
The 39-year-old, who has since rebuilt his property from scratch, isn’t big on tough love. Instead, his tone is relentlessly casual, as though to make us forget we’re reading about compound interest. At the end of each chapter, he encourages the reader to head to the pub. “Money talk is better with garlic bread and wine,” he writes, counseling couples to talk through financial issues on the back of a napkin at least once a month. Throughout, he displays a suspicion for authority and a disdain for the wealthy, which syncs with the Australian national mythology of a classless society. Have a drink, he suggests at the end of a chapter about cutting up your credit cards, reasoning that it’s not every day you save yourself from paying off some banker’s BMW.
On the phone from his farm, Mr. Pape is clear on what his book is not. “It isn’t a wealth creation book which will make you a millionaire,” he said. “It’s about security.” He’s “barefoot” because that’s how life was for him growing up in a rural area, working alongside his father who ran and later owned a gas station.
After a business degree at a regional university, Mr. Pape worked for a short time as a stockbroker in Melbourne before starting his own financial advising business. “I went into finance not for the wealth, or the $300 pair of jeans, but because I wanted to keep my freedom,” he said. Ten years ago, he started writing a syndicated newspaper column on personal finance. He’s proud to say he’s never been in the business of making outlandish claims — like telling people they can retire early. Mr. Pape himself isn’t interested in stopping work, ever. “I enjoy what I do too much.” He is skeptical of “those guys who run around saying, ‘I retired at 35, and you can too.’”
Mr. Pape’s folksy manner delivers down-home truths: Don’t get swept up in trendy investments; pay off your debts; analyze how banks are managing your money. As a result, it’s uncontroversial with experts. Chris Richardson, an economist at Deloitte in Canberra, said that Mr. Pape’s major tenets, like his argument that Australians have generally overvalued property and undervalued stock trading “are more real then people realize.”
Another cornerstone of the Barefoot Investor’s plan that resonates with economists is the importance of renegotiating bank fees, which, according to the Reserve Bank of Australia, run to 480 Australian dollars, around $355, a household per year. “Over ten years,” Mr. Pape writes, that’s “enough to take you to New York City and stay at a five-star hotel.”
Bank fees are lower in the United States; in Australia, just four banks represent about 80 percent of the total share of the market. “We certainly have high market concentration by international standards,” said Danielle Wood, an economist at the Grattan Institute, a public policy think tank in Melbourne. Ms. Wood sees high bank fees as a result of status quo bias, or the tendency to accept things the way they are, perhaps understandable for a country doing so well economically. “I think the message of the Barefoot Investor gets traction because he encourages people to think about things, and think about why they’re paying too much,” she said.
Jackie Frankel, a 47-year-old factory worker from Australia’s Mornington Peninsula, is a zealous Barefooter, as Mr. Pape’s fans are known. She concedes that her two grown daughters don’t completely understand his appeal. “They say to me, it’s common sense stuff to figure out what you owe, but I say people need it in black and white,” Ms. Frankel said. After reading the book, she and her husband, who also works in a factory, started going out for “date breakfasts.” (Nights were out because of their shifts.) After talking it through over eggs, they moved their money from one of the “big four” banks to an online-only account recommended by name in Mr. Pape’s book. (He says that he does not accept any endorsements, and will pull a recommendation if he sees a company using his name in advertising.) “We saved $500 a month just doing that, and now we’re going to New Zealand on a cruise,” Ms. Frankel said.
Australians love to travel internationally: about 60 percent hold passports, compared with around 40 percent of Americans. Mr. Pape doesn’t come across as abstemious about these sorts of big-ticket expenses. Instead, he advocates for letting the good times roll by divvying money into “buckets.” This approach ensures daily expenses are separated from “splurges,” like lattes, and “smile” purchases, which, like vacations, make you smile when you think of them. Call it the set and forget principle of money management.
“He doesn’t subscribe to the idea that you’ve got to get down to the bare bones and have no fun,” said Ali Cusack, a 31-year-old lawyer in Melbourne. “He just says, build it into your budget.” Ms. Cusack has been to Europe each summer for the past two years and recently started her own maritime law practice. “I got so ridiculously good at saving money that I didn’t even need to take out a loan to start my own business,” she said.
Even hearing these stories, it can be hard to grasp why Mr. Pape seems to inspire such joy. He is, after all, talking about money. But then he shared a Facebook post on the Barefoot Invester page from Tania Drummond, a 48-year-old single mother of four. Ms. Drummond wrote that one morning five of the 10 fellow patients in an oncology hospital ward where she was were reading Mr. Pape’s book. They were laughing and sharing their stories of mojo accounts and how they had implemented other aspects of Mr. Pape’s personal finance strategy; it was the first time in a while that she could remember laughing. Ms. Drummond said on the phone that Mr. Pape talks in terms she understands, and that “he makes you feel like you’re doing something right, not something wrong. Financial advisers often say, well, if you don’t have $150,000, I don’t want to speak to you, but Scott doesn’t make you feel embarrassed about what you have.”
Mr. Pape knows Australians have it good. “You and I won the lifestyle lotto,” is how he puts it in the book. But Australians also don’t generally like to be perceived as promoting themselves. Tall poppy syndrome, which refers to Australians’ supposed aversion to high-achieving individuals, can extend to avoiding sensitive topics, including money. Mr. Pape wants to change that, and his next book, which is due out with HarperCollins in September, will focus on how families can be more open about their financial situation.
“I’ve got three little kids so that’s where I’m at at the moment,” he said. “I have parents who come to me and say, ‘my little Tim is such a saver, he doesn’t spend any of his money.’” Mr. Pape says he worries about how miserly — and miserable — that kid will be when he’s 28. “You want your kids to grow up generous and hardworking and enjoying their life.” His advice to parents: Talk to your kids about money. It’s a way of sharing your values.
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