The Elephant in the Room by Ed Baker is a financial fable. This is a highly readable book on the secrets for pursuing real financial success, told in the form of a story. Baker uses a character named Michael Davidson to bring this message across. If you are expecting technical reading on investing in bonds, shares, or other forms of financial matters, this book is not it.

In this story, having a big income and successful career could still mean that one is living from paycheck to paycheck and not having any savings—as in the case with Michael. The book gradually builds the case for financial freedom dealing with attitude, building knowledge, exploring financial beliefs, identifying values, setting goals, exercising patience and discipline, forming the plan, and finally coming up with a sound financial planning model.

The protagonist of the story, Michael, decides to seek the help of his widowed aunt for advice. Aunt Katherine is the epitome of financial freedom and good life right into her ripe old age. But how does she do it? Michael seeks her mentorship.

Little did he know that Aunt Katherine will put him through some seemingly trivial, non-related financial advice and thought processes but they’re necessary because they form the basis of financial success. However, Michael doesn’t know that yet. He even feels annoyed and thinks they are a waste of his time. He is a numbers person and is not about to get touchy-feely. He is, after all, one of the top performers in meeting sales numbers. Michael, to his credit, tries to stay open-minded.

Michael meets with his aunt at a restaurant every week together with wife, Jennifer. Jennifer is not present at the first meeting but following his aunt’s advice, he rectifies that and gets his wife to be involved. If you are married, it is important to do it with your spouse so that both are aligned and share the same values toward achieving the goals set. Each week’s meeting brings about a “new discovery” and these discoveries build up upon one another. Michael becomes more and more excited, and begins to grasp the importance of his aunt’s words.

Aunt Katherine also emphasizes the importance of a good financial planner. Even the best of athletes need coaches, so what makes financial planning any different? In addition to the very easy to follow messages, what I also like about the book is the summary notes that Michael makes after each meeting. Reluctant to follow some parts, he remains open and continues to take notes, albeit struggling. This is an example of his summary for “Behavior”:

What ‘woke’ me up is one can earn a lot and still be poor when one spends more than one earns. One may live in credit; sometimes even drown in credit. Reading the book also made me think about the ways I spend my money and to live more intentionally.

Money facilitates values that are really important to us; for example, freedom, supporting family, leaving a legacy, and it depends on what drives you and your values. Which makes understanding the root cause to our financial woes so important. All in all, our behavior affects everything in our life, including the way we earn, spend, and save. The Elephant in the Room deals with the specific elements of behavior and how understanding those elements impact our behavior and their relationship to our financial future.

I was rummaging through my treasure trove of books during Chinese New Year at home and found this little gem. I decided to dive straight in; finished it in two sittings. I highly recommend this book.