A financial plan on the back of a napkin.

• Author: Singletary, Michelle
• Position: Business

Byline: Michelle Singletary

WASHINGTON -- Many people score poorly on financial literacy tests. In real life, they make real mistakes too. Often money missteps are emotionally driven decisions.

If this is you, don't beat yourself up. Think of it this way: When driving, you should look in the rearview mirror, but you can't stay focused there. You have to watch what's ahead.

To help you move forward in your finances, my pick for this month's Color of Money Book Club is "The One-Page Financial Plan: A Simple Way to Be Smart About Your Money'' (Portfolio, $24.95) by Carl Richards, who is a certified financial planner and a columnist for The New York Times. Richards is known for his simple cocktail napkin sketches about money.

Richards lost his home in 2010. He borrowed too much to start a business and then the housing crash came. He had to sell his house in a short sale, meaning the bank allowed him to sell it for less than what was owed on the mortgage.

You are probably wondering how someone who makes a living advising other people on their finances could find himself in such a position.

"Yes, I'm a financial adviser,'' he writes. "But in the heat of the moment, when my income was rising rapidly, when home prices were soaring with no sign of stopping, I wasn't thinking like one. I'm also human, and a big part of being human involves irrationality.''

I appreciated Richards' honesty, acknowledging his mistake and then using that experience to help people avoid the same detour. "Financial success is more about behavior than it is about skill,'' he writes.

Richards is a man of simplicity, hence the one-page plan. It's a strategy to get you to determine what really matters to you. So grab a Sharpie and a piece of paper, he suggests. Write down three to five action items. You might write, "Save for a house'' or "Pay off my house before I retire'' (that's on my plan). Keep in mind, the list is "a snapshot not an instruction book,'' Richards writes.

The book details how to create a net worth statement and a budget, tips for saving, spending wisely, paying down debt and finding a good financial adviser. You'll get guidance on turning your wishes into...