Let’s face it: Making the Most of Your Money is a monster. It clocks in at over 1,060 pages and the text on those pages isn’t the huge typeface that Dave Ramsey likes to use – it’s dense and meaty. It took me almost three weeks to read the whole thing simply because of the length and density of the material. At one point, my wife mistook it for Joy of Cooking (it’s not quite that big, but if it’s close enough for someone to make the mistake, it’s pretty fat). So, let’s get to the real question: is the material in the book worth the effort in slogging through the whole thing? Let’s take a stroll through the book and find out what treasures – or traps – lie within.
Walking Through Making the Most of Your Money
Much like last week’s book, Making the Most of Your Money is packed to the gills with information and a truly detailed review of it could go on for weeks and weeks. The book consists of 32 chapters, which are grouped into eight “steps.” In order to keep this review from being a book in and of itself, I’ve compressed the key points of each “step” down into a few paragraphs each below.
Step 1: Building Your Base
The first seven chapters of the book are about the foundations you need to maximize your money. This includes clearly defining what you have and what your goals are, setting up a proper system of record keeping, finding a good bank with which to keep your money, and preparing a will and/or living trust. Why is all of this first? If you do these things right off the bat, you have a sturdy and secure platform upon which to build a secure financial life.
There’s one thread that ties all of this foundational material together, though, and is the key to unlocking all of it: trust. Do you trust in your knowledge of what you have and what you owe, down to the dollar? Do you trust that all of your records that you may need are in a safe place? Do you trust that your assets that you’re accumulating are going to go to an appropriate place if you were to be hit by a bus tomorrow? Do you trust that your bank is offering you fair rates and not eating you alive with nickel and dime charges? You need to have a rock solid foundation of the things you can directly control before you move on to the bigger questions of what to do with your money that you bring in and that you spend.
Step 2: Finding the Money
Now that you have a firm foundation, the book moves on to addressing what many people identify as the first step, figuring out where your money goes and redirecting some of that flow into saving and into buying a home. Quinn starts off with the expected chapter on building a budget, but avoids the dreaded “b word” by calling it a spending plan. The principle is still the same, though: write down what you spend each week for several weeks, see where the fat is, then use that information to set targets that will put your worst spending areas in check.
What do you do with that extra money? Save it, of course. Quinn focuses on putting money into savings accounts, savings bonds, and treasury notes – in other words, in places that are pretty liquid so you can get at them easily. There’s also some serious focus on how to select a credit card, and also how to kick a credit card addiction.
I quite liked the first two sections of the book, as they provided a very strong financial backbone, but the problems with the book began appearing at this point.
Step 3: Your Safety Net
Two hundred pages on insurance. Really, what more can I say than that? While there is potentially a lot of information one can write about insurance, the truth is that unless you start digging into the ins and outs of every single potential variation on insurance policies, there’s only so much you can write specifically on the topic of insurance. So, unsurprisingly, Quinn starts digging into the details here.
There’s only one problem, and it’s a general problem with this book: the more specific you get on a personal finance topic, the more likely it is that the information will quickly become dated. In other words, explaining what life insurance is, how a few of the most general types work, and some things to look for when evaluating insurance is great advice no matter when you read it, but when there’s dozens of pages explaining the difference between two different subtypes of whole life insurance when these policies are very specific and offered only by a small number of companies, the information becomes tedious and quickly dated.
In short, the quality of this book would be much higher if roughly 160 pages of this section were just completely excised from the book. Reading it in detail is not only a time-waster, but potentially gives you information that is actually false because of the specificity on a topic that changes regularly.
Step 4: Your Own Home
This section is about home ownership and is actually quite concise, particularly as compared to the previous section. This is a good thing, as it keeps Quinn from slipping into too much detail, as she does in the insurance section. It’s a nice fifty page summary on the home-buying process.
As a person about to buy a first home, I felt this section was perhaps the highlight of the book, as it outlined the whole homebuying process in a very clear fashion. This isn’t enough to give a “buy” recommendation, but it is a good resource for people thinking about home ownership.
Step 5: Paying For College
This section, however, made me feel that this book’s overspecificity hurt it. In a lengthy section devoted to how you can plan for your child’s college education, no mention is made of college 529 plans. Now, this book was originally written before 529s came into existence, but this is the revised edition of the book, which loudly advertises that it is “completely updated and revised for the 21st century.”
Instead, Quinn points at putting your money into an IRA for a child’s education. This would be a solid plan fifteen years ago, but with the advent of 529s, there’s a much better option available for people saving for their child’s future.
The general principles are again correct – you do need to save for your child’s education – but the information given is very specific to the time in which the book was written.
Step 6: Understanding Investing
Again, the dating and overspecificity of the book shine through here, as this section of the book spends fifty pages (equivalent to the length of the homebuying section) on picking and working with a stockbroker. For anyone who actually wishes to maximize their investment opportunities, this advice is terrible. The internet offers so many opportunities for managing your own funds that having a stockbroker is like choosing to have a middleman that takes a cut of your money.
The advice on mutual funds is pretty sound (put the brunt of your money in index funds, diversify the index funds) and matches well with other materials on the subject, but the length of material on investment options is shorter than the parts on using a stockbroker, so the whole section comes off as an ad for managed brokerages.
Step 7: Retirement Planning
The book gets better here because Quinn sticks to the basic premise that you need to get started now on retirement planning and that you should leverage taxes to your advantage when retiring (put money into a 401(k) if you think you’re going to pay more taxes now than later, and put money into a Roth IRA if you think you’re going to be on the hook for more taxes later than now). It also tackles how to keep that money rolling through your entire life, from retirement to death, which actually turns into a good tutorial on human risk.
She does get bogged down a bit in specific investment options, but for the most part in this section, the specific investment discussions are very short and to the point, unlike the lengthy ramblings in earlier parts of the book.
Step 8: Making It Work
The book closes with a section that’s almost as good as the way the book opens: a basic tutorial on how to manage all of this information for yourself. With it, though, she basically undermines most of the material presented earlier in the book, as she encourages people to do their own detailed research into specific investments. If she recommends this at the end, why present page after page after page of overly detailed information?
Buy or Don’t Buy?
Here’s the whole problem with this book in a nutshell: it gives very, very specific advice, particularly in areas that are fluid. So what’s the problem? Highly specific personal finance advice is very short term advice, because things change so quickly. For example, when this book was written, 529s didn’t exist and thus aren’t mentioned at all, but they’re a very important part of any college savings planning.
In short, the middle half of the book is mostly wasted space: that information could have been crunched into explanations on the various factors to look at when comparing investments, rather than discussing the specific investments themselves. She does do this, but it’s buried in a tidal wave of information that was already becoming dated when the book was printed.
In short, don’t buy this book. The big reason to buy this book is to treat it as a reference book, but it’s a reference for information that changes fairly rapidly, and thus the book becomes less and less accurate as the seasons pass. The foundational ideas in the sections are good, but so much of the book is spent on outdated material that you’re better off looking at another book or two for your personal finance needs – ones that talk about how to figure things out for yourself.
This book would have been much better if 60% of the content was removed right off the bat.
Making the Most of Your Money is the twenty-fourth of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.