Yes, You Can Get A Financial Life is the latest in a long string of books on financial topics from Ben Stein and his regular co-author Phil DeMuth. This one’s premise seems to be of particular interest to twenty- and thirtysomethings looking to get their financial house in order: it’s basically a guide to prudent financial decisions at each stage in life, from your 20s to retirement. I’ve been a fan of Ben Stein’s financial writings for years, but this is the first book of his that I’ve picked up. Could it possibly be as good as his columns? Is it worth reading at all?
This relatively short book is broken down into a pretty large number of chapters, making each chapter not too much longer than one of Stein’s columns on Yahoo! Finance. There are a handful of chapters devoted to each decade in a person’s life, starting off with their twenties, and making it clear how and why you should be dealing with money at that point in your life.
This book is conservative in tone. At no point does the book advise dumping everything into speculative investments or anything of that nature, so if you’re looking for advice on individual stock investments or the like, this isn’t the place to go (try Jim Cramer’s Real Money, for example, if that’s what you’re seeking – it’s quite good). However, if you’re not looking for a ton of risk and don’t want to invest mountains of time into your investments, there’s a lot of appropriate stuff in this relatively thin tome.
The first two chapters are pretty introductory and mostly provide a good argument of why you should get financially prepared now rather than later. The book really gets going, though, in the third chapter.
Chapters 3 through 6 of Yes, You Can Get A Financial Life focus on personal finance issues of people in their twenties. The book unfolds some premises: your salary will go up dramatically during your twenties and it is likely you will marry in your late twenties. The book generally puts off issues such as childbirth and a home purchase until the next decade of life.
So what’s vital here? First, you should invest in your own human capital. Go to school and get the education you’ll need for your life. Figure out who you are and what you want to be doing. Spend the time needed to polish yourself a bit.
Next, find the right job to start with. Usually, this is a job that will reward hard work with advancement, not necessarily a job that immediately puts you in the corner office. Get to a place where you can be rewarded if you prove yourself.
Then, start saving for retirement as early as possible. The earlier you start saving, the less you’ll have to save because compound interest will take care of a lot of the work for you. If your company offers a match in your savings plan, get that match as soon as you possibly can as it’s basically free money for your future self – never turn down free money.
If you still have room to breathe, start saving for a house (even if you don’t see yourself in one). This money can provide the foundation for a life full of financial stability, whether you use it for a house (which is really encouraged) or for simply long-term savings.
A large portion of the book (chapters 7 through 13) really focus on issues that many people begin to face in their thirties, and this provides the central meat of the entire book. It provides some general financial rules of thumb in several different dimensions of life during the third decade of life.
On a career in your 30s Basically, the book indicates that for the most part, the biggest acceleration in salary you will have in your life occurs in your 20s because early on is when you can demonstrate the greatest increase in your skill set. How can you leverage this? By remembering that a 10% raise when you’re making $25K is the same net increase as a 5% raise when you’re making $50K (ignoring taxes, of course).
On being single in your 30s The book advocates that as long as you’re single, you should put effort into staying competitive in your career, as married life often can fill up a lot of time that you would have otherwise used in building up your career. Continue to invest in your own human capital with time and money.
On being married and setting up a home in your 30s If you’re married, learn how to start living well within your means and saving money for a home. This means being frugal and cutting down on unnecessary expenditures, and taking that extra money and socking it away until you have a house down payment. If you “can’t” do this, then you are opening yourself up for a lot of risk in the event of job loss.
On having children in your 30s Children are wonderful, beautiful, amazing things – but they’re also expensive things. Plan ahead by having a “saving for baby” account if you’re going to have one in the future, then use that when it comes time to actually have one, as you’ll have start-up costs and a nice increase in your monthly budget.
Investment changes? The book is still in favor of being rather aggressive with retirement savings throughout your thirties, though depending on your specific plan, you may want to readdress things when you get near the end of that decade.
The 40’s and Beyond
The final portion of the book discusses the march toward retirement and all that it entails: children leaving the nest, a need to carefully manage your retirement portfolio, and so on. For many people, the period between age 40 and retirement is the most financially lucrative of their lives, but it is also the period most strapped with expenses. Let’s take a look at the things people in this age range should be doing, according to this book.
Manage your retirement portfolio carefully. As you get within fifteen years of retirement or so, you should slowly start migrating your portfolio out of high risk stock investments and into bonds – after all, you don’t want to be on the edge of retirement and be holding the next Enron. The book doesn’t offer any direct rules of thumb for everyone, but provides a nice walkthrough of the logical process.
Bump up your savings when the nest is empty. When your children leave, now is the time to really kick retirement savings into high gear. Toss as much as you can into retirement, particularly if you live in a home that is fully paid for.
Set your long term plans now when you’re relatively young and healthy. This means long term care insurance and estate planning – do what you can so that you’re not a financial burden on your children. Do this early and keep tabs on it to make sure that it continues to represent your desires.
Buy or Don’t Buy?
I really wanted to like this book. I adore much of the writing of Ben Stein and his column clearly shows that he can write about personal finance.
However, this book not only doesn’t contribute anything compelling or new. The information is all quite basic, which means that it could potentially be good for someone with no idea of basic personal finance.
But there’s another problem: it’s just not that entertaining, either. There are a lot of introductory personal finance books out there that are far more entertaining than this one – either more purely entertaining or more thought provoking.
In short, I wouldn’t buy this book. If you still want to read it, I’d definitely look for it at the local library. The book is not bad, per se, but it just doesn’t offer anything compelling that isn’t done better elsewhere.
Yes, You Can Get A Financial Life is the twenty-first of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.