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simplicity has its benefits, but the road to financial security requires a little more substance...
on May 5, 2012
Money Rules: The Simple Path to Lifelong Security (2012) is a book designed to emphasize a few basic points, to hopefully provide the reader with some fundamental guidance regarding personal finance. Jean Chatzky, the financial editor for NBC's Today Show, has written a book that consists mainly of bullet points, broadly related to savings, spending, and some of the psychology behind both. The goal is not to provide a detailed road map to financial security, but primarily to get you mentally pointed in the proper direction as soon as possible, and then with a conservative approach, encourage you to take some prudent steps.
With a 7"x5" format, the 114 page book features 94 of Chatzky's "money rules", with one page typically devoted to each rule, with an occasional second page featuring an illustration. Chatzky keeps things concise, as each tip is usually not more than a few sentences. As the number of words decreases, the height of the text typically increases. The oversized text results in a look that is in some ways similar to a book intended for young children.
Although most anyone can find something of value among the tips, it might be fair to say that those in their prime earning years, and not currently well prepared financially, might benefit the most from the fundamental advice presented. If you are already retired or nearing retirement, then much less in the book may be helpful.
Both for retirement and for addressing emergencies, Chatzky puts major emphasis on saving money, and beginning as soon as possible. In these troubling financial times, many retirees are finding their retirement savings inadequate. If one runs the numbers, being diligent about savings, can pay off significantly in the long run, so getting an early start makes a lot of sense.
While many of the "rules" are often easier said than done, the point is to understand the principles behind them, and attempt to incorporate them when possible and appropriate. Chatzky's Rule #10, "Live Below Your Means. Period." stresses another key point, staying out a debt. She also believes in paying with cash rather than credit cards, and devotes attention to your psychological state of mind, and how it can factor into your decision making process.
While the book has some good tips and prudent ideas, when you look at the actual content, the word count is extremely low. Statements are made, and in some cases, besides common sense, there is not too much to back them up, as often the discussion is a bit too general and unspecific. There's nothing wrong with Chatzky's approach, as there can certainly be beauty in simplicity, however there is a limit on how far you can go relying on just these basic principles, and she does not really get into how one obtains more specific information.
A famous saying not mentioned in this book is "It takes money, to make money". It's simple, and often quite true. If you are broke, unemployed, drowning in debt, or perhaps doing time in prison, you may have trouble applying these rules, no matter how well you may understand them.
Part 6, entitled Cover Your Assets, is described by the author as perhaps the most important of her sets of rules. And there are some serious subjects here, such as health insurance, life insurance, estate planning, and taking care of your health. While still a rather superficial treatment, it's mostly good sound advice.
Chatzky has written several other books which include some of these same points, and probably wanted to take a very streamlined approach for this one. Teens just entering the work force, or anyone who may be totally lost regarding personal finance, might find Money Rules quite helpful, as it is a quick and easy read. The book probably rates four stars for that type of person, but those seeking any specificity regarding investing, will be disappointed. The limited audience, lack of depth, along with what seems to be a rather high retail price, drop the book's rating down to three stars.