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Your Money Ratios: 8 Simple Tools for Financial Security Hardcover – December 24, 2009

4.7 out of 5 stars 50 customer reviews

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Editorial Reviews

From Publishers Weekly

Investment adviser Farrell simplifies retirement savings. To make the process of preparing for the golden years less complicated—and less anxiety provoking—Farrell developed a series of simple formulas to help readers understand what they need to be saving based on age and household income, while taking as much of the irrational emotion out of the equation as possible. Swift calculations help readers understand how much they should be saving each year, how much to contribute to 401(k)s and IRAs, when to invest in real estate, how much education debt to carry, how to balance debt, how to calculate investment power and how to find a financial adviser for those situations that require a little extra help. Farrell keeps his readers on track—each decision boils down to what he calls the Unifying Question: Will [x] help move me from being a laborer to being a capitalist? By focusing on making readers' money work for them, and with the use of simple, clear numbers, Farrell does a wonderful job of taking the worry and stress out of number anxiety—no calculator necessary. (Jan.)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.


"Your Money Ratios is a no-nonsense, comprehensive resource for those ready to grab the reins of personal finance once and for all."

"Your Money Ratios by Charles Farrell (Avery, $26). Why not manage your family finances as you would a business? Farrell is a money manager who makes a convincing argument for that approach. He uses rations more common in the business world, such as the debt-to-equity ratio and the capital to income ratio so that readers can figure out how they are really doing. The book is direct and numbers-focused, and offers answers to questions like "How much should I be saving?" and "How much insurance do I need?"

"Charles Farrell, an investment adviser in Denver, has long written about financial planning. In particular, he has developed, in recent years, some of the smartest tools we've seen for gauging the health of your nest egg. Now, he has combined these calculators with additional guidelines in a new book, Your Money Ratios: Eight Simple Tools for Financial Security. Mr. Farrell uses easy-to-understand ratios to help individuals manage savings, debt, investments and insurance, all with the goal of achieving a secure retirement. In short, one of the best financial books to cross our desks this year."
-Wall Street Journal

"What I like about the use of ratios is that it imposes discipline on emotional spending decisions. When you do the math based on specific goals, real household income and exact time frames related to age, it becomes crystal clear that you really can't afford to blow out the back of your home or expand the kitchen, no matter how attractive or tax-deductible the financing may be."
-Laura Rowley, Yahoo Finance

"Everyone wants to know, 'Am I on the right track?' Thanks to Charlie Farrell and his delightfully simple Money Ratios, the answers are just a few pages away."
-Jonathan Clements, author of The Little Book of Main Street Money


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Product Details

  • Hardcover: 272 pages
  • Publisher: Avery (December 24, 2009)
  • Language: English
  • ISBN-10: 1583333630
  • ISBN-13: 978-1583333631
  • Product Dimensions: 5.9 x 1 x 8.5 inches
  • Shipping Weight: 13.6 ounces
  • Average Customer Review: 4.7 out of 5 stars  See all reviews (50 customer reviews)
  • Amazon Best Sellers Rank: #610,731 in Books (See Top 100 in Books)

Customer Reviews

Top Customer Reviews

Format: Hardcover
I found this book to be really helpful in terms of setting some reasonable goals for myself while coming out of my own "era of overspending". Well-written and often humorous, the author manages to convey the importance of saving without being a bore or being unrealistic about what's possible today. While I certainly don't find myself in ideal financial shape right now, the ratios have provided me with great goals to work toward, and helped me be conscious of where my money goes and what I'd like (and will need) it to be able to do for me later.
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Format: Hardcover Verified Purchase
Finally, someone in the know has given me an idea of when I can retire and how much I'll need to do so. Charles Farrell gives a lot more guidance than the usual "max out your 401(k) contributions and diversify your investments so you can retire comfortably at some unspecified age." The first ratio he introduces is the capital to income ratio, which basically quantifies how much money you should have saved (401(k), savings and checking accounts, brokerage accounts, etc. [excluding house and cars]) at a given age and salary in order to retire at 65 on 80% of your income. That one ratio alone is worth the price of the book.

He then goes on to discuss savings, debt, investment and just about everything else you'll need to know to save enough for retirement. He actually tells you to spend as little as possible on a car because, even though it's necessary for you to have in order to generate income, it also ends up worthless after ten years (generally speaking). He has essentially the same advice for housing: buy only what you need rather than a McMansion.

Since I read quite a few business and investment books, some of the material (stock and bond investments, for example) covered very familiar ground, but there's nothing wrong with a little refresher now and then.

Thank you, Charles Farrell, for writing this book.

Highly recommended.

(Note: you can take the capital to income ratio (CIR) data he provides--which is only in five-year increments--and type it into Excel, then plot it, then calculate the equation for the CIR so that you can come up with numbers based on your exact age. Instead of that, you can go to yourmoneyratios.com, input the code he provides in the book and use the web tool.)
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Format: Hardcover Verified Purchase
Kudos to the writer for making it so clear and within everyone's reach to be successful with finances. As more people read this work, we will slowly resolve the problem of financial dependency so pervasive in society today. This work should be found in the self-help area of bookstores. It is an easy read and a definite entry point for everyone seeking basic financial awareness.

Mr. Farrell offers a very clear explanation of how everyone should address financial issues. If more people had read this book prior to the phenomenal crisis we currently endure, none would have lost their homes, their cars, or their job. Private industry and banks would not have fired anyone, instead they would still be hiring more workers. We would remain the pillar of financial strength that irresponsible behavior destroyed.

The author's argument places the financial responsibility for our future needs squarely on each of us. He provides the reader with a blueprint for the meeting of long-term financial goals. His philosphical position is almost a Libertarian argument--except for the acceptance of Social Security as a pillar of virtue, which most Libertarians would argue against, especially in light of the abuses perpetrated by the ever-increasing waves of pillagers in Congress. Nonetheless, his suggested cures for the ills of the system as we face them today are sensible and should be heeded with immediacy.

The work is well conceived, albeit a tad repetitive at times, yet understandably so; most individuals tend to forget from one minute to the next the importance of thoughtful financial planning and a strict adherence to a plan.
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Format: Hardcover
For years I have struggled to figure out what my family should be doing with our finances. I knew I wanted to be able to retire with a decent lifestyle, but had no idea how to do it. The primary reason I struggled is because of my deep distain for anything having to do with numbers. It all just seemed too difficult for me. When I read this book, it all became clear to me. Everything is laid out in clear and simple terms in a way that even a financial dim-wit like me can understand. Unfortunately for me, I read this book about 20 years too late! The good news is that I still have some time to get back on track, and I can't feel too guilty, because the book just came out. I highly recommend this book to anyone who wants a clear and simple formula for planning for retirement. I would also recommend that you give this book as a graduation gift to anyone you care about who is graduating from college! Having this book then would have made a big difference in my financial future.
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Format: Hardcover
Gives 8 simple ratios to guide your entire financial life, with sensible explanation of what they are, why they matter, what they should be as you get older, and common sense suggestions for doing them. It is all the common advice gathered into one integrated, comprehensive table of four investing ratios and four insurance ratios. The explanations and advice help keep turn those standard dictates into meaningful, motivating messages and help to explain how things can go wrong. (Pointing out that real estate cannot go up faster than salaries to pay mortgage should have always been obvious.) With the goal of being financially independant and yet protecting against catastrophe it leads you from how much school loans is enough or too much, thru working years of savings rate and mortgage paydown with disability and life insurance, to your golden years and the kinds of health insurance and long-term care insurance.

Introductionn - A Simple, New Perspective
1. The Capital to Income Ratio
2. The Savings Ratio
3. Social Security
4. Where to Save Your Money
5. The Debt Ratios
6. The Investment Ratio
7. Stocks and Bonds
8. Ignoring Wad Street
9. The Disability Insurance Ratio
10. The Life Insurance Ratio
11. The Long-Term Care Insurance Ratio
12. Health Insurance
13. Getting Professional Health
14. Putting It All Together
Appendix - Special Situations
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