There are many personal finance books and tools out there, useful to people in all stages of personal finance. I have a lot to learn before reaching financial independence, and the editorial elves thought it would be useful if I shared some of what I learn with you.
My recent reviews include “FlexScore, Part I (The Book)” by Jeff Burrow, CFP, and Jason Gordo, AIF as well as a review of FlexScore's online tool. This week, I'm reviewing “Personal Finance for Dummies, 5th Edition” by Eric Tyson, MBA.
Why this book? Well, I figure that this is the time of year where people are resolving to eat right, exercise more, and track their money. As a result, we probably have lots of readers who are either new to GRS or returning to the fold after a hiatus. So a book that provided a comprehensive overview of all things financial seemed just the ticket.
Philosophy behind the book
Most people are probably familiar with the “for dummies” series of books. For those that aren't, these books provide primers on a variety of subjects that people tend to find difficult or confusing. Eric Tyson, the author of “Personal Finance for Dummies,” has also written other books for the franchise, including:
“Investing for Dummies”
“Taxes for Dummies”
“Home Buying for Dummies”
“Small Business for Dummies”
There are also lots of books by other authors on additional, non-financial topics. I have a “Vegetarian for Dummies” floating around someplace, for example. “Personal Finance for Dummies” is written in six parts:
Assessing your fitness and setting goals
Saving more, spending less
Building wealth with wise investing
Insurance: Protecting what you've got
Where to go for more help
The part of tens (this covers ten common life changes and ten tactics for thwarting identity theft/fraud)
Each part is further divided into multiple chapters. The section and chapter divisions make sense in that they are ordered in the way you are most likely to need them. For example, you have to assess where you are and pay down debt before you can focus on building wealth.
However, I think most people are likely to use the book as a sort of reference guide. You are able to flip directly to the part of the book that you need in the moment, then put it away until your next question. There's a very detailed table of contents that outlines what each chapter covers and a very good glossary to help you do this.
What I didn't like
I'm not really sure it's possible to dislike this book. In terms of the topics that are covered, it's pretty basic stuff. In addition, while there are “real world” examples throughout, it's not nearly as personal as, say, “Soldier of Finance“. Although now that I think about it, the more personal stories tend to be the ones that work best for me. The tone of this is more textbook-y, which sometimes makes it hard to focus.
As a result, I'd say that if you really tried reading this book cover to cover, you'd get pretty sick of it before the end. However, since that's not really what's intended, I doubt a lot of people are going to do that. Or at least they may start it with the intention of reading it cover to cover only to adjust mid-course!
What I loved
I really liked the table of contents (dorky, I know) because it made it really easy to find relevant information without having to use the glossary. I also found Eric Tyson's story compelling, which helps you insert some personality into the more bland parts of the book. One of the things he's trying to do is to get you to consider money as something that is both separate from your life and, at the same time, interwoven with every aspect of your life.
As a result, money becomes a tool to accomplish the kind of life you want to live, rather than a goal in and of itself. Which is kind of the way it should be. Tyson also acknowledges that we tend to have a complex relationship with money.
For example, maybe your parents didn't set a good financial example growing up. This could be on either extreme — maybe they were tightwads and so you grew up with a tendency to splurge to compensate. Or maybe they frittered everything away and now you're too scared to spend a cent. Or maybe everything ran smoothly, but you never knew how or why and never felt like you could ask.
This book can help you figure out why you have the relationship with money that you do, identify aspects of your financial life that need adjustment, and help you develop good habits going forward. Additionally, the assumption is that making positive financial changes will be easier if you can connect it to goals that are important to you.
My absolute favorite part of the book was when he delineated between the media's definition of wealth (who has the most money/biggest paycheck) and a personal definition of wealth. What that personal definition is may be different for everyone. The trick is to figure out what will make you happy. From there, you can figure out how to get the money that will enable you to live that life.
Who should read “Personal Finance for Dummies”
Like I said, I don't think anyone's going to devour this book in one sitting. But I do think it's useful to have a copy hanging around the house. With tax season starting (ugh! sorry I reminded you) I will probably be giving Chapter 7 a close re-read in the very near future.
Jake and I are hoping to buy a house this year. That goal has become all the more urgent since our landlord was unable to refinance. The condo we live in is scheduled to be auctioned out from under us any minute. So Chapter 14 is going to get pored over too.
But maybe you're in a different place. Maybe you're at the very beginning, struggling to reduce your expenses. If that's the case, Chapter 6 is for you. Or maybe you've got money coming out your ears and struggle to manage it all. Your focus then might be on Chapter 18.
Honestly, this book is so comprehensive there's something for everyone. Plus, it's exactly the kind of book that's available in used bookstores super cheap (that's where I got mine). Win-win!
Do you have any financial resources that you go back to again and again? Share them below!
Author: Honey Smith
Honey Smith has been reading GRS since at least 2008, right when she got her first â€œrealâ€ job and started getting serious about finances. She and her husband Jake are in their mid-30s and recently bought a home together. Currently, she manages graduate programs at a large state institution, and he is an attorney at a mid-sized firm.
Between them, they have paid off approximately $30,000 in consumer debt since she started writing for GRS in 2012. However, they still have nearly $200,000 of student loan debt, so she will continue to chronicle their debt-paydown journey. In addition to personal finance, Honey is interested in vegetarianism and cooking, gardening (despite living in the desert and having a black thumb), issues in higher education (including the student loan bubble and the slow death of tenure), and animal rights; however, her heart lies with fantasy novels, trashy TV and Skyrim.