I was given a copy of Your Money Ratios by Charles Farrell and asked to provide my thoughts on the book. I would like to first state that I was not asked to provide positive feedback on the book, just my honest opinion of the material and how it was presented. I am also going to be giving this book away to one lucky reader so be sure to read on to figure out how to enter the give away.
Your Money Ratios seeks to provide the reader with a method for determining:
- How much they should be saving,
- How much they should already have saved,
- How much debt they can carry,
- How you should invest your savings, and
- What type of insurance you need.
The determination is made using ratios defined by the author such as the savings ratio which states you should be saving 12% of your annual income from ages 25-45 and 15% of your annual income from 45-65. Based on the book I should be saving at least 12% of my income every year (Which I am). Similar type ratios are set for each of the 5 areas listed above. Some of the areas, such as insurance, include multiple ratios.
What I liked
It is an interesting take on how to calculate the “necessary” goals in obtaining financial security. It clearly outlines what the author feels are the pertinent ratios and presents them in ways people can easily understand. Each section is targeted at a specific goal and doesn’t wander as much as some other books do. This makes the entire learning experience easier and moderately less confusing.
What I didn’t like
There is a heavy reliance on Social Security as a retirement income stream. While I don’t disagree with the facts he states regarding social security, it isn’t a guaranteed benefit and can be given at taken away at the whim of congress. I don’t really feel like I learned a lot from reading the book, it takes a lot of the regular principles of personal finance and packages them in a gimmicky box, the contents are still the same. To the authors credit he did a good job of explaining his ratios and someone just starting out could certainly learn a lot from a reference like this.
About the Author
Charles J. Farrell, J.D., LL.M. works for Northstar Investment advisers and writes a column for the CBS Moneywatch site. Prior to being an investment advisor he was a Tax Attorney which is how he picked up those fancy letters after his name. J.D. = Juris Doctor or Doctorate of Law and LL.M. is a Masters in Law.
Overall the book wasn’t bad, it took concepts that are prevalent in most personal finance books and tried to apply some form of “logic” to how they should be applied. If you are a numbers kind of persons it can certainly help you out to have these ratios to base your decisions on. One word of caution I like to give is to not rely solely on one resource to make all of you decisions. Just like noone should come here as their one stop shop for all things personal finance you shouldn’t rely on just one book. This may be a good compliment to your collection, especially if you collection is still in its infancy.
Win The BOOK!
We are giving away our copy of the book to one luck reader.
There are two ways to enter to win a free copy of the book “Your Money Ratios”
- Leave a comment on this post telling me how you plan to improve this year on one of the Five Main elements listed in the overview.
- Tweet the following notice about this giveaway on Twitter: I Just entered to win the book “Your Money Ratios” via @suburbandollar #sdymrbk http://bit.ly/sdymrbk
The Fine Print
This giveaway is open to U.S. Residents only sorry to my international readers but the book is kind of heavy. You get one entry and one entry only for each of the methods allowed. This makes for a maximum of two entries if you both leave a comment and tweet about the giveaway. If you tweet about it 6 times, I will appreciate it but you only get one entry. You must follow me on twitter so I can DM you if you win or use a valid email address when posting a comment. If I can’t get a hold of you, you don’t win. The winner will be selected on Sunday January 10, 2010 via random number generation on Random.org.
UPDATED 01/10/2010 – The winner has been chosen @liverealnow won by random selection and will be contacted shortly to receive their book.