I’m not really a dummy. I don’t think you’re a dummy either. I’ve never been attracted to the “Dummies” series due to my anti-dummy vanity I suppose. To be honest, I never liked the feeling of buying a putrid yellow book from a store cashier and admitting to certain subject matter dummydom.
I’m over it. I’ve owned various editions of Personal Finance for Dummies (including the Canadian version) since 2001, and have always been grateful to the authors Eric Tyson and Tony Martin. When I first bought this book I was in deep student debt, to the tune of 17K. I was about to start a new job with a decent salary and needed help figuring out how to retire my debt, save for my retirement, save for a house, buy insurance, and learn financial responsibility. The putrid yellow book had all the answers I needed then, and continues to guide me today.
So here’s a breakdown on what to expect from Personal Finance for Dummies:
Personal Finance for Dummies offers several chapters to help you figure out where you stand. Basically, if you don’t know where you are financially today, it’s hard to get where you want to be tomorrow. The chapters on Overcoming Obstacles and Establishing Goals are sound reading for anyone in any financial situation. I often re-read these chapters just to evaluate my financial path.
The debt chapters cover credit cards, student debt, tracking debt, and getting your credit report. When I had student debt, I felt good about reading the debt chapters. The authors didn’t preach to me about the errors of my ways. Rather, they offered tangible solutions and ways to attack the debt. I haven’t needed these chapters for a few years now, but the tidbits on how to choose a credit card are golden. To this day, I still use a no-fee credit card and pay the sucker off each and every month without fail. I really liked this book’s approach to debt.
Spending and Saving:
Several chapters cover spending and saving habits. The authors discuss how to track your money and offer arguments why you should save some each pay. They also give many frugal suggestions on how to save money. One tip (page 114) suggests we cut our own hair using a “home electric shaving kit.” Now I don’t know about you, but the last thing I need is a home-style bowl cut. Cause then I would really look like a dummy.
I find the chapters on taxes calming and soothing. I can’t help but feel a little taxed whenever I sit down to file. I’ve always appreciated the advice on how to find an accountant, how to prepare for an audit, and how to better understand the different kinds of tax deductions.
The chapters on investing blew my mind and changed my life. When I first learned I was invested in mutual funds boasting bloated back-end loads, high management expense ratios, and terrible trailer fees I nearly fainted. The book discusses how to read a mutual fund prospectus, and how to decipher “financial speak” to better understand how these fees work. The authors really saved my bacon by introducing me to index funds and exchange traded funds. I not only learned how to construct a proper portfolio, but I learned how to invest for myself, by myself. The chapter on discount brokers is awesome. I learned what to look for, how to move my money from my mutual fund company, and how to open a new account. Thanks to Dummies, I now DIY like a smartie.
The chapters on retirement saving and planning are also sound and very very helpful, to both American and Canadian audiences.
Both authors advocate home ownership. On this point I disagree. Albeit, their details on mortgages and advice on buying a home are stellar. After going through their buyer beware lists, I decided buying a home was not a financially responsible move for me at the time. For this I will always be grateful. Ohh, their tips on choosing a real estate agent are kinda fun. Snicker.
When I first got this book I needed a real crash course on how to buy all types of insurance. I needed renters insurance, my “better half” needed life insurance, I wondered about disability insurance, and stuff insurance and so on. I really love how they go through and outline which life insurance products are suspect (Whole Life) and why other policies are worth the money (Term Life). It is also suggested where to find a good insurance policy for a fair rate. These chapters saved my butt!
Throughout the book the authors suggest what to look for when hiring financial help – be it though insurance brokers, real estate agents, accountants, or financial advisors. These tidbits are the most valuable unbiased words you could ever hope for in a financial book. As soon as I read how most “financial advisors” got paid I flipped. I immediately learned my super friendly “financial advisor” was really a sales person, who sold me very expensive to own mutual funds. The list of criteria to consider when hiring a financial planner is essential reading for everyone not DIYing.
Should I Buy?
Over the last 8 years, I have owned three editions of this book. I’ve bought it for friends and family members as well. I think those new to personal finance and those more seasoned veterans can learn significantly from Personal Finance for Dummies. The format is super accessible and readable. Authors Eric Tyson and Tony Martin do an exceptional job of taking complex terms and making sense of the nonsensical. I often re-read chapters just for a financial refresher. Since this book has been around for several years, consider borrowing it from your local library. It’s also available used at Amazon for less than new. Now that’s good financial sense for not a lot of dollars. Snicker.