Book Review: Yes, You Can Get A Financial Life!

One of the more interesting personal finance books I’ve come across in my readings is Yes, You Can Get A Financial Life! It’s fairly unique, at least among the personal finance books that I have read, in providing suggestions and advice that are different for each decade of your life (as you might be able to guess from the subtitle, Your Lifetime Guide to Financial Planning).  Most of the other books in the personal finance sphere tend to either focus on one relatively narrow segment of your life (as with the Money Book for the Young, Fabulous, and Broke) or provide generic advice that’s most applicable for those in their forties to fifties.  It’s a nice change, then, to see a book cover a broader swath of people.  Let’s take a peek behind the cover:

Synopsis:

Yes, You Can Get A Financial Life! starts with a guide to the thought process behind the book.  The authors, Ben Stein and Phil DeMuth, explain life cycle planning, the model for their assumptions, wherein your ability to earn income starts small, increases over your lifetime until you reach middle age, and then falls as your productivity decreases and you eventually retire.  The authors also stress their belief that the best approach to your finances is to smooth out your spending as much possible over your lifetime, borrowing when you are young (to buy appreciating assets, at least), saving the most at middle age, and living off the savings at retirement.

The rest of the book can be divided into roughly three parts.  First, there is a decade by decade overview of how you can expect your finances to change and fluctuate.  The chapter on your twenties, for example, covers the basics of starting a job, getting a place of your own, and starting to save for larger expenses down the road.  At the other end of the guide, the chapter on your sixties covers retirement, as well as some of the steps (immediate annuities, reverse mortgages) you could take to stretch your savings.  The decades in between help to get you from one stage of your life to the next, hopefully as smoothly as possible.

The second part of the book takes a closer look at some of the major expenditures you will experience over the course of your lifetime.  There are chapters on buying a house, raising children (as well as funding all the related expenses) and even dating and marriage, inserted into the broader overview of your life at appropriate junctures.  The authors’ basic message for most of these events is plan carefully, be aware of what you want to happen, and to save up a goodly amount of money in advance.

The third set of chapters cover investing and saving at each stage of your life.  The suggestions echo the common wisdom you frequently hear: start with mostly stocks (or rather, stock index funds), add (short-term) bond funds as you get older, and use TIPS or other inflation hedges when you are nearing retirement to avoid having the real value of your portfolio declining too much.  The book also provides some benchmarks, so you can know whether your rate of saving and investing is on target to reach your goals.

Pros:

Plenty of Facts and Figures: One of the strengths of this book (as well as Stein and DeMuth’s writing in general) is the reliance on solid facts, explained with plenty of figures.  There’s never much speculation or guesswork; rather, just about all the recommendations made by the authors are duly researched and backed up by their own calculations (with all assumptions duly spelled out).  The suggested savings rates by age, for example, are listed in each of the corresponding chapters on investing (such as ‘Investing in your Twenties’).

-Comprehensive advice over time: As mentioned in my introduction, one of the strengths of this book is that it provides you with a view of how your finances will change over time, as you grow and your financial situation changes.  If you are fairly young, in your teens or twenties, and aren’t prone to losing books, this could indeed prove to be a ‘lifetime’ guide to financial planning.

-Consideration of multiple possibilities: Another strength to the book is that it provides advice to cover a variety of situations.  Not everyone gets married at the same time, has kids at the same time (or has children at all) or faces the same financial challenges at the same time.  This book, particularly the chapters I mentioned in part two of my synopsis, covers some of these alternative possibilities quite well, allowing you to deviate from the standard family and still get good advice.

Cons:

-A Bit Shallow: Given the breadth of material the authors attempt to cover, there’s little hope of getting comprehensive advice on every point.  The chapter on insurance, for example, barely scratches the surface of the subject, and doesn’t provide much more information on life insurance than my entry on the subject.  If there’s something you really need to know about that’s covered in this book, you’ll almost certainly have to go on and do further research on your own.

-Most Useful for the Young: Although there is information in this book to cover your forties, fifties and sixties (and beyond), it’s much reduced from the wealth of material provided for your thirties and younger.  This makes sense, as what you do when you’re young will have a greater impact on your finances in the future, but it doesn’t make the book any more useful for the older set.  If you’re above the age of forty, you’d likely be best served with a book the focuses more on your age bracket or specific monetary concerns.

-Conservative Leaning: Stein and DeMuth are both rather conservative guys, and their writing reflects this point.  In this book, that becomes most clear during the chapter on children, when they go on at some length about the deficiencies of the modern American public education system.  If you would prefer a finance book that doesn’t dive into politics, you should probably avoid their works, including this book.

Overall:

I think this book is good addition to your financial library, at least for those who still have most of their lives ahead of them.  While I doubt many people will use it as a guide to their entire financial lives, it provides some excellent advice, particularly to those in their twenties and thirties.  The long view of your finances it provides is also helpful and fairly unique among these types of books, and good for allowing you to have a more comprehensive idea of what to expect through your life, financially.  Overall, I recommend it for any Generation Yers out there who are looking towards what the future will hold.

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