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Sunday, April 23, 2017

Book Review: Your Money or Your Life – Second Edition

Posted by Tim Stobbs on February 19, 2009

Ok, for long time readers you might recall I have already done a book review on Your Money or Your Life.  So why do a second one?  Well because the second edition did some significant changes.

Perhaps the first noticeable change to the book is the introduction of an environmental theme into the book.  Which might seem strange until you realize how well the concept of being frugal ties in with being green.  The reality is many frugal actions happen to be green as well so it’s a natural extension of the book to touch on.  Besides after I did it on this blog I’m hardly going to give them trouble over it.

Then the other major overhauls are chapters 6 and 9.  In chapter 6 they got rid of the 101 ways to save money list, which I liked, and replaced it with some general concepts and what works for some people who had previously read the book and put it into action.  I agree with the change as so far to say the list limited people’s creativity.  Instead now it’s a open concept where people can find out what works for them and do some Google searches for ideas.

In chapter 9 they finally updated the old ‘just buy bonds’ advice.  It’s not an extensive discussion, but it does introduce a money system which I had previously come up with something similar myself.  They divide your retirement funds into three parts: capital, cushion and cache.  The capital section is still invested in bonds and is such it can cover all your day to day expenses and a little bit more.  The cushion is six months living expense in cash to cover those odd expenses that come along like a ‘new to you’ car (In my case I was thinking about 3 years living expenses in cash as insurance on a market crash when you just retire).  Then the cache is money you don’t need for day to day, but for other projects, trips or things you want to do (in my case I was thinking about 20 to 25% of the portfolio in stocks, but this concept works well).  Here they suggest you take your extra risk and get into other investments like index funds or real estate.  They also provide a few stories of what worked for other people.

All in all, I still think this is one of the best personal finance books out there for people to see and change their spending habits and views on money.  It’s one of those rare books that address being happy and having enough all at once.  The core principles and heart of the first edition is still there in the second, but now it is updated and expanded.  Is it worth buying if you already own a first edition copy?  Likely not, there isn’t that much change to the message of the book.  Just borrow it from the library and read it and make a few notes in your first edition.

Any one else read the second edition?  If so what did you think?

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