The Money Book for the Young, Fabulous and Broke

What advice would you give to young people struggling with debt?

I was wondering this question and decided to see what the experts had to say. I recently read The Money Book for the Young, Fabulous & Broke by financial expert Suze Orman. I have seen Orman appear on TV many times. I’ll be honest that her style of advice (parental and forceful) made me hesitant to pick up the book.

But I’m glad I was open-minded because the book was interesting. There were some discussions that gave me pause, but overall I was satisfied. Here are some of the reasons why:

It discusses many topics

The book is divided into 10 chapters:

1. Know the score (about credit score)
2. Career moves
3. Give yourself credit (how to use credit cards)
4. Making the grade on student debt
5. Save up
6. Retirement rules
7. Investing made easy
8. Big-ticket purchase: car
9. Big-ticket purchase: home
10. Love & money

Notice these are a lot of topics to cover in about 350 pages. In fact, the page count is misleading because each page contains very little text. The book has plenty of colorful designs and big headlines. Additionally, some pages have simply one sentence next to a picture, like “You want to play it safe with your savings” juxtaposed with an image of a turtle (pages 148 and 149 of the book).

Usually books like this are fluff. But this one isn’t. Orman manages to explain a decent amount of things in the little words she does use.

The book promises answers for a specific group

This book is Orman’s targeted advice for young people. The back cover sums up the attitude of the book: “Suze knows that you’ve been too busy or uninspired to figure out how a Roth IRA works, what a FICO score is, and why you should even care. Not a problem. Every section of this book was written so that you can quickly and easily comprehend exactly what actions you need to take and why.”

The book delivers on its promise

The chapters are brief and provide useful information. Advice is geared to a young crowd and Orman explains how easy it is to avoid many of the worst problems.

Though I liked the advice in the book, I did have a mixed reaction to how some information was presented. Some parts are excellent and others I find questionable. Here is the good and the bad.

The good part is the discussion of specific problems

I learned quite a bit from the book. While I more or less knew details about the topics covered, I got perspective on how to connect the knowledge.

What makes personal finance hard is putting individual decisions into a larger perspective. And this is where Orman excels. She takes on the tough questions, like whether to use extra money to pay off a student loan or contribute to a 401(k) matching program (she suggests to consider the 401(k) match, p. 129-30) or whether one should use retirement accounts for a down payment on a house (be very careful when doing this, if at all, and consider the Roth before a 401(k) loan, p. 211-3). Every chapter has several of these Q&As that I found interesting.

Also noteworthy is Orman’s chapter on credit cards. Many experts tell you to stick with cash or debit, but Orman explains that credit cards are too important for your credit score. This comes into play when buying a car or a house. I have financially stable friends who have been denied or charged excessive rates simply because their credit history was sparse. The right advice is not to tell people to avoid credit cards, but to use them the right way-as a tool that can build credit and sometimes offer free rewards.

The bad part is the book oversimplifies some topics

As much as the book succeeds by being an introduction, it sometimes succeeds too much. Some topics are simplified simply to avoid doing math. I guess that’s a plus for many people, but not for me or readers of this site.

An example: on page 266-7, there is a car discussion about taking zero percent financing or $3,000 cash back. Orman goes through two scenarios (without explaining the math behind the calculations) and then concludes on a magical rule of thumb. I feel rules like this add to confusion because they make it seem like numbers are being pulled out of thin air.

I would prefer a comprehensive approach. For instance, I would explain the basics of car loans and then suggest an online calculator to do the calculations. But that’s just my opinion.

There is one more bad point but this is purely personal. I think Orman’s style is hard to swallow for anyone with a reasonable level of self-discipline. We disciplined people do not need parental advice but rather friendly advice and information. But to be fair, the book is targeted for a certain audience, and Orman has a knack for connecting and motivating people.

A bonus: review of the website

The book also has an accompanying website with calculators, resources, and a forum. I checked it out but was not too thrilled.

The calculators are nice but nothing special. They are nothing better than free ones you’ll see online. The resources are limited, which makes sense since Orman likely put all the good stuff in the book. The forum is interesting and it seems like there are a decent number of users. I checked out a few topics and saw people were replying, but the quality of advice is a big question mark. All in all, I didn’t find the website to be that useful.

There is also an “Action Planner” section where you take a small survey to get more personalized advice. I did not fill it out but judging from the rest of the site I would not expect miracles from a five page survey.

Overall impression was good

Though not even close to making to my list of favorite books, this was a useful read. It’s a decent introduction and gives perspective among topics. If you’re looking for the broad basics, then check it out.