It Pays to Manage Your Finances
Is there anything easy about making money, you ask? Perhaps not. But personal finance expert Liz Pulliam Weston, in her latest book Easy Money: How to Simplify Your Finances and Get What You Want Out of Life, suggests that there are plenty of reasons why practicing smart habits for dealing with your finances not only takes some of the pain away. It also makes dealing with many financial aspects of your life much more manageable, whether you are a new college graduate trying to deal with school loan debt, a mid-career worker planning for retirement or a retired couple dealing with caregiver responsibilities.
The key principle that powers all these smart habits is simplification: Finding the simplest way to think about the tasks at hand so that you can increase the money you make, correct the mistakes you are bound to make and retain your sanity along the way. Easier said than done. But Weston argues that for all the complexities that our choice-ridden life bears, we have a great ally on our side: automation.
Automate Trumps Procrastinate
Smart consumers set up bill calendars and alerts so that they don’t miss due dates and accrue financial penalties. Whenever possible they pay their bills electronically, avoiding the pitfalls of snail mail and reaping the benefits of an electronic audit trail. To her credit Weston doesn’t whitewash the risks inherent in technological options. She offers risk mitigation strategies instead so that readers can weigh the risks versus the benefits of these timesaving methods.
But as helpful as automation tools are, these tools can’t take the place of good old-fashioned critical thinking. Easy Money is an interesting fusion of techno know-how and modern day conventional wisdom. In fact, it reads a bit like a modern day almanac. Instead of weather forecasts and folksy truisms, Weston includes plenty of financial mother wit including retirement planning formulas, asset management strategies and plenty of checklists — those powerful memory ticklers for our overworked minds. Interspersed with her advice are also helpful Internet-based references.
Tackling Those Pesky Questions
Weston tackles the elephants in many consumers’ households, such as saving for college, managing credit card debt, buying adequate insurance and choosing the right mortgage.
While you can find a number of books that address each of these issues, most consumers would prefer not having to pour over a whole book for just a few burning questions. Weston seems to have a great grasp of what those questions are: In the case of saving for college, the question is about addressing the maze of complex federal and private aid formulas, different saving vehicles and spiraling education costs. Most people, at one time or another, equate the devil with their credit cards. But Weston reminds us that they do have a silver lining, if we work with them smartly. Her credit card checklist gives good pointers for co-dependent as well as more disciplined users.
In regard to insurance, questions about coverage often focus on assessing risk. Weston is wise to avoid talking “shoulds.” Instead she offers some useful ways of thinking critically about insurance deductibles and coverage for the most popular categories like auto, home, life, disability and health. Regarding mortgages, Weston zeroes in on the perennial burning question: Should I prepay my mortgage? (Yes and no, she says, depending on financial circumstance).
Money Over Easy
Weston closes out her book with two chapters that address everyone’s personal relationship with money. In some respect this might be the most important part of her text and the most telling. With employee-managed 401K plans replacing defined pension plans, the pressures of escalating medical premiums and volatile housing and stock markets, consumers are faced with the prospect of having to be the smartest money managers they can be. Weston does it for a living. If any of her financial experience can rub off on readers, that’s well worth the price of this book.