Making The Most of Your Money Now is a very large book containing 1,264 pages written by Jane Bryant Quinn. It was first published in 1997 and became very popular so now the author has published a revised edition.
This book is full with solid and practical financial advice. This main focus of this book is on getting out of debt, starting an automatic saving plan, investing in stock market and mutual funds to receive a steady income when you retire.
This book contains everything you need to know about personal finance in simple understandable language. This is probably one of the most thoroughly researched, informative and complete book on money.
The book is divided in the 8 following steps
1. Building Your Base
2. Finding the Money
3. Your Safety Net
4. Your Own Home
5. Paying For College
6. Understanding Investing
7. Retirement Planning
8. Making It Work
Step 1. Building Your Base
How do people learn managing their money? They don’t learn the subject of money in school. In home they see their parents struggling to make enough money to live a richer and better life.
No one is born with a mind for personal finance. You can learn how to manage money by watching, doing, reading and making mistakes. Money comes and goes in your life at different times. Money goes out of your pocket mostly when you are young.
A cycle of Spending and Saving
From age 20 to 30, you use credit to buy your furniture, electro domestics and your first car. You start putting some money in the retirement account and then around the age of 30 you get married and buy a house and put down all your savings as down payment.
From the age of 30 to 45, you don’t know where your money goes, you just pay the bills, bills and more bills. If you haven’t open a business, you think about it now. This is a good time to invest in yourself and become more educated.
From the age of 46 to 65, you know where your money goes, these are fat years, 20% of your salary can be saved during these years. Consider long term health and care insurance in these years.
From the age of 65, start your golden years. You get steady income from retirement and from your investments. You don’t need to save much money in these years, you can spend all the income you get from retirement and investments.
But to live comfortably when you retire -
- You need to track your income and expenses during your working years.
- You need to accumulate income producing assets such as rental apartments and dividend paying stocks.
- You need to know how much interest you are getting from your saving account.
- Are there other better investments?
Step 2. Finding the Money
First of all, you need to make a spending plan (Budget) to figure out exactly how much money you are spending monthly and annually. Write down whenever you buy anything for next 2-3 months and try to find out where the most of your money is going. Try to reduce the unnecessary Expenses.
You need to get educated in investing. You need to get information about various investment options such as stocks, bonds, mutual funds and high-yield saving accounts. You will become wealthy faster if you are able to invest your money wisely.
You should not use your credit card. You should open an emergency-fund account where you will save some money each month and you can use that money in emergencies instead of using credit card.
Note: When you borrow money from your credit card, you pay more than 12% interest on the money you borrow, but when you save money in savings account you get only 3% interest on your money.
Step 3. Your Safety Net
This chapter focuses on life, auto and home insurances. There is a lot of good and useful information about insurance in this big chapter. The author explains very deeply about the life insurance why it is needed if you have family who depends on your income.
If you are not married and you don’t have family members who depend on your income then you don’t need a life insurance, you should simply invest money each month for the long term.
Step 4. Your Own Home
Before buying your own home, you should save at least 20% money for the down payment. You should find a good bargain apartment whose prices will go up in the coming years. Instead of paying rent each month, you should own a home and pay your monthly mortgage installment.
You should consider buying home if you are willing to live at least for next 5 years at the same place. Once you own home and you are saving some money after paying your monthly mortgage installment, You should consider buying another rental apartment. The process is same, save at least 20% money for down payment and find a good apartment. Your tenant will pay you rent each month and with that rent you can pay the monthly mortgage installment.
Step 5. Paying for College
This chapter focuses on how you should plan for your children’s college education. This is a great advice that you need to save for your children’s higher education when you are young to take full advantage of compound interest.
There are a lot of good investments available in the market and you can invest your money each month in such way that the return on your money could beat the inflation rate.
Step 6. Understanding Investing
In this chapter once again the author suggests you to get more educated about different investments but if you don’t have much time to learn investing then you should find a good financial planner or stock broker who could invest your money in the mutual funds and stocks.
Nowadays internet has made a lot easier the job of managing your own funds without the need of stock broker who is just the middleman that takes a cut of your money.
Final Thoughts on This Book
This book gives very specific advice on the areas that are very important in the personal finance such as credit cards, borrowing, saving, investing, insurance, retirement, children’s education and owning a home.
This book may seems huge containing 1200 pages and time consuming but it is an easy read and If you want the solid and detailed information about personal finance then…
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After finishing her study in computer science in 2005, she chooses to work in the economic - financial sector (as an accountant) to take a closer look on economic reality. Now she works as a full time blogger, writer and editor on the subject of personal finance.