The Money Book for the Young, Fabulous & Broke is financial expert Suze Orman’s answer to a generation’s cry for help. They’re called “Generation Debt” and “Generation Broke” by the media — people in their twenties and thirties who graduate college with a mountain of student loan debt and are stuck with one of the weakest job markets in recent history.
The goals of their parents’ generation — buy a house, support a family, send kids to college, retire in style — seem absurdly, depressingly out of reach. They live off their credit cards, may or may not have health insurance, and come up so far short at the end of the month that the idea of saving money is a joke. This generation has it tough, without a doubt, but they’re also painfully aware of the urgent need to take matters into their own hands.
The Money Book was written to address the specific financial reality that faces young people today and offers a set of real, not impossible, solutions to the problems at hand and the problems ahead. Concisely, pragmatically, and without a whiff of condescension, Suze Orman tells her young, fabulous & broke readers precisely what actions to take and why.
Throughout these pages, there are icons that direct readers to a special YF&B domain on Suze’s website that offers more specialized information, forms, and interactive tools that further customize the information in the book. Her advice at times bucks conventional wisdom (did she just say use your credit card?) and may even seem counterintuitive (pay into a retirement fund even though your credit card debt is killing you?), but it’s her honesty, understanding, and uncanny ability to anticipate the needs of her readers that has made her the most trusted financial expert of her day.
Over the course of ten chapters that can be consulted methodically, step-by-step, or on a strictly need-to-know basis, Suze takes the reader past broke to a secure place where they’ll never have to worry about revisiting broke again. And she begins the journey with a bit of overwhelmingly good news (yes, there really is good news): Young people have the greatest asset of all on their side — time.
Review By Melissa Batai from moneycrashers.com
The book is organized by chapters that correlate to important money issues:
1. Know the Score
Orman says that the most important thing twenty- and thirty-something-year-olds can do for their financial future is to know and improve their credit score. She thoroughly explains what the FICO score is comprised of, how to improve it, how to run a credit score report, how to fix errors, and how your credit score can affect your financial future.
2. Career Moves
Orman’s advice in this chapter is sometimes surprising. She advocates that you find a job you love, and not just work for the money. She even advocates using credit cards for a few years to supplement your income if you have a job you love but that does not pay much in the beginning. Orman doesn’t advise that you finance an expensive lifestyle, but rather that you use credit to help survive by meeting basic needs until your career pays enough to support you completely.
3. Give Yourself Credit
Because Orman advocates that young people use their credit cards for basic living expenses if their jobs do not pay them enough, she uses this chapter to give advice on how to limit your expenses with credit cards, such as by finding low interest cards with no annual fees. She also explains how to avoid getting behind on credit card payments.
4. Making the Grade on Student Debt
Student loan debt plagues millions of college graduates, and Suze Orman offers encouragement that the student loans are likely to be worthwhile as the incomes of those who carry them climb over the years thanks to their higher education degrees. She also offers specific ways to both cope with student loan payments and lower the interest rate.
5. Save Up
In this chapter, Orman offers specific techniques to find more money in your budget and begin to save. For instance, she doesn’t say to stop going to the bar altogether, but instead suggests that you make better decisions, such as buying a beer or a glass of wineinstead of a $10 martini, or even going to a cheaper bar. Other techniques include checking your credit card statement monthly for errors.
6. Retirement Rules
Trying to tell most new college graduates who may be deep in credit card and student loan debt to save for retirement is a hard sell, but Orman offers a compelling argument. For example, if someone who is 25 invests $300 a month for 15 years (a $54,000 investment) and earns an 8% return in a retirement account – and then doesn’t invest any more after that – he or she will have $1.05 million by the age of 70. Orman explains the various retirement vehicles that are available, and which one to invest in first.
7. Investing Made Easy
Explaining the principles of investing in one chapter is not easy, but Orman provides a basic primer of the stock market and mutual funds, explaining specific terms such as load or no load, and small and large cap funds. In addition, she gives a short synopsis of the best choice for allocating funds in your 401k or Roth IRA.
8. Big-Ticket Purchase: Car
Orman immediately argues against leasing a car, providing mathematical data to prove why leasing is not a good investment. She would prefer that people in their twenties buy used cars, but she also has strategies for those who want to buy new. She outlines the best way to deal with car salespeople, and the financial implications your choice of a car has on numerous aspects, such as insurance.
9. Big-Ticket Purchase: Home
In the last 5 to 10 years, many financially unprepared people have jumped into home ownership, and they have suffered the consequences. While Orman does not suggest that you have to be completely debt-free before purchasing a home, she does insist that your debts be on the decline, and that you have at least 3% available for the down payment (though she would prefer 20%).
This is one of the most thorough chapters in the book. She clearly outlines all the fees and expenses that come with home ownership that many people do not consider, such as closing costs, maintenance, property taxes, and insurance, which can make a home payment that seems within your budget suddenly several hundred dollars out of reach.
10. Love & Money
Many people get married in their twenties and thirties, so Orman ends the book with this chapter. While the chapter includes practical advice, such as whether to have a prenuptial agreement and what kind of life insurance to purchase, she also stresses that you should carefully pick your partner, because when you marry someone, you are marrying their finances and their financial behavior. This can affect you positively or negatively throughout the duration of your marriage.
About Suze Orman
Suze Orman (born Susan Lynn Orman) is an American financial advisor, writer, and television personality.
Originally published: October 2004