Stacy Johnson’s new book Money Made Simple examines many ...



Matthew Lennon

Math 588

Book Review

Stacy Johnson’s new book Money Made Simple examines many of the most common financial difficulties the average American family faces on a yearly basis. This book is full of several short chapters discussing everything from saving for retirement to world-altering corporate scandals. Money Made Simple is especially useful for the college graduate who forgot most of his introduction to economics classes. Overall, Stacy Johnson does a good job explaining basic financial concepts and helping the reader organize personal finances in a short amount of time.

Money Made Simple discusses a wide variety of topics that face many middle-aged people in America. Johnson talks about investing, saving for retirement, saving for college, insurance policies and many others. However, the most interesting topics in the book discuss how to “diversify your portfolio” and how to save money on insurance.

When Johnson talks diversifying he is interested in investing in the stock and bond markets. For those unfamiliar with how either of these respective beasts function, an introduction is provided with several useful explanations. However, one of the interesting investment tips he gives is not to try to buy individual stocks. Johnson shows that it’s too time consuming and based upon a false sense of reality. Everyone has seen high school competitions where several groups of kids have invested fake money and tripled their investments within a year’s time. Although this happens occasionally it is the exception and not the rule (and by the way it’s play money). As an alternative, Johnson suggests the reader invest in certain mutual funds and municipal bonds.

Another question Johnson asks is “how much?” Even though someone understands the basics of investing, the amount of assets to allocate into respective areas is another matter. Johnson includes several multiple choice question sets to understand the reader’s capacity for risk. Several charts and percentages are given for the respective amount of risk a person is able to saddle themselves with. Johnson always suggests a large investment base to avoid complete disaster in case of another recession. Johnson also completely advises his audience to avoid dabbling in completely risky investments such as futures and options leaving those to the Peter March’s of the world.

One of the big problems many people will have with this book is how Johnson will have his readers go about saving money, which is, cutting insurance policies. This seems to be one of the most controversial areas of the book. Many people will not like the fact that Johnson recommends not insuring children or having comprehensive or collision coverage on their cars. Although he discusses many of his “tricks” in very great detail many people will not be ready to risk the potential disasters they create by cutting insurance policies.

In conclusion, Money Made Simple is an entertaining, creative introduction to the world of organizing personal finances. Johnson takes the time to include several humorous quotes and hilarious examples in order to keep the reading bearable. As a guide to finances, the book does a good job helping the reader get organized. Many of the numerical examples are over simplified and designed to create understanding but nevertheless, informative. Also, the chapter on corporate scandals, although interesting, does not offer a great deal of practical knowledge. Finally, some of the ways Johnson suggests saving money are questionable to many people but should not take away from the remaining content of the book. Stacy Johnson’s Money Made Simple is great reading material for anyone who needs to get control of their finances but doesn’t have a lot of time.

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