Book Review: Your Money Ratios

I was recently approached to write a review on Your Money Ratios: 8 Simple Tools for Financial Security, by Charles Farrell. I’ve so far seen a couple of reviews crop up already, and I must say – I’m impressed with your work! I’ve picked up and put down this book a solid half dozen times trying to read it. I wanted to be able to provide a comprehensive, thoughtful review.

Unfortunately, I am only able to share with you some basic highlights.

I found this book very hard to get into. Not that the language was difficult – it was actually very basic language – and so on the surface easy to understand, however; it was also very repetitive which made it frustrating to try to read. At times I felt like the author was speaking to someone very young, so you could say aspects of the book also felt somewhat condescending; however, that may have been just due to the repetition.

The book set out to answer five questions:

1. How much should I be saving each year? 
2. How much should I have saved at my age? 
3. How much debt can I carry? 
4. How should I invest my savings? 
5. What type of insurance do I need? 

These questions, were meant to be answered through a variety of ratios. Basically, by age X you should have saved $X/$current salary = ratio of savings to salary. I won’t detail the progression, but I will say that the books’ message was by the time you reach retirement age you should have saved 12x your salary. The ratios themselves seem pretty easy to follow along – but I didn’t necessarily agree with the information provided – there wasn’t a solid reason behind the math, why 12X?

I’ll be the first one to say, that by the time the book got to the math, I may already have had a mental block that it wasn’t going to work. It’s hard to say at this point.

I am sad to say, that I stopped reading after the introduction to Chapter 3: Social Security. Up until that point, there was no specific mention (that I caught at least) that the book was directed to folks from the U.S. of A. I am Canadian. I said to myself, and to Jordan, maybe the concepts will still apply. Again, I tried to get through them but unfortunately the American language was so lost on me, that I gave up.

I so appreciate that this book try’s to provide guidance on answering some age old questions relating to how much and for how long someone should save – but I truly believe that every case is different and it so depends on your personal circumstances.