Cash, Cars & College: A Young Person’s Guide to Money
When it comes to book reviews, I am usually contacted by the publishers, press agents, or public relations teams. When an author takes the time to email me directly, I pay more attention. I was contacted a few weeks ago by Janine Bolon, the author of Money…It’s Not Just for Rich People!, to review her latest book, Cash, Cars and College.
The book is more like an oversized pamphlet, at 91 pages (including appendices) with large print. The intended audience consists of students between the ages of 12 and 19, but I think the book is most effective for the young end of that range. There are only a few major concepts in the book, and they are explained well for the reader, even taking into account a wide variety of experiences and parental lessons a young teen may have.
Bolon explains that money doesn’t move in a straight line (in, then out), but rather in a cycle of living, saving, and giving. With this idea, money is more likely to come into your life when you give it away. To take full advantage of this cycle, Bolon instructs through some age-appropriate activities to split any income you receive (except for money from your mom for buying clothes, for example) into five buckets based on her 40/60 Principle.
* 40% goes to living. This, the “40%” in the 40/60 Principle, is the money you spend on yourself.
* 20% goes to short-term savings. The description in the book matches what I’ve written about in the form of an emergency fund: savings for unexpected expenses.
* 20% goes to long-term savings. While it’s not completely explained in these terms, this is your retirement fund. If I had known to save money for retirement when I was 12, I’d be much further along than I am now, having started when I was 26 or so.
* 10% goes to a philanthropy of your choice. From the book: “This cash demonstrates your willingness to share the good things that the Universe has given you — thereby showing that you can be trusted to continue receiving (and sharing) the good thingsof the world.”
* 10% goes to a spiritual institution of your choice. While again not explained in the terms we’re familiar with as adults, this is the typical tithing that is taught in the Bible. More importantly, this money is used for giving back to the community of which you’re a part. Bolon does suggest for those who have no religious affiliation to use this 10% for additional philanthropic donations to keep the cycle flowing.
The above points form the basis of the book. They are in fact “points,” as Bolon has created a five-pointed star to illustrate each destination for income. Around these five points, Bolon fills the book with good advice, perfect for a young teenager. For example, Bolon imparts the lesson: “Do what you like, the money will come.” This certainly encourages kids to improve their skills for whatever type of activity they are most interested in.
Bolon also explains the virtues of frugality, and for some kids, this will be the first they’ve heard of the concept. She also tackles credit card debt and compound interest in such a way that young adults will understand but not find boring. These concepts, as well as others, are reinforced with exercises at the end of each chapter, similar to — but yet much different than — exercises at the end of the school text books with which readers of this age will be quite familiar.
The goal of this book is to set these young adults on the path to financial maturity, and here’s her list for getting started on that path:
* Break the (piggy) bank. This refers to the money destinations listed above, based on the 40/60 Principle.
* Plow the ground. Open up two accounts at the bank with your money for short-term and long-term savings, and let compound interest go to work.
* Catch a porpoise. Bolon wants everyone to determine their passion in life — “porpoise” being a pun on the word “purpose” — which will guide them through their choices.
* Drive on. Continue learning about money by reading more books that will lead towards financial independence.
* Branch out. I addition to books, find other resources, such as magazines and, dare I say, websites.
* Stay engaged. Learn all kids of new things continuously, and never stop exercising your brain.
* Relax! Let the world do what it is supposed to do while you take care of your responsibilities, but it will take a long time. Be patient.
Janine Bolon’s Cash, Cars & College is a good introduction for kids getting an allowance or babysitting, with a small income coming in. Now that they have money to call their own, they can benefit from the author’s suggestions for spending, saving, and giving. Bolon handles the section on giving without preaching and without overly emphasizing religion, which I appreciate. All in all, Cash, Cars & College will set young adults on the right path towards financial maturity, if they follow the exercises and make her suggestions part of their permanent philosophy.
Why did I give only 6 stars out of 10? I think teenagers in the work force for the first time, say as a waitress or a fast food worker, might have some questions not covered by the book. For example, how do taxes fit into the 40/60 Principle? Are taxes paid from the 40% “living” category or does the entire pool of cash consider only after-tax income? A 12 year old may not be concerned with this question, but a 19 year old might be. Also, I don’t remember much discussion of cars and college in the book, though they are included in the title. Nevertheless, this short book is full of quality suggestions and exercises that can provide good talking points for parents with their children.
As always, I give away the books I receive for review. Look for a contest of some sort in the next few days. If you’re the parent of a teenager, pay close attention.
Updated January 16, 2010 and originally published June 18, 2007.