Money 101

If your young female clients are in need of an edu

Since many planners generally prefer that their clients don't mess with buying and selling stocks on their own, my first recommendation may surprise you. However, You Have More Than You Think: The Foolish Guide to Personal Finance, by David and Tom Gardner of The Motley Fool fame (Fireside Books, 2001), is an excellent place to start for those who are ignorant of, or intimidated by, their financial situation.

While the Fool's well-known "do-it-yourself" mantra has grated on the nerves of many financial professionals, much of the information herein is sound. The Gardners take complex financial concepts, break them into bite-sized pieces, and then feed the reader with those pieces in a non-threatening and highly amusing fashion. And since you, the planner, will be recommending the book to your client, you can have a few words to say about the section on how to do it all yourself.

The idea here is to help a client understand the process and learn to feel comfortable with the concepts of stocks, mutual funds, and the need to balance a checkbook. This book can accomplish all of these goals without boring your client to the point of abandoning the process

The book has a great deal to say about basic money wisdom, such as being wary of carrying balances on high-interest-rate credit cards, spending too much on unnecessary junk (or even on necessary items), and understanding the importance of investing versus saving. For someone who has put off understanding her money because she finds it threatening, boring, or incomprehensible, this is a painless and informative introduction to the basics.

Another excellent book that will help young women who "don't know where the money goes" is financial writer Deborah Knuckey's Ms.Spent Money Guide: Get More of What You Want With What You Earn (John Wiley & Sons, 2001). Knuckey deals forthrightly with the problem of what she calls "unconscious spending"--a common symptom of far too many people today, not just young women flashing credit cards.

With advice on how to recognize whether a purchase is a necessity or just an impulse buy, and how to determine if a prospective investment is wise or just a waste of money, Knuckey addresses the lures of marketing that encourage young people to buy the newest, fanciest, or fastest of whatever is being advertised. She also points out the need to save for the future and to put aside money to fund one's dreams.

Knuckey uses a pyramid approach not unlike the food pyramid, dividing her "Conscious Spending Model" into seven categories: Security (the foundation of the pyramid), Shelter, Sustenance, Self and Family, Social, Society, and Soul. The reader is asked to consider all her expenses and categorize them according to the divisions of the pyramid, considering as she does so whether she is getting enough satisfaction out of them to justify the money she's putting into them. If not, Knuckey suggests a number of strategies for shifting, eliminating, or even increasing expenses in order to balance the categories and make the money spent cost-effective. In the course of this self-discovery exercise, she says, people will often be surprised to find that money disappears in directions they had never expected--hence "unconscious" spending. It's much easier to plug financial leaks once they've been identified, and Knuckey points out a number of ways in which to do just that without feeling deprived.

Knuckey writes in a breezy, engaging, approachable fashion, and explains things in English rather than in financialspeak; even the most reluctant student should find valuable lessons here.

How-To's

For clients who want to learn the ins and outs of their investments, there's How to Read a Mutual Fund Prospectus, by Thomas P. Lemke and Gerald T. Lins (Mercer Point Press, 1999). This excellent book will guide novice investors, or anyone who wants to understand more about mutual funds, through the ins and outs of prospectus language, format, and meaning. Highlighted with plenty of examples, the book provides explanations of what each piece of information in a prospectus is, what it means, and where it can be found in the prospectus--as well as how necessary that particular piece of information is to understanding the whole picture presented by the fund.

Written in plain English, and equipped with a "fast finder," an index, and appendices laden with information that include a glossary, a discussion of types of funds (both bond and stock), contact information for some fund groups, and a reference list of other books on mutual funds, this book should be mandatory reading for anyone new to the world of mutual fund investing.

For an excellent overall crash course in money, steer those clients toward Making the Most of Your Money, by Jane Bryant Quinn (Simon & Schuster, 1997). This will educate clients on everything from paying for college to living on retirement income, including such in-between steps as finding a good bank, learning how to keep good financial records, understanding mortgages, and figuring out how much of what kind of insurance to buy.

Weighing in at a hefty 1,066 pages, Making the Most of Your Money may look intimidating to someone who's been avoiding money all her life. (Personally, I favor massive books with good information.) On the other hand, it is clearly written, broken into individual sections, and can be read in stages or as needed rather than all at once. Any reader who manages to get through the whole book will be much better off for the experience.

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