Money Management Skills

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Completely Irresponsible Advice

Would you try another book from The Great Courses and/or Professor Michael Finke?

Definitely not from Professor Finke. This is my first Great Courses book, but seeing as they produced this terrible book it really makes me think twice.

Has Money Management Skills turned you off from other books in this genre?

No, I’ve read many investing and money management books.

Which scene was your favorite?

none, this is terrible advice for anyone. You SHOULD NOT borrow any more than you have to when you’re young, and only for things like an education.

What character would you cut from Money Management Skills?

Professor Michael Finke

Any additional comments?

The advice from this book is absolutely horrible. Please DO NOT follow his lifecycle theory. It will get you into a lot of trouble down the line. He advocates that you figure out how long you’re going to live, figure out your total earnings over your lifetime, and then divide it by how long you are going to live. Then, you should live your life by spending that average amount of money you will make in your lifetime, every year. Thus, you should borrow when you’re younger to get yourself to that average so you can “maximize your happiness,” and only start to save once you are over your average. This is absolute garbage! How do you know how long you’re going to live? How do you know how much you are going to earn? Yet he is asking the listener to somehow decide this and then take on debt early on when that later wealth may never materialize. And if it doesn’t then you’re saddled with debt for the rest of your life. Also, you might live longer than you planned, what then? You’ll only know that at the end, and by then it’s way too late. What happens when your plan inevitably goes off course? How will you predict for that? Will you have budgeted for that?

The author runs into traps that many economists are susceptible to. They oversimplify the problem, and make broad assumptions in their model to prove some wonderful theory. (Economist can prove anything so long as they are able to control for whatever variables they want.) And his model doesn’t take into consideration that your costs when you’re 25 may not be the same as when you’re 55 with kids and a mortgage. But if you follow this model, then when you’re 55 you have to live on the same amount of money as when you were 25. Brilliant!

And then he advocates for younger people to spend more and get into debt so they can “maximize their happiness?” It’s like he’s advocating taking on debt and spending just for the sake of spending. Do not take on debt just because you’re afraid you’re not having as much fun as you could be. Not to mention that he equates happiness with spending money. Money does not buy happiness, and borrowing money just to “buy” more happiness is just ridiculous.

Basically he is advocating that you live beyond your means and trap yourself in debt early on so that you can maximize your happiness and then spend the rest of your life paying for it.

His life cycle theory is not the only thing I had a problem with. I only got part way through Chapter 5 before I had to stop. I thought I still might learn something but the more I heard, the more frustrated I got with his instruction. For anyone that doesn’t know any better, they would get themselves into a lot of trouble down the line. My concern was especially pronounced since I see so many positive reviews of this course on Audible praising his advice. In addition any of his subsequent advice is tainted since he uses his lifecycle model as an overarching framework for everything else. Much of his advice is over-simplistic or incorrect, or only applies in specific situations but he never elaborates or mentions what those specific situations might be. For example he advocates cancelling your credit cards if you just can’t seem to control yourself and your spending. What he doesn’t mention is that by cancelling your cards you are going to lower your credit limit, thus lowering your debt to credit ratio, and your credit score will drop. What would be better advice is to just keep the account and just physically cut up your cards. Unless you have such self-control problems that even that might not stop you.

I am very disappointed that anyone, especially anyone that purports to be a collection of “Great Courses” would ever publish anything so irresponsible.

Source

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