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Review: The 10 Commandments of Money by Liz Weston

The 10 Commandments of Money by Liz Weston [3] is a personal finance book that looks at ten money principles and how they’ve changed in our post-bubble economy. At the start of each chapter, Weston shares the “old-school” mantra, follow by the “bubble economy” mantra, and shares with us the new rules. The chapter then launches into a personal finance principle, she calls them commandments, that I consider essential in a good personal finance system. The key insight is that for each commandment, the new rules represent a more efficient and effective way to implement the old rules. I think this will be clearer when we look at an example later on.

Quick disclaimer: I’m friends with Liz Weston so please keep that in mind when you read my review. Heck, if you look on page 13, she mentions Bargaineering as one of her favorite sites… so just know I’m biased because she’s awesome. 🙂

When I started the book, I thought it was a look at how money rules may have changed in the post-economic crisis new economy. It’s actually much broader than that. It’s really a book about sound personal finance techniques with consideration for how things have changed in the last five to ten years. The reality is that while money is still money, you didn’t have to be quite as persistent and diligent when the economy was going strong. You could overpay and overspend because the economic tide was always rising. Buy too much house and you’ll grow into it, with the value of the house growing along with it.

It’s different now and this book seeks to guide you through how your thinking must evolve in the “new economy” to take advantage of new tools you didn’t have ten or fifteen years ago. I think the best example of this is in Chapter 2: Create a Survival Plan with Cash and Credit.

As you can see, there’s a little bit of simplification whenever you boil down such a large into into a one liner but the new rule is simply the next financial evolution of the old school rules. Saving for a rainy day is advice that can’t go wrong – you can never over-stress the importance of an emergency fund. If you save too much and have too large of a cushion, it can be financially inefficient but you’re never tempting disaster. If you want to get a little more efficient, then learn to leverage credit and access to credit, whether it’s a HELOC, a bank, social lending sites, selling possessions, or even family and friends. The key is identifying those sources before you are hit with an emergency (planning is best done when you aren’t freaking out!).

As you can see, it’s not your average personal finance book telling you that you need an emergency fund, how to get it started and all that. It provides all that and adds another layer of sophistication that is specifically designed for our post-credit crisis world.