Personal Finance Book Review: The Cure for Money Madness

“But we’re so tempted by the fantasy of instant wealth — of changing our lives overnight — that we’ll dip into our savings to try for it.” (Spencer Sherman in The Cure for Money Madness)

One of the more interesting books I’ve ready in the last few weeks is The Cure for Money Madness by Spencer Sherman. He tackles the ideas that have grown up in our consumer culture about money and wealth, and offers insight into how we can get over the “money madness” that makes normally rational people behave irrationally when money is involved. The book is easy to read, and contains actionable (and common sense) ideas for better wealth management:

• Don’t hide your spending from your spouse.
• Spend your money in a mindful manner.
• Employ diversity in your investing.
• Buy low and sell high – don’t give in to the culture of panic.
• Save money regularly.
• Spend less than you earn.

The Cure for Money Madness also challenges long-held assumptions about money. Sherman delves into such treasured concepts as leaving money to your kids (something I don’t really care to do), buying a home v. paying rent and the concept of true wealth. Sherman also spends time on cash flow and true net worth, and the importance of understanding how you use your money, rather than just figuring out how much you have and where it is going.

The Cure for Money Madness includes helpful worksheets to help you evaluate where you are at, and to make a plan for the future. Sherman also includes a chapter (“The Rainbow Portfolio: Madness-Free Investing — The Boring Way to Make More Money) on investing and asset allocation. The key is to plan to make money over the long term, rather than try to get rich quick. This means that now is a good time to buy, since investments are so inexpensive.

One of my favorite points of this book, though, comes in Chapter 10. It tackles the way we entwine money and status. Chapter 10 is all about looking at what you have and deciding how much it is worth to you, rather than always comparing yourself to others and deriving feelings of self-worth from your net worth. He also includes some feel-good stuff about how — with your talents, abilities, health and intelligence — you are worth more than your net worth, because of your future ability to make more down the road. But there is merit to “calculating…the market value of the resources you possess that are enabling you to gain those earnings.”

In the end, I found this a supremely useful book, and would recommend it to anyone. You can find out more on The Cure for Money Madness at the Web site Sherman set up to complement the book (take the test!).

Have you read The Cure for Money Madness? What did you think?