Confused about where to start, he approaches his father.  His dad sends him to a surprising mentor - their barber, Roy.  The father explains that Roy taught him everything he knows about money, and offers to call Roy and let him know that Dave is coming in for a lesson.

Dave, joined by his sister Cathy and best friend Tom, go to the barber for a financial lesson.  Roy is a small town barber who has amassed a small fortune on a small salary.  He explains that he did this by following a few simple rules, and offers to teach them to the trio on a monthly basis.

The lessons include:

1. Take 10% of your salary, and save it by paying yourself first.  This is not a retirement or emergency fund – it’s a get rich fund.  Every time you get paid, take 10% of your paycheck and invest it.  The author suggests mutual funds, but I’d be willing to bet that if I had a newer copy, he might suggest index funds too.  I’d add the caveat that you should invest 10% or your pre-tax salary if you really want to get ahead.
2. Make sure you have a will and life insurance.  You need to think of your dependents, even if you’re not around.  No dependents?  Don’t worry about life insurance
3. Save for retirement, and don’t rely on social security.  No advice on how much to save, but he explains the different types of retirement plans available, including 401K, 403B, IRA, pensions, SEP (Simplified Employee Pensions), and Keoghs (for the self-employed).
4. When deciding whether to rent or buy, do a comparison and make sure you think of the consequences.  Roy leans heavily towards buying a house due to tax advantages, increasing value, and leveragibility, but he also points out that depending on your situation, renting might be a better value.
5. Be thrifty and frugal in your day to day finances.  The barber suggests having a budget, but also says if you’re saving and planning for retirement, you can afford to be a little wasteful. 
6. Make smart investments (even if the investment is paying down debt), and learn how to minimize your taxes
7. How to handle emergency funds – only have a small one.  This one of the few areas I disagree with.  The author says that you don’t need to worry about having a significant emergency fund, as you can always use credit cards or loans in a crunch.
8. How to save for your childrens’ education
9. The importance of disability insurance.  I agree completely.  All it takes is one accident to change your way of life and ability to earn an income.  You need to protect against this if you want to protect your lifestyle.
10. The importance of staying informed of financial news.  You don’t need to check your investments continuously, but you should at least be aware of what’s going on in the economy.  An informed investor is a smart investor.

Unlike many books that make finance seem too complicated, the Wealthy Barber emphasizes that anyone can get rich.

The fictional story line makes for an entertaining read, even if the jokes are corny.  The three protagonists provide a good sample of the potential audience: a married man with a family, a single business owner, and a single worker.  The diversity shows that the lessons apply to you, regardless of your situation.

This is a great read for everyone.  It covers the basics of finance well, and also makes the principles of building wealth available to everyone, regardless of income.  It’s an enabling and encouraging point of view.

Executive Summary:

Title:  The Wealthy Barber

Book Jacket Summary:

Regardless of your income, you are probably making a salary that would have looked like a small fortune just a few years ago.  And yet, if you’re like most people, you are not on your way to financial independence.

The amazing thing is that even if your income were twice what it is today, or more, you would not necessarily be any wealthier.  Most people simply become broke at a higher level – the more they earn, the more they spend.  And if you’ve tried budgeting, you’re realized that it is as ineffective as dieting – it only makes you feel deprived.

Thankfully, with this special book, there’s a way for you to become wealthy gradually, starting today.  The Wealthy Barber has already shown hundreds of thousands of people how to improve their fortunes by taking a few simple and painless steps.  And by successfully helping so many get ona  sound financial track, it has proven that a small salary is no barrier to financial well being - as long as you follow its simple, easy, and enjoyable plan.

Author:  David Chilton

Target Audience:  Everyone

Pages:  200

Topics / Chapters:

1. The Financial Illiterate

2. A Surprising Referral

3. The Wealthy Barber

4. The Ten Percent Solution (saving and investing money to get rich)

5. Wills, Life Insurance, and Responsibility

6. Planning for Retirement

7. Home, Sweet Home

8. Saving Savvy

9. Insights into Investment and Income Tax

10. Graduation

Should I Read It?  Read it twice

I’ve never taken the time to figure out exactly how much money I need for retirement.  And more importantly, I’ve never stopped to think about what I want to do when I get there.

Lee Eisenberg tackles both of these topics in “The Number – A Completely Different Way to Think About the Rest of Your Life.”  For me, the book was an eye-opener.

The Number is that magical net worth you need to stop thinking about a career and start thinking about fulfillment.  It’s best summarized by a Wall Street broker in the book: “it’s f*ck you money”.  After your net worth reaches this number, you have freedom.  Freedom to walk away from your job and travel the world.  Or start your own business.  Or dedicate yourself to a higher cause.  All this assumes that you’ve planned accordingly, and have reached your goal.

Eisenberg doesn’t tell you exactly how to calculate your Number.  Instead, he suggests some resources and gives you some things to think about.  First, you have to know what you want out of retirement.  Where you want to live (and how many houses you’d like).  What kind of lifestyle you want.  How much money you’d like to give to charity, or to your family.  How often you’d like to travel.

Most importantly, he gives advice on the hardest part of retirement: figuring out what to do with your time.  Even if you have all the money in the world, it won’t bring you happiness unless you use it to do something that brings you a sense of fulfillment.  This is what sets “The Number” apart from other books.  It doesn’t tell you what to do.  It forces you to think about what drives you.

Its secondary goal is to help you prepare for retirement.  To do this, you have to consider the difficulties and uncertainties you’ll face along the way.  Among them are an uncertain economy, social pressures to spend, and the potential of being drowned in a sea of complicated and ever-changing financial choices.

This book is definitely aimed at an older crowd – baby boomers on the verge of retirement – but I don’t understand why it is not marketed at a younger crowd.  The principles apply to all ages, but you’re in a better place to adjust your plans at a younger age.  After all, time is our best friend in the financial world.

Title:  The Number: A Completely Different Way to Think About the Rest of Your Life

Book Jacket Summary:

It’s the burning question for 76 million baby boomers.  It is a question that ought to burn for everyone over thirty.  It is a life-defining issue.  most of us don’t want to face it, but we have to.  It’s The Number: How much money do you need to secure the rest of your life?  Do you know what your Number is?  Do you know how to think about it?  Do you know what you want to do with it?

In this new and fascinating book, Lee Eisenberg looks at The Number as no one has before.  The Number allows all of us to face our inner demons, and our dreams.  The concept, and the book, are impossible to forget.

Lee Eisenberg left a successful career in journalism in search of his Number.  Along the way he realized that he was but one of millions setting off for the rest of their lives without a good map.  He took an intriguing and entertaining tour – speaking to wealth gurus, life coaches, financial advisers, everyday investors, and many others, to explore the secrets of The Number.  The result is a provocative field guide to our psyches and finances, and an urgently useful book for every man and woman over thirty.

The Number will help you have the money conversations you have been avoiding.  It will help you think about the kind of life you wan, and the kind of help you need to achieve it.  It will make you laugh, ruefully and otherwise, and it will scare the living daylights out of you.  It will help you discover:

- whether you are a Number procrastinator, plucker, plotter, or prober

- why you wander through your financial “lost years” until it is almost too late

- why young people always under call their Number

- why downshifting into retirement is so challenging

- how the second half of life is being reinvented as we live on for decades, forging new patterns of work and recreation.

The Number will help you answer the biggest questions of all: What should you do with the rest of your life, and at what cost?  It is the one book to read before you talk to an investment adviser, before you flip open a retirement guide – and above all, before the rest of your life slips by, unexamined.

Author:  Lee Eisenberg

Target Audience:  People over thirty, but I think any age can benefit

Pages:  248

Topics / Chapters:

1. Welcome to Numberland

2. A Field Guide

3. The Eisenberg Uncertainty Principles

4. Debt Warp

5. The Lost Years

6. Alone at Sea

7. The Forest for the Trees

8. Crash Dummies

9. The Health and Welfare Crash

10. Covering your Assets

11. Advice Squad Confidential

12. Night Sweats

13. Downshifting with Jung

14. Sun Spots

15. A Needleman in the Haystack

16. Deep Breathing

17. Bottom Lines

Should I Read It?  Yes.  It’s aimed at an older crowd, but everyone should think about this topic, even at a young age.

The services are all free, and consolidate information from a variety of sources to give users a complete picture of their financial health.  It’s a great way to figure out how you’re spending money, and identify ways to save.

Quicken Online – http://quicken.intuit.com/online-banking-finances.jhtml

Summary: Quicken Online is the newest site for financial management, but one of the oldest when it comes to desktop software.  Intuit, the company behind their desktop software, released Quicken Online earlier this year to grab some of the market share in the online arena.  Quicken Online is now free.  It used to cost $3 per month, but they changed it to compete with the other financial management sites.

• Pros:
  • Intuit has been a market leader for years in financial software, so they know the market very well. 
  • If you are already a user of Quicken, then this is an easy transition.
• Cons:
  • Can’t sync the online version of Quicken with the desktop version

Geezeo – www.geezeo.com

Summary: Geezeo is a free, web-based application offering a variety of tools and services to help reach your financial goals.  You can organize your finances, create a budget, set savings goals, plan for retirement, and learn how to buy a house.  Along with the online software, Geezeo includes a community feature that lets users help and learn from each other.  The back end of Geezeo uses CashEdge, an online account aggregation and interaction service used by numerous financial institutions.

• Pros:
  • Simple, clean design
  • Email-based; lets you manage your finances via your inbox
• Cons:
  • Set-up is more painful than others we reviewed
  • Plain and doesn’t offer rich graphics like Mint.com
  • I could not find the ability to add student loans, but it is my understanding that this will be added later.

Buxfer – www.buxfer.com

Summary: Buxfer is simple and easy to use.  Most of the core features are similar to its competitors, including things like budgeting, summary reports, transactions, etc…. 

Like Wesabe, Buxfer is trying to position themselves in the social networking arena, but they take a different approach.  Whereas Wesabe encourages users to join group discussions, Buxfer creates a more one-on-one feel by adding a contacts list to your main screen.  The contacts list lets you track how much money people owe you (or how much you owe them), and also lets you send and receive payments for those loans via Amazon Payments. 

As for their security, they boast successful audits by Verisign and McAfee, but I’m troubled by number of data entry and exit points that they offer.   Most of the other sites we reviewed have one method of entry: a web portal log in. 

Buxfer has numerous entry points because they offer Firefox add-ons, Google add-ons, iPhone applications, Facebook applications, and other mobile device tools.  If you are worried about this, they offer a manual upload of your financial data so you do not have to provide them with user names and passwords.  This increases security, but also makes it much harder to use.

• Pros:
  • Clever social networking features
  • Personal loan tracking and payments
  • Clean and simple interface
  • Financial reports offered via email or text message
• Cons:
  • Numerous data entry and exit points that can could cause security issues
  • Not as much reporting functionality

Conclusion:

• Out of these 3 products, Quicken Online is my personal favorite.  The others have great potential, but lack deep functionality and a rich interface.

To see our reviews of Mint.com, Yodlee, and Wesabe, check out part one of our online tool reviews: Market Share Battles: Review of Free Online Money Management Tools.

In this week’s Market Share Battle, we review free web-based money management tools including Mint, Wesabe, and Yodlee.  These products summarize financial data from multiple accounts, and offer helpful features designed to save you time and money.  The services are free, and serve as a one stop answer shop for gathering all your financial info in one place.

Mint – www.mint.com

Summary: Mint’s software is a powerful web based money management tool.  Features include real-time investment tracking (including 401K), budgeting, and net worth.  Once your accounts are set up, the software analyzes your money habits and suggests products to help you save money.

• Pros:
  • Customized text message and email alerts (this is a cheap alternative to active identity theft protection)
  • Automatic and custom rules for categorizing your transactions
  • Very user friendly, and great graphics
  • Investment tracking
• Cons:
  • Cannot enter cash purchases, but you can split up cash withdraws into multiple transactions.
  • Cannot turn off money saving suggestions.   This is not a big issue, as this is how Mint makes their money and allows the service to stay free.

Wesabe – www.wesabe.com

Summary: Wesabe is a combination of a social networking site and basic personal finance software.  Like the rest of the online money management tools, it includes budgeting and account linking.  What sets Wesabe apart is the social networking.  Its features include the ability to join groups and discuss topics that you are interested in.  Another feature worth mentioning is that they can give you tips for saving money based on spending trends.

• Pros:
  • Participate in group discussions on a variety of financial topics.
  • Offers suggestions for saving money based on your spending habits and credit score.
  • Customized text message and email alerts
• Cons:
  • Suggestions are not completely customized. This feature could use some work, but has a lot of potential.
  • It is difficult to track non-traditional accounts, like a 401k

Yodlee – www.yodlee.com

Summary: Yodlee has the most features of the products reviewed in this post.  It is so feature-rich that Mint actually uses Yodlee for the back end of their website.  If you want an in-depth view of your finances and don’t care about a fancy interface, then Yodlee is the tool for you.  The presentation is an accounting style view of your finances.  It includes features like online bill payment, bill pay calendar & alerts, budgeting, rewards points tracker, net worth, and many more.

• Pros:
  • Very rich in features, and offers numerous options that the other tools don’t.
  • Customized text message and email alerts
• Cons:
  • The front end is dry and boring. The graphs are dull, and could use a little work.
  • Does not offer suggestions on how to save money.

Conclusion:

• If you want an all-in-one, no frills view of your finances,  then you should turn to Yodlee.
• If you like group discussions and want to get tips and tricks from other users, Wesabe is the choice for you.  It’s more of a social networking site than the other two.
• If you are looking for an upcoming star that is adding features, but still has an amazing presentation,  then you give Mint a shot.

Make sure to stay tuned until next week, when we’ll review three more money management sites.

*Update: Here is the link to Market Share Battles: Review of Free Online Money Management Tools Part 2