If you're new here, this blog will give you the tools to become financially independent in 5 years on a median salary. The wiki page gives a good summary of the principles of the strategy. The key to success is to run your personal finances much like a business, thinking about assets and inventory and focusing on efficiency and value for money. Not just any business but a business that's flexible, agile, and adaptable. Conversely most consumers run their personal finances like an inflexible money-losing anti-business always in danger of losing their jobs.
Here's almost a thousand online journals from people, who are following the ERE strategy tailored to their particular situation (age, children, location, education, goals, ...). Increasing their savings from the usual 5-15% of their income to tens of thousands of dollars each year or typically 40-80% of their income, many accumulate six-figure net-worths within a few years.
Since everybody's situation is different (age, education, location, children, goals, ...) I suggest only spending a brief moment on this blog, which can be thought of as my personal journal, before looking for the crowd's wisdom for your particular situation in the forum journals.
Writing a book so that it reads smoothly for everybody is much like picking a specific weight for a dumbbell so that everybody may use it. When I wrote the ERE book the intended target were my long time readers so I wrote it in the same tone and level as the blog. As the word has spread, others have started picking it up and the audience has broadened. This increases the likelihood of people coming away unsatisfied because the book was either too hard or too easy to read.
The ERE book was intended to read as a textbook and not as an easy fun story. As a result, it makes demands on the readers. Frankly, I can’t really tell what level of demands it makes. Hence this survey. Having gone through school, what level would you expect students to be able to follow the concepts at. In other words, if you were a teacher, at which level would you use the ERE book (as compared to another book, like, say, Your Money Or Your Life) as a text book if there was a class in ERE. Keep in mind that the aim is not to find out ‘how smart you think people should be’ but ‘how smart you think people actually are’.
Sorry to say, I haven’t read the book, but the rule of thumb is, for a general reading audience, aim for a 6th-grade level…kind of depressing. There are all sorts of calculators out there the will tell you based on # words/ syllables what grade level a piece of writing is.
Jacob said,
@Holly – Yeah, I knew about aiming for 6th grade. I think tabloids even aim for 3rd grade. I just ran some random paragraphs through an online test based on Flesch-Kincaid, and it puts the book at grade 15 or 16.
dragoncar said,
No public results?
I said College Freshman because that’s where I would have had the general educational background to already be familiar with most concepts presented (basic economic theory, allegory of the cave, etc.) It’s also the time most (but not all) options are still open.
The earliest I would introduce the book would be 9th grade, probably… but in that case it would be a vehicle to expand on concepts that would be completely new to the reader. In high school, the reader could benefit from making major deviations from the status quo — opting for a trade, for instance, instead of a 4-year degree. Maturity could be an issue at this time, though.
For college seniors, I think you end up covering some well-trodden ground. That is not necessarily bad — it lets the reader focus attention on your main points. But at this point, many big decisions have already been made.
I’d say college grad level. And even then, some of it was over my head.
smileyriles said,
There’s no way anyone I knew would have been able to read the ERE book back in highschool. Definitely college level.
bgeek said,
I chose college sophomore. I think a clever high school kid could get the general ideas down, but the brunt of the presented concepts won’t be internalized until one lives away from Mom and Dad. Formal education has little to do with it.
hickchick said,
I went with grad school. I would have gone with some other college level, but then I remembered that most people study business and education – not math and chemistry.
Jacob said,
@hickchick – Oh snap!
rePete said,
I voted for college freshman, but that loses some of the information to my conclusion.
Most of that vote is based on maturity and experience.
To get the concepts, I think Pre-Calc is helpful. However, to repeat your work I think you need to know series approximations that I learned in Calc 2, from what I remember of your derivations.
Adam Jaskiewicz said,
I chose college sophomore. I graduated in 2008, so it’s not long ago for me, and the book read like many textbooks I had. Not so much due to language, but due to the terms and concepts you assume familiarity with.
I don’t consider that a bad thing. There are plenty of personal finance books written at a “general public” level. If anything, I prefer this style, as it means I can quickly digest YOUR thoughts, rather than yet another regurgitated explanation of Econ 101 terms. If there’s a term I don’t understand, I can always look it up.
I think the practice of ERE should be taught from early childhood (the way our great-grandparents did it without the use of pre-calc or trig or anything past a 4th grade education) because the concepts are inherently simple. But since we live in different times and tend to grow up with a consumerist mindset, giving us different ideas about how life should be lived can cause anger and backlash. I think you can’t introduce a dissenting opinion until a person/kid is old enough and mature enough to actually listen and appreciate a divergent view. Some may make a convincing argument that a 16 year old is the *last* person you should try and preach to, but I think it could work. There are plenty of adults who balk at the thought of living beneath their means (or is it not beneath their means but beneath their neighbor’s or peer groups means?).
The formulas in the book, I have no clue when they become useful. To me they seem to be supplemental and act as proof of concept. The concept is 4th grade. But no kid from the burbs wants to hear it or is ready to hear it. They want video games and transformers. I think once they get to the age where they are trying to ape adult behavior they may be open to a new view of how life can work since their value system is still forming.
As an aside, writing for the 6th grade level is admirable. Don’t equate it with dumbing things down. Hemingway, Ambrose Bierce, John Cheever, and plenty of other great writers aim for the 6th grade level. Despite being written at a 6th grade level no 6th grader will EVER get the subtle undertones of Hemingway’s “Hills Like White Elephants” (I’ll marry you if you get the abortion). That’s complex stuff and the conversation is tense and filled with implied thoughts and Phd students are still ripping it apart for meaning. So while a 6th grader can read it they won’t “get it”.
I feel your book is the opposite, the concept is simple but muddied by academic writing. If you’re writing at a college level (grade 15/16) for a concept that is basic (be frugal, learn skills, invest) you’re doing it backwards. Plus it’s harder to write at a 6th grade level, so it’ll show how good you are…
Jacob said,
@JasonR – I don’t think I’m one to intentionally use academeese to make myself look smarter or use endless strings of passive voice because I’m too lazy to think. I’m a big fan of Orwell’s essay on language. I don’t think my writing (in the book) is unnecessarily obfuscated or that the flow of the arguments are hard to follow. I do agree, I presume familiarity with concepts that someone with a 7th grade education or maybe even a 12th grade education would not be familiar with.
Writing at any level is actually not that hard. If you follow E-prime rules, for instance, the writing becomes very easy to read. I wrote an essay on thermodynamics that way. Musashi’s book of five rings, which covers very complex material, is also written in a simple language. The problem with this is that then scholars and readers must spend lots of time discussing “what exactly the author meant when he chose that word instead of that word”. All this could be avoided if the complexity of the communication matched the complexity of the message.
With personal finance, it all boils down to “Live below your means”, “Spend less than you earn”. This would make for a very short book and simple 1k website where people could have a white background with a centered text “LBYM” which would never change.
However, I think this is a bit like saying that all computer science (including the internet) boils down to AND and XOR operations. Alternatively, that moving beyond machine code (particular to OO-programming) was a largely pointless exercise to complicate things when any 5 year old can understand ADD and MOV.
Humans are complex creatures and we like to generalize and use abstractions to more easily understand things. Just look at how many ways there are for paying down debt: debt snowball, debt snowflake, and debt tsunami.
In general (ha!) the more subtle or the more detail we consider, the greater the abstractions. I think the ERE book goes into substantial detail about the world. (I’d also claim that it’s not just a book about personal finance.) To give an analogy (which requires knowing about fractals, so college level understanding is required), if the world is fractal like a sea shore, the measuring stick of the ERE book is shorter than it is for the simple message “live below your means”. It is also shorter than Your Money Or Your Life. Hence it reveals more detail and more subtleties.
The mathematical formulas are supplemental to the graphs. I hate it when authors just show a graph and tell you, this is how it is. That is about as bad as “go to my website and plug your numbers into my applet.” I did not expect everyone to be able to follow them. My intent is to show you how to build the conclusion rather than just give the conclusion. It’s like showing you how to forge a sword. You may not understand how the folding aids and controls the carburizing of the steel (this is actually a good part of the reason why Japanese swords are folded) and how the clay is used to differentially temper the blade, but at least you will have some idea of the complexity and assumptions of the construction method compared to just giving you a sword. In particular, I could show you how to make a $20 blade and how to make a $2000 blade. Without previous knowledge, you wouldn’t be able to tell the difference just from seeing the blades, but seeing the construction method should give you an idea about the differences. Then if you do go on and study the metallurgy (here, learn how to do series math, first year college level), you can understand exactly what’s going on.
“All this could be avoided if the complexity of the communication matched the complexity of the message.”
That’s what I wanted to say. Perhaps we’re looking at the animal from two different angles yet somehow arrived at the same end point. I think ERE is perfectly simple and thus requires a simple treatment (with crayon drawings and Dr. Seuss couplets). Maybe you see it as vast and deep, thus requiring more detail.
I think the $20 piece of spring suspension steel ground down to a fine edge with a full tang will work for me. I wouldn’t know what to do with a $2000 work of art. I’d be scared to use it actually. Maybe a boken is all I need.
I highly recommend the LBYM website. Someone should build that. With JK flip flops and shift registers.
Jacob said,
@JasonR – I think most (organic) things are as complex as you want to make them. Like a fractal or a beach, a wave. The simpler explanation of ERE is given in YMOYL. Or conversely, ERE is a more complex explanation of YMOYL. I recommend that people who are interested in FI/RE start by reading YMOYL and then if they want more, read ERE.
(My preliminary attempts to write a simpler book have turned out to look remarkably similar to YMOYL. I believe those authors got it right the first time. I see practically no ways to improve on it.)
urbanhomesteader said,
I think the average college sophomore could understand the ERE concepts enough to apply them. However, a smart 15 year old could also read a copy of the ERE book and run with it. I tend to think those that will be most successful are those who would have ‘gotten it’ at 15. I have a 15 year old sister, and after seeing this post I decided to have a talk with her about life planning, college debt (which doesn’t have, yet), and the ERE book.
I chose 12th grade because of the density of the material – generally it takes me a lot less time to get through 50 pages than with your book, even books with tiny, incredibly dense print. My genres of choice are science fiction and fantasy, which I hope are slighly higher than 6th grade reading level. At least the classics.
This is less dense than my high school calculus books for sure, but more dense than most scifi other than the best.
Lora said,
“Gunning Fog” and “Flesch-Kincaid” offer formulas for estimating reading level. Wikipedia includes info about these.
Brandy said,
I haven’t read your book because I read a review that said it had a lot of math equations. I don’t really care about understanding the math, just what the results are. I thought that the book would be really boring with too many equations. I enjoy learning from your blog and just so you don’t think that I am not an idiot who can’t understand it, I went back to school to get my Masters in Economics. I just don’t want a lot of math in my free time 🙂
Jacob said,
@Brandy – That review (I think I know which one you were talking about) was exaggerating for effect. There are only math equations in chapter 7 (okay there are two in chapter 5 as well) and the reason there are so many of them is because I write out the derivation. Most books just give the answer and make you either do the work yourself or take it on faith. Which is better? Also, the reason for the existence of the equation in the first place is to show you where the graph comes from. Again, many books just give you the graph and asks you to accept it on faith. The argument in the ERE book is more complete and it doesn’t leave things “as an exercise for the reader” or quote some ‘expert’ like most other books.
The level/type of math in the book should be easily followed and understood by a first year college student in economics. It is basically the derivation of a perpetuity and an annuity-like equation.
Alexandra Evans said,
I was talking about your book and how much I liked it to some friends. When asked to describe I said, “if you think of Dave Ramsey as Highschool finance, Mr. Money Moustache as College finance, then Jacob and ERE are definitely graduate school.”
Since so much of the concepts are so knew to people in the US culture, I think they will get more out of it to gradually learn. If i had picked up ERE first, I’d probably have put it back down and moved on.
I chose 11th grade – I would have eaten it up at that age!
[Unfortunately, you didn’t publish it until I was in the AARP 🙁 ]
oinkette said,
Is the image on the book page updated regularly?
I do think that a high school level individual could “get” it if you are talking about the youngest possible age for reasonable comprehension. It’s just that some of the material is contextual to the real world and “being a grown up” so in that respect it may be over their heads.
I was (happily) earning minimum wage in high school (and college for that matter) and totally dependent on my parents. I didn’t think about mortgages and retirement, even though I felt myself to be fairly smart with money for my age group. Which, let’s be honest, at that age meant not blowing all my money on nail polish and cassette tapes (yes I’m aging myself).
Even in college you still aren’t quite introduced to the realities of the real world, but you have somewhat of a taste of it because you are preparing yourself for it. Thus the combination of writing level + relevance is perfect. I think college senior or junior is perfect.
M said,
I hesitantly chose 12th grade, hoping for the best. However, like other posters, I suspect it’s more appropriate for college students. I didn’t find the math hard; rather, it was fascinating! And with some years behind me, I was blown away by your early approach to life and money. I’ve had a healthy relationship with money but looking back, I could have freed myself from financial worries much earlier and been less cautious about life. Well done!
phred said,
I would say beyond the postdoc level. Any earlier than that their minds are still wrapped around gadgets, doodads and gear. The student just won’t be ready emotionally any younger — unless they are INTs.
Kosmatek said,
College+/Grad
I think you need some experience with earning and spending money, (no) taking credit, having financial responsibility for self or other people, and any other personal ups and downs …
Then, from a broader life perspective the abstractness of the book may be perceived as a great advantage, as you have some life tactics (subjective experiences, competencies, responsibilities) to be structured. Otherwise, one can conceive the book as a mass of generalities with no content.
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