Ben Stein's Financial Rules...

Author and finance expert Ben Stein's new book, "How To Ruin Your Financial Life," is a tongue-in-cheek look at money and financial planning. In it, Stein lists 55 rules to help readers figure out what kind of financial shape they're in.

Stein tells The Early Show co-anchor Rene Syler, "People know that there are a million books, telling them how to get rich. My book tells you how to get poor and ruin your life. If you recognize yourself in it, you're doing something wrong. Turn around and do the other thing."

Asked if most people are poor savers, Stein says, "In this country, for an example, 77 million people racing toward retirement in the baby boom generation, which is me, and 77 million others, average amount of savings, $40,000. That means that would give you about $800 a year at the current rate of interest.

"People are going to be eating dog food. They have got to start saving more right away. People screw up in so many ways. I say in my book, these are ways to ruin your financial life."

Here are some of the rules:

• Collect as Many Credit Cards as You Can and Use Them Frequently
• Compete with Your Friends to See Who Can Own the Most Expensive and High-Status Possessions
• Know in Your Gut That Only Suckers Work Hard for Money and That Smarties Like You Only Have to Find an Angle
• Remember That Retirement Is a L-ooo-nnn-g Way Off
• Don't Even Think about It Right Now; Bear in Mind That Only "Little People" Pay Their Bills or Taxes

Asked what is the biggest financial mistake people make in their lives, he says, "Two things: Not saving enough and not diversifying. People either don't save up or if they do, they put it in one basket. Save and diversify on a whole range of things. If people, especially in the baby boom generation, don't start saving, they're going to be so screwed up; they can't even imagine how miserable their lives are going to be."

Read an excerpt from the Introduction:

"The world rests on three pillars: on money, on money, and on money." So goes an ancient East European proverb. We can also look around the world to China and one of their Confucian axioms: "No money, no life."

Then again, we can look even closer and recall the words of the immortal Bob Dylan. About ten years after he burst riotously onto the cultural scene, an interviewer asked him why his lyrics weren't as angry as they had been when he started out in Greenwich Village.

"It's hard to be bitter when you're as rich as I am," said the Bobster (or words to that effect).

But we really don't have to look to great poets or ancient proverbs for financial wisdom. Money is simply a great thing to have. It may not be able to buy happiness, but it sure gives a good impression of a long-term lease. In fact, now that I think of it, maybe money can't buy happiness, but money comes as close to the ability to buy happiness as anything outside yourself can.

Let me count just a few of the ways: With money, you have financial and material security—which is a giant part of life, especially when you don't have any. The fear of financial insecurity is one of the most lethal destroyers of human happiness, a creator of anxiety and paranoia, and a wrecker of a decent night's sleep. When you have money, you don't have these problems, at least not nearly as much. Money also allows for a high degree of freedom and choice—such as the ability to travel at will, the choice of living in magnificent mansions, of driving sleek cars, of consorting with fast women and sultry men, of enrolling your sullen children in the best private schools, of purchasing magnificent art for your walls and tables, and of buying fashionable clothes and sparkling jewelry that make your friends green with envy.

With money you can give gifts to charities, build shelters for animals, send food to the starving, erect dwellings for the homeless, and give money to your relatives. In other words, with money . . . you can not only do well, but do good.

Without money, you go to bed worrying about how to pay your MasterCard bill. You can't help anyone, not even yourself. Appeals from perfectly good causes go unanswered. However, with money, you can go to sleep thinking about what you want to buy the next morning, and who you can help out. This, as you can see, is a very good thing.

With money in your pockets and in your Merrill Lynch account, you can go into any store or car dealership or travel agency with your head held high. The map of the world is not a fantasy or a dream or an abstraction. It's your travel itinerary any old time you feel like going—and going first class, of course—not in coach with an obese stranger sitting on your lap and a stale bag of peanuts thrown at you by a surly flight attendant. Money is fresh salmon and caviar at 40,000 feet eaten off china on top of a linen placemat, with a hot fudge sundae for dessert.

Having money cannot automatically cure disease, but it can sure buy you better doctors and far, far better care than you'd get with a penny-pinching HMO. It can allow you to buy the best medicines, get them refilled as often as you want, make sure your physician sees you first, and give you the option to take the kind of long rests the doctor orders. Plus, it can ensure the type of serenity and peace of mind that builds a far healthier immune system.

Money cannot buy love . . . well, just forget that one. Money can buy love—it's time to put that old lie to rest. Men and women do love other men and women who have money. It makes the homely seem better looking, the fat seem less corpulent, and the weak and sickly seem more robust. Money confers an aura of beauty around the otherwise not-so-beautiful. And, yes, money can make men and women fall in love with you and stick to you like glue. Maybe this isn't the way life should be, but this is the way it is.

Perhaps, most important of all, money buys respect. A man may be of middling intellect, slow in his speech, doddering in his gait, and not at all witty, but if the people around him know that he has tons of cash, he garners respect. And the more money he has, the more respect he gets. It's quite a phenomenon to sit at Morton's or Le Cirque and witness waiters, busboys, and wine stewards—not to mention lawyers, film studio heads, and movie stars—fall all over themselves before billionaires. Perfectly respectable millionaires actually tug at their forelocks in the presence of billionaires and cringe as if they were coal miners in 19th-century England meeting the local Earl of whatever.

"Nobility is riches sanctified by long passage of time," goes the English saying. Here in America, nobility is just plain having money. We don't have dukes or earls or viscounts here. We do have immense respect for money, though, and the words, "He's rich" or "She's a billionaire's daughter" are the equivalent of saying, "He's a prince" or "She's a duchess."

But you don't have to be a billionaire to reap the joys of having money. In David Copperfield, Charles Dickens wrote: "Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought six, result misery."

The main thing is to have enough money to live comfortably, with some reasonable degree of security, with the ability to enjoy the good things in life that definitely do come with money.

You don't have to race a Donzi speedboat or fly a Gulfstream jet, and you don't have to own racehorses in order to experience the joy and security that money can bring you. But you do have to have enough cash to feel secure at night if your boss starts picking on you and you realize you may soon be looking for a new job. You need to have enough moolah to make sure that your spouse and children can see the very best doctors if they get sick. Basically, you just have to have enough of it so that you know you're well protected. A life lived in or on the edge of deprivation is simply not the same as one that's lived in comfort. One is enjoyment—the other is just eking out an existence.

Yet, despite the clear desirability of having money, millions of people don't have the funds they need and want. This, alas, is the case despite the fact that there are thousands—maybe tens of thousands—of books out there telling people how to make, save, spend, and invest money wisely. (How well I know—I've written a few of them.) They make some impact, but the vast numbers of people in this country (and others) simply don't get it when they're advised how to handle money and how to manage their financial lives. (I didn't get it the first few hundred times myself.) They just keep on doing the same messy things that got them into trouble in the first place.

So in light of the above, I decided that it was time for a different approach. I thought I'd offer some pertinent advice in reverse . . . by creating a book that tells you, the reader, how to ruin your financial life. By doing so, I figured I'd allow you to see just what you're doing wrong, and how what you're doing wrong fits into a recognizable pattern of ruination. (By the way, it's a pattern I've seen in those close to me—in fact, under my own skin on many a day.)

If, as you're reading this book, you see that you're doing 75 percent of the things that people do to wreck their financial lives, then maybe you'll wake up and realize that your financial mess didn't happen by chance. It happened because you were doing certain clear, specific things wrong that get everyone who does them into hot water. If you realize that your actions and inactions will inevitably lead to grief, maybe you'll stop doing those things . . . and start to pull your financial life together. In any event, that was the hope with which this book was written. We Americans, British, Canadians, free people, create our own financial reality.

Now, what qualified me to write this little tome? First, I've been following money and its uses and misuses all of my life, and by now I'm 58, so I've been doing this a long time. I've made a large number of the mistakes in this book—not just once or twice, but many times. The results have been predictably calamitous. When I stopped doing those harmful things, the results were predictably good.

Second, I had a father who was a highly insightful guy when it came to money. He never made a truly huge income, although it was certainly not a small income, but he always had money and lived in comfort, and he was able to leave my sister and me a meaningful sum. And I observed how he did it. To be truthful, I haven't always done as well as he did, but if your father is a wizard, you do grow up learning some magic.

Third, I'm fascinated by how some people have money and comfort, and how others have neither, and I've long been a manic observer and classifier of how success and failure come to pass. I'm bound to say that I've learned more from the failures than from the successes, and I think you will as well. (Maybe some bit of levity will help, too.) In every action I take, I try to ask myself, "Am I behaving like so-and-so who went into bankruptcy?" or "Am I behaving like my dad, who had a gift for avoiding the pitfalls that leave men and women in desperation?"

Or, to put it another way, when I was a child, we lived in a neighborhood with people who had fancier cars than we did, played at elegant country clubs, and thought nothing of laying down a handful of bills on a horse. They all wound up broke. I try not to do anything in the way that they did. I have friends here in Hollywood who made excellent incomes for decades and now can't afford to take a vacation. I try to avoid doing what they did and do, too. Instead, I try to put myself in the mold of the people who wake up each day knowing that they can pay their bills not just for this day, but for a decade, without worrying too much about where the next dollar is going to come from.

Years ago when I told my father that I could buy a certain estate (which was bigger than I really needed) and still be years away from being in the neighborhood of poverty, he said, "Good, because that's a neighborhood you never want to be in." That's what this book is about. Do the things in this book consistently, and you'll find yourself in the neighborhood of poverty. Do them very rarely, and you'll sleep soundly at night in a nice neighborhood.

Let me make this point as clear as possible: This book is called How to Ruin Your Financial Life for a reason: If you follow the rules in it, you will ruin your financial life. If you do the opposite, sunny days lie ahead.

Without further ado, here are the 55 rules. I'm positive that I've probably missed some ways in which you can ruin your financial life—maybe even some important ones—but let's just get on with it. I'm not much of a perfectionist.

Copyright © 2004 by Ben Stein. Written by permission of Hay House. All rights reserved. This excerpt, or any parts thereof, may not be reproduced without permission.