The Vine: July 25, 2008
Hi Sars,
So now that I’ve done the whole first job thing, and the emigration thing, and the settling into what kind of adult I want to become thing, I find myself pondering the important stuff, like buying a house, investing for a rainy day, and never ever going into debt ever again.
So my question of readers is if they know of any decent books on budgeting, saving, investing and financial sense for the unmathematically inclined. I am in the UK so if they know of any that would be pertinent this side of the pond that would be perfect.
Thanks very much —
Suze Orman hater
Dear Hater,
I phoned my dad to see if he had any recommendations that might pertain to young investors regardless of country, and he said that, while he’s not a fan of hers, Suze Orman might have something on her website that would help you.”No go, Dad,” I said, “she signed the letter ‘Suze Orman hater,'” and I’ll tell you, I have not heard him laugh that hard in a while.So Dad is a fan of yours, is my point.
Anyway!The issue here is that you have a lot of different personal-finance issues you want to address, and there probably isn’t one book that gives you step-by-step instructions on all of them.Personal Finance for Dummies is as good a place to start as any, I’d guess, although I don’t know that they have a UK edition; the For Dummies series also has books specifically on the stock market and home-buying.
If you’re looking for a good system to help you save, Dad recommends a simple spreadsheet listing income and “run rate” (how much you spend in a given month).Once you get into the habit of tracking your expenditures, you see where you can make adjustments to save more money.Or you can reverse that — if you want to buy a house, and the down payment is twenty grand, go backwards from that figure to see how long it’ll take you to save that amount.
For investments, it’s often best to outsource that to someone who, like my dad, does it for a living; s/he can help you work up your investment profile — what your savings goal is; how much risk you want to assume in the portfolio — and diversify your money in the appropriate way.
So, start with the spreadsheet, and Google phrases like “personal investment advice UK” to see what comes up.The Interwebs have hundreds of sites on the subject that will give you tips and tricks, or point you in the direction of useful books.
Readers, anything to suggest?
Tags: Ask The Readers Suze Orman
Last spring I went through 10 or so personal finance books, mostly beginnging stuff, and here are the two I purchased, given to friends, and have re-read.
As a disclaimer, these were both first published quite a while ago, but the practices are fairly general and I didn’t find them outdated. I suspect the first book to be very helpful to any location, although the investment book may be more geared toward US investors.
“Smart and Simple Financial Strategies For Busy People” – Jane Bryant Quinn http://tinyurl.com/5v5t4w
I find Jane Bryant Quinn to have all of the saavy but less of the abraisiveness (and catch-phrasy-ness) of other popular financial advisors. Her book is a really great book to get started, but much more intelligent than the comparable books out there. I found its advise to be very reasonable and what I was looking for, and as the title suggests, it did not instruct me to put cash into envelopes as a method of budgeting.
“The Only Investment Guide You’ll Ever Need” – Andrew Tobias
http://tinyurl.com/57wfxf
I really do not want to pick up day-trading, and I don’t want to spend all my times reading Forbes (yuck) trying to pick up last years trendy mutual funds. He speaks to those goals quite nicely, and after going through this in detail, I’m going with several index funds. I found it to be nice that he goes into detail about the main choices, which let me translate the information into action quite easily. That always seems to be the hard part … taking the investment advise and then actually DOING it.
Good luck!!
I have an MS in Personal Financial Planning, and the one book that was required reading, that I found really helpful and accessible is Your Money or Your Life:
http://www.yourmoneyoryourlife.org/
It has some practical steps for planning and saving, and also a lot of challenging material about how you think about money, goals, etc. It’s great!
Along the lines of the “For Dummies” series, the Complete Idiot’s people actually make a “Complete Idiot’s Guide to Personal Finance in Your 20s and 30s.” It sounds like this is the stage that the anti-Orman is at, although I could be wrong. Some of the stuff at the beginning is extremely basic, but I enjoyed a lot of it and it’s pretty worthwhile for someone in the I-have-financial-priorities-other-than-beer-money-now set.
Its not in book form yet (the author is in the process of being published currently), but I’d recommend checking out The Simple Dollar website.
http://www.thesimpledollar.com/
I have read dozens of personal finance books, many aimed at 20-something women, and found that the combination of the two following books really helped me get my finances in order (and I, too, am a bit of a Suze-hater):
All Your Worth (Elizabeth Warren and Amelia Warren Tyagi) – gives a basic overview, focuses on dividing up your expenses into needs, wants, and savings, and looking at your big purchases and saving money there
Smart Women Finish Rich (David Bach) – really basic overview, focuses on setting goals and knowing your own values, understanding how all the money you spend affects your lifestyle (for good and for bad), and looking at your small daily purchases and saving money there
A friend gave me this to read: http://www.amazon.com/Get-Financial-Life-Personal-Twenties/dp/0684872617
and it’s helped thus far – it has a bit of a cheat sheet in the first chapter that my friend, whose father is a forest ranger/tax fanatic (I…don’t know) recommended to her. Though I’m going to check everyone else’s recommendations out too.
If you’re looking for advice on how to SAVE money, not invest, I highly recommend The Complete Tightwad Gazette by Amy Dacyczyn. It’s a compilation of newsletter the author used to write, and is a mix of longer articles and shorter (often reader-submitted) tips. This is VERY comprehensive, and I’m sure it includes plenty of tips you’ll never use, but it’s a great resource.
I would like to echo Kate’s suggestion of Jane Bryant Quinn. I hadn’t read her stuff since high school (many years ago), but I found Quinn very informative when I was writing a paper on this material for my high school personal economics course.
If I was going to recommend a Bach book, it would be The Automatic Millionaire, since the basic message — basically, make some savings go from your checking account to your savings vehicle automatically, so you don’t ever count that money as spendable — is not unique to the US. But a lot of the advice you get about Roth IRAs and index funds will be.
I did some searching on Amazon.co.uk, and the best I was able to come up with for the UK market was this guide published by the Daily Telegraph. Also I’d poke around the Guardian money page and see if they have any recommendations.
“If I were,” I mean. I think. The subjunctive is just an evil tense generally.
The Motley Fool is an excellent website for beginners on up. There are discussion boards, too, so you can get a lot of support and ideas from other people with similar goals. AND – they have a Motley Fool UK. Go Fools!
Not a book, and I don’t know if it works in the UK, but a good website that I use to track all of my finances is Mint. Discovered it through consumerist.com, and it “consolidates” information from all of your accounts, credit cards, 401Ks (now I think you can include loans like mortgages as well), and creates nifty reports and budgets for you.
I forgot to mention: hating Suze Orman is a great place to start! Her name was basically a punchline among my PFP professors. The woman is a quack.
I’d second The Simple Dollar blog as a place to start – he does really long and thorough book reviews every week, and he’s reviewed maybe a hundred personal finance books by now. Reading the reviews is a financial education in itself, but it will keep you from wasting money on books that aren’t worthwhile.
I can’t recommend it enough — The Total Money Makeover! There are elements of Dave Ramsey’s teachings I’m not on board with — *cough*God*cough* … But there’s not much of that in this book, and it’s WONDERFUL for beginners.
moneysavingexpert.com” and Martin Lewis’s book The Money Diet. They are fantastic, will save you tons of money and have incredibly lively forums for any questions you have on any topic. Got me out of debt and have done the same for many other people.
I second Lori’s Motley Fool recommendation, plus http://www.moneysavingexpert.com/?utm_source=jantip&utm_medium=email who you might recognise from TV & printed media – like the Fool this site has forums, an email mailing list and many advice articles.
I have a bunch of friends who swear by Your Money or Your Life. From my own observations of my friends, the lessons of the book didn’t make them rich — but it did enable them to find ways to save enough and reduce their expenses enough that they are able to work less and spend more time doing things they love.
Seconding the recommendation for The Total Money Makeover. Whatever you think of his personal beliefs, the man knows his finances.
I’ve found Get A Financial Life, by Beth Kobliner, really helpful for twenty- and thirty-somethings.
Read Gail Vaz-Oxlade’s blog: http://www.gailvazoxlade.com/blog/. Gail is a no-nonsense, no-excuses kind of woman – the complete opposite of Suze Orman, basically. She’s the host of “Til Debt Do Us Partâ€, a Canadian TV show on Slice network where she comes and yells at people who’ve messed up their money. Then she makes them live on a budget, complete challenges and, if they do well enough, gives them up to $5000. It’s an awesome show. Her blog is full of great advice, and she answers questions from readers.
I would also recommend Your Money or Your Life, although I feel like it needs a caveat. They’ve got this whole “Financial Independence” system which, if you want to get into it, that’s great, but I don’t think it’s for everyone. Be prepared to filter their ideas and just know that you don’t have to go gung-ho into everything they say.
What is great about the book, though, is that it will make you think about your priorities, and how your spending reflects your priorities, and help you to create some perspective about what your time and your money are really worth. There’s a lot of value in their big ideas.
I’m thirding the rec for Total Money Makeover. I also don’t agree with Dave about everything, but money-wise, I have found it to be very helpful!
Because he goes step by step I’ve found it very manageable–that is, I don’t need to worry about saving for retirement until I’ve saved up an emergency fund, etc. I also thing it speaks well to the don’t-buy-what-you-can’t-afford idea that is opposite to what our culture tells us daily. Lastly, I think it might go well with one of the other books because Dave’s ideas are not what a lot of other books will tell you (instead of just “Don’t carry a balance on your credit card,” he thinks you shouldn’t have one at all.) I know several folks working through Total Money Makeover and we’ve discovered that we all still have at least one credit card, our own idea being that having for emergencies makes sense until we’ve saved up enough to be able to pay for any emergencies.
I’ve never listened to it, but I think Dave has a radio show–I wonder if you could listen to podcasts of it or find his book at the library to see if it is a good fit.
I’ve also enjoyed the Simple Dollar website suggested by several others.
Good luck!
Thirding Dave Ramsey, despite the…uh…god thing. He also has a podcast, which I was really enjoying, but stopped subscribing to until the election is over. Michelle Singletary of the Washington Post has a similar anti-debt perspective. Both Ramsey & Singletary go so far as to say that debt is evil: they’re not judgmental about finding yourself in debt, but they do find it critical to get out and to avoid it in the future. Ramsey has been there, having gone broke at least once himself.
Thirding the Simple Dollar blog, and adding to that a recommendation for Get Rich Slowly: http://www.getrichslowly.org/blog/
And I guess I’m Nth-ing both “Your Money or Your Life” and “Get a Financial Life.”
Seconding the Simple Dollar recommendation. The guy has straightforward advice and has his own story of getting out of debt.
Yet another recommendation for “Total Money Makeover” – and if you can, take the 13 week class. It was truly life changing for my husband and I. You learn an entirely different way of thinking.
I’m going to second the Tightwad Gazette Series- I found them very helpful over the years, for interesting, low cost ideas.
It’s not a book, but I absolutely love http://www.getrichslowly.org/blog/ I’ve been reading him for over a year, and I feel like he give the best articles, the most in depth information… JD is all around awesome, in my opinion. Not everything applies to everyone, but it’s a good, free way to learn things.
“Your Money or Your Life” certainly clarified a lot of financial principles, but reading “Rich Dad, Poor Dad” drove home investment strategies and came at the issue of wealth creation from an entirely different angle than a lot of financial self-help books.
Not a book recommendation, but I HIGHLY recommend finding some personal finance software and tracking EVERYTHING. I am an accountant by trade, and have used all kinds of software, but at home I just use MS Money. I am able to track all spending, project income and expenditures, establish savings goals, and it even has a debt tracker if you are trying to pay off debt. You can also track investments and assets (cars, etc). I love being able to project what a vacation or large purchase will do to our finances, and it really helps outline the areas where spending could be reined in (in our case, FOOD, always food).
My husband and I completed Ramsey’s Financial Peace University, and since then, we have socked away savings, paid extra on our mortgage, made some good cash purchases, are debt free (except for the mortgage, of course), and are considerably closer to our goals. The “God thing” isn’t a problem for us, but even if it were, I still think his financial sense is good. He STRONGLY advocates charitable giving as a vital part of said financial peace. Whatever your beliefs, it feels good to be able to bless someone else, even if it’s someone you will never know, rather than always needing help yourself. (She said, having needed financial help many times in the past.)
“The Automatic Millionaire” and “Start Late, Finish Rich” were helpful to my husband and I.
I’d caution that anyone who reads “Rich Dad, Poor Dad” also read other books to supplement it. That book might have been singlehandedly responsible for the U.S. mortgage crisis.
I would heavily caution anyone on reading Rich Dad, Poor Dad, at all. There’s a site that discusses the way the book packages either completely commonsense advice or very bad advice to sound really attractive, and how it’s not clear that the author has really had great success investing.
http://www.johntreed.com/Kiyosaki.html
I found this site logical and credible. There is little in the way of personal attacks and much in the way of discussing errors or deceptions created by Kiyosaki.
Completely unrelated to anything actually pertinent here, but I love that you used “s/he” for purely personal reasons. I’ve used it for years because it is so much less clunky than “he/she” which still seems to be the norm, but I’ve still never seen it used elsewhere.
Thanks for giving me a grin this Sunday night!
I’m casting another vote for Dave Ramsey and Financial Peace University (or Total Money Makeover the book.) He is logical and rational about looking at money and essentially not throwing it away. He breaks it down into baby steps and he encourages giving – not just to churches but to charity. I’ve recommended it to several friends who are perhaps less enthusiastic about religion just because it’s good advice. I don’t agree with everything he advises but it makes a lot of sense.
Seconding B on Martin Lewis and Money Saving Expert. He’s the man in the UK for helping the consumer keep their money.
I can’t give you a recommendation for anything specific, since all my knowledge came from a couple years of reading everything I could find (including a lot of crap, which, thankfully, taught me to filter out nonsense).
But if you hate Suze Orman, you probably will also hate Dave Ramsey. Sweet Jeebus, that man gives me hives. My boyfriend took me to one of his seminar thingies, and it was 6 hours of being talked down to + sales of pretty envelopes to keep your money in.
I agree that it’s very important to track all your spending in a spreadsheet/MS Money/Quicken/etc., at least until you get the hang of your budget.
Some other references that I have been using to help educate me, especially about investing and my future plans, are:
MoneyTrack
WealthTrack
Kiplinger’s Personal Finance
The first two are television shows, the third I hear on the radio as little articles on our newsradio station. They all have websites and may help provide some more information.
@Alexis – WOW! now THAT is a critique! I think I learned more about sound investing reading Reed’s page than I knew before.
Thirding the Motley Fool suggestion. The message boards have the pitfalls that any internet message board has, but at least the flame wars focus on important things like washing and re-using plastic baggies. If you can get beyond all that, there are a ton of pleasant, intelligent, and helpful posters there. The site itself, as opposed to the boards, is a good jumping off point but you’ll still have to do some other research.
I personally found “The Only Investment Guide You’ll Ever Need” to be a great help but it is USA-centric in its advice. Other classics include “Your Money or Your Life” (already mentioned, read it for interest but take it with a grain of salt), “The Millionaire Next Door” (parts seem repetitive so some skimming may be in order, chapter 5 is brilliant), and “The Richest Man in Babylon.”
Tell your Dad I said thanks. At the ripe old age of 44 I have decided it’s time to settle down and buy a house. I just got my credit report from the big 3 companies and, well it wasn’t pretty. So unless a rich relative dies I need to knuckle down.
I’d go with Martin Lewis too. You may have seen him on Five or LK Today. The man has saved me thousands!