Best books for money management?

[MJ DeMarco]

Best books for money management?​

How much money you got to "manage"? I'm guessing you're wasting your time.

 

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[WJK]

I’m working two jobs now and starting my fast lane business but don’t know how to manage my money. I’m 26 now and know tbh w habits I build up now will impact me for better or worse in the future. What are some books that will give me a good direction on money management?

Do you need a book? There are just some basic rules:

1. Spend less than you make.
2. Track what you spend so you know where your money is going.
3. Save enough money to start investing -- at this point, it can be in your business
4. Don't take on long-term contracts or debt that will limit your future decisions.
5. Be smart-cheap. Spend your money carefully and thoughtfully. It's too hard to make to just throw it away.

 

[biophase]

I was talking to a friend last week who is in the slowlane. She tells me that everyone is priced out of a home in Phx now, citing this article.

74% of Arizona households are priced out of new AZ homes

New data from the National Association of Home Builders finds that about three in four households in Arizona would struggle financially to purchase a median priced home in the state.

www.abc15.com

But she's always broke and tells me that she needs to get a better job. She makes around $90k, which I tell her is pretty good money. Then she tells me she spends $300-$450 a month on coffee in the morning. She "needs" it every morning.
Then you combine that with getting your nails and hair done every month. It's no wonder she can't live off $90k.

I tell her that that $300-$450 could be invested or saved to get her into a home. I say, let me look at your finances and your budget. She tells me she doesn't want to talk about finances because she's not in the mood. Ok, so we talk about important stuff like NBA basketball or where to go for dinner.



Some people are just destined to be where they are at.

 

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[Andy Black]

“The Richest Man in Babylon” maybe.

Other folks advice above is good.

Additionally:

Don’t raise your living expenses to celebrate when you earn more.

Consider (at least) two bank accounts. One where your monthly salary goes in and your monthly bills automatically come out. Get that main account to automatically pay weekly into your cash account that you live off. Only have a bank card for that second account. If someone steals that card they can’t spend too much, *and* you act like you’re paid weekly which can be easier to manage.

 

[Johnny boy]

How much you spend in a month?

I bet 99% chance you need to cut out BS activities, hanging out with friends wasting money doing dumb shit, and that’s probably it.

Then, your biggest problem is not making nearly enough money!

Never watch Dave Ramsey. He is a dumb boomer.

 

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[Andy Black]

She’s lucky. I myself have never made more than $30k a year in a job.

Be careful of the words you use @socaldude. It’s probably not luck that got her $90k salary. Even if you don’t actually believe it, try not to say it.

 

[MJ DeMarco]

At the risk of ticking off the owner of this site, I'm going to disagree that getting a big chunk of money solves anyone's financial situation until they have mastered those basic financial skills.

Actually I agree with you, however he asked about money management (which I view as relating to investing) not basic financial literacy. I view them as two separate entities, but I can see how one can equate them as the same.

 

[MJ DeMarco]

1. Pay off any bills that you have. Use the snowball plan. If you don't know it, look it up.
2. Then sneak up on your savings goal. Start with 5% and bump it up to 25%, one rung at a time.
3. Figure out how to test your business ideas without blowing a bunch of money.
4. Start small on your business idea and build as you go.
5. Educate yourself continuously. Use resources that cost little or nothing. You can start by reading the threads found on this Forum. Make some friends and start some conversations.
Watch podcasts on the net.
Google everything.

+1.

I tell people to forget about investing money until they have enough money to invest. But definitely learn the basics of finance. Learn how to pay bills, save money, and manage debt. Then apply that money toward business ventures that have the potential for asymmetric returns. When that business starts to accumulate cash (I have $100K sitting around!) then its time to get that money invested (assuming it can't grow the current business) so it becomes another income (or growth) generating asset.

 

[WJK]

I agree. Some of Ramsey's principles are good, like save more than you earn or don't go into debt for a car, but some of his other points will lock you into the slow lane for good. My favorite book is The Richest Man in Babylon by George S Clayson. In all honesty though you don't need a book to tell you to save a percentage of your money every paycheck and to stay away from consumer debt like credit cards and car loans.

1. Pay off any bills that you have. Use the snowball plan. If you don't know it, look it up.
2. Then sneak up on your savings goal. Start with 5% and bump it up to 25%, one rung at a time.
3. Figure out how to test your business ideas without blowing a bunch of money.
4. Start small on your business idea and build as you go.
5. Educate yourself continuously. Use resources that cost little or nothing. You can start by reading the threads found on this Forum. Make some friends and start some conversations.
Watch podcasts on the net.
Google everything.

 

[Guyfieri5]

I read that book when I was twenty and it did more for me in terms of actionable steps than any of the other personal finance books I read later. I find that some of the other finance books promote an ideology. That one was just pure advice in story form.

“The Richest Man in Babylon” maybe.

 

[MitchC]

There’s a book in Australia called barefoot investor, it’s really good.

Richest man in Babylon was mentioned and I agree it has good advice and tips in it.

But Barefoot investor is what you need. It lays everything out step by step, you do it all once, then just leave it and you look back in a year or 2 and have a shitload saved and your life wasn’t really any different.

Once you have a business, profit first is kind of barefoot investor for business.

Mjs books will teach you the how to and why you should start a business. But for having a job and trying to save so you can free yourself, Barefoot Investor.

 

[Kak]

Buying something to make you better with money isn’t a good start to being better with money. I’ve always found that concept, like Dave Ramsey books, or even worse, seminars, which happen to be expensive, oxymoronic.

If you’re talking about investing… You can make this as big of a deal or little of a deal as you want. If you don't have at least 6 figures of investible net worth, I'd make sure not to make this a big deal. Warren Buffet beat every hedge fund manager there was by buying and holding SPY. That’s it. That was his bet. He was right.

There’s the start. You can expand from there. Learn economics. Learn monetary theory. Learn the political headwinds and tailwinds. Learn commodities. Learn value vs growth. Learn options. Learn time decay. Learn to put time to work for you.

Ultimately, you can beat hedge funds… But you have to bet against the consensus and be right. The consensus doesn’t really make money.

Of course, once again, don't even bother if you don't have 6 figures minimum. Focus on a business.

 

[2dads]

As Johnny boy stated stay away from Dave Ramsey and likes.

Know your numbers, I can tell you what my monthly Cost of living (COL) is but dont track $$$, which some times varies due unforeseen expenses - but when you have a buffer it does not matter.

If we want to eat out tonight - we will, our income is higher than my COL - a $2000 expense will not break me but slow down my plans and goals.

Simply create a list of all your expenses and be realistic - but earn more, know your worth and get in the right lane -not tomorrow, but today!

 

[socaldude]

I view them as two separate entities, but I can see how one can equate them as the same.

I view them as distinct as well. There is a difference trying to manage, allocate and invest $5million to maximize alpha compared to saving money, cutting expenses etc.

I think the concept of personal finance is super overcomplicated

Yeah, me too. Just learn how to read a balance sheet and income statement LOL.

 

[biophase]

She’s buying a minimum of 2 Venti Starbucks daily? Wow that’s a lot of coffee.

I’m guessing she also has a big car payment.



She’s lucky. I myself have never made more than $30k a year in a job. Which is like $20k after taxes. She could definitely afford a house except she will have to make some sacrifices like not shopping at Nordstrom rack, getting nails done, her car payment etc.

She buys 2 at a time, one for the afternoon. She has some medical bills. But also does have a nice car, mid level BMW.

 

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[BaiAnrui]

For met it works in 4 fases:

1. financially mature
2. financial peace / rest
3. financial freedom
4. financially independent

I almost reached fase 3. So still some work to do.
I always try to connect with people who are one fase ahead of me...they are the best mentors out there.

 

[WJK]

+1.

I tell people to forget about investing money until they have enough money to invest. But definitely learn the basics of finance. Learn how to pay bills, save money, and manage debt. Then apply that money toward business ventures that have the potential for asymmetric returns. When that business starts to accumulate cash (I have $100K sitting around!) then its time to get that money invested (assuming it can't grow the current business) so it becomes another income (or growth) generating asset.

I totally agree. You can't invest out of empty pockets. You can't make any headway in your life if you mismanage your finances. Bad decisions equal bad outcomes -- over and over again. Then, when you climb that mountain, you can't successfully invest without knowing how and where to put your money. MJ is right. You must learn the financial basics for yourself, your businesses, and your investments. Otherwise, you will be broke and reduced to chasing chump-change all your life.

 

[Antifragile]

I was talking to a friend last week who is in the slowlane. She tells me that everyone is priced out of a home in Phx now, citing this article.

74% of Arizona households are priced out of new AZ homes

New data from the National Association of Home Builders finds that about three in four households in Arizona would struggle financially to purchase a median priced home in the state.

www.abc15.com

But she's always broke and tells me that she needs to get a better job. She makes around $90k, which I tell her is pretty good money. Then she tells me she spends $300-$450 a month on coffee in the morning. She "needs" it every morning.
Then you combine that with getting your nails and hair done every month. It's no wonder she can't live off $90k.

I tell her that that $300-$450 could be invested or saved to get her into a home. I say, let me look at your finances and your budget. She tells me she doesn't want to talk about finances because she's not in the mood. Ok, so we talk about important stuff like NBA basketball or where to go for dinner.



Some people are just destined to be where they are at.

I was sending money to family in Ukraine (past Friday). Using Western Union means going to one of those Money Mart shops. In front of me was a 20 something year old labourer with a hard hat etc. I heard everything he talked about with the clerk behind glass and realized how some peoples lives suck so bad.

He only had a cheque for $800 that he needed to cash to pay rent that same day. He also had a loan with these loan sharks Payday money mart people. It’s probably worse than credit card.

And yet, when the clerk lady told him a super helpful tip to save money! All he had to do was change the dates for payments to match his paycheck schedule to avoid penalties (pay only interest if you are on time). Consider that his account is always overdrawn - meaning, both the bank charges penalties for that and the loan Money Mart people do the same! It’s insane how much he’s wasting given how little he has.

And guess what. He replied “oh I didn’t do it yet”
- why not?
- I’m just not that organized in my life

I felt sorry for him and also knew, his life will suck for a very long time.

You are 100% right, some people are destined to be where they are. Even when a solution is literally staring them in the face.

 

[thelastsurvivor]

I’m working two jobs now and starting my fast lane business but don’t know how to manage my money. I’m 26 now and know tbh w habits I build up now will impact me for better or worse in the future. What are some books that will give me a good direction on money management?

 

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[AppMan]

I’m working two jobs now and starting my fast lane business but don’t know how to manage my money. I’m 26 now and know tbh w habits I build up now will impact me for better or worse in the future. What are some books that will give me a good direction on money management?

I remember Personal finance for dummies was good

 

[Two Dog]

I’m working two jobs now and starting my fast lane business but don’t know how to manage my money. I’m 26 now and know tbh w habits I build up now will impact me for better or worse in the future. What are some books that will give me a good direction on money management?

I Will Teach You to be Rich by Ramit Sethi is ideal for you. Including your age. He covers the basics of personal finance from credit cards to investing in an easy to read, no BS manner. These are all things that anyone with a dollar in their hand who plans on accumulating future dollars needs to understand.

At the risk of ticking off the owner of this site, I'm going to disagree that getting a big chunk of money solves anyone's financial situation until they have mastered those basic financial skills. Everyone successful who remains wealthy has done that - even when it's been so long that you forget you weren't born knowing it. You learned those lessons over time.

There are endless studies showing how often lottery winners, entertainers, celebrities and athletes go bankrupt within years of getting ridiculous chunks of money. The problem is their complete ignorance of money management, learning what "enough" means and trusting endless investment scammers and vampire friends who suck the dollars out of them. Ignorance => poor decisions => right back to poverty. It's much easier to start when you have little to lose in the first place and there's nothing wrong with having a backup plan to becoming a multi-millionaire in 2023.

 

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[Guyfieri5]

Buying something to make you better with money isn’t a good start to being better with money. I’ve always found that concept, like Dave Ramsey books, which happen to be expensive, oxymoronic.

If you’re talking about investing… You can make this as big of a deal or little of a deal as you want. Warren Buffet beat every hedge fund manager there was by buying and holding SPY. That’s it. That was his bet. He was right.

There’s the start. You can expand from there. Learn economics. Learn monetary theory. Learn the political headwinds and tailwinds. Learn commodities. Learn value vs growth. Learn options. Learn time decay. Learn to put time to work for you.

Ultimately, you can beat hedge funds… But you have to bet against the consensus and be right. The consensus doesn’t really make money.

I think the concept of personal finance is super overcomplicated. I say that because I read all of those personal finance books and honestly they got me nowhere. I could have just lived on less than I earned from the outset and focused on a business. I wasted so much time studying that crap.

 

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[socaldude]

But also does have a nice car, mid level BMW.

What she lost in depreciation on that car she could have already had her down payment LOL.

 

[woken]

Also, might be worth mentioning that if your income cannot cover basic costs like housing, food, etc, you shouldn’t be reading any money management books, but instead focus on earning more.

I think that, coming from the bottom, lots can appreciate this :

When your income is less or very similar to your basic expenses( again, only for survival) then cutting coffee won’t do you any good, especially when you brew it at home.

Then you have the other extreme as per @biophase ‘s example.

It’s both interesting and stupid how we always like to overcomplicate things.

 

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[Two Dog]

Then she tells me she spends $300-$450 a month on coffee in the morning.

My wife and I have fancy French press coffee almost every morning. From our kitchen, LOL.

Maybe you should buy her a travel mug. ;-)

 

[Kevin88660]

I’m working two jobs now and starting my fast lane business but don’t know how to manage my money. I’m 26 now and know tbh w habits I build up now will impact me for better or worse in the future. What are some books that will give me a good direction on money management?

As unconventional as it sounds I would say save a lot of cash than what others would advise.

Unless you have high six digit liquid assets investing bulk of your money for gain is a waste of time and effort.

Having cash gives you the dry powder for potential business venture or really attractive once in a life time investment.

It could also help you in family emergency like an Uncle needing help in sudden medical bill.

Over the years I have seen a lot of people complaining that They wish they had the money when they were presented with the opportunity.

i never had people crying about they losing too much on inflation for having the cash sitting in the banks for many years .

 

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[AppMan]

How much money you got to "manage"? I'm guessing you're wasting your time.

View attachment 42742

my life story, the first books Iv read was about investment , wasted years trying to be good stock investor . I should have learned the value of business

 

[WJK]

I was sending money to family in Ukraine (past Friday). Using Western Union means going to one of those Money Mart shops. In front of me was a 20 something year old labourer with a hard hat etc. I heard everything he talked about with the clerk behind glass and realized how some peoples lives suck so bad.

He only had a cheque for $800 that he needed to cash to pay rent that same day. He also had a loan with these loan sharks Payday money mart people. It’s probably worse than credit card.

And yet, when the clerk lady told him a super helpful tip to save money! All he had to do was change the dates for payments to match his paycheck schedule to avoid penalties (pay only interest if you are on time). Consider that his account is always overdrawn - meaning, both the bank charges penalties for that and the loan Money Mart people do the same! It’s insane how much he’s wasting given how little he has.

And guess what. He replied “oh I didn’t do it yet”
- why not?
- I’m just not that organized in my life

I felt sorry for him and also knew, his life will suck for a very long time.

You are 100% right, some people are destined to be where they are. Even when a solution is literally staring them in the face.

I see this type of problem all the time. I provide low to moderate-income housing through my residential rentals. Many times, my tenants are tenants rather than property owners as a result of their day-to-day decisions. I, like the clerk, can only suggest solutions to their problems.

 

[klaipeda]

Personal finance is a straightforward thing on paper. It's just addiction and subtraction. One rule it's elementary: don't spend more than what you gain.

There are some variables involved. If you grow up in a family with no money management culture, you'll grow up with money issues.

I have a friend with excellent money management, and he never read any book about personal finance.

In a nutshell, he constantly saves every month. He has a monthly budget for fun, and he keeps his lifestyle under control: no kids, no loans, no mortgage. He also moved out from Italy to the Czech Republic to reduce the expenses and taxes.

I didn't grow up in a wise money management family, and I had to learn all myself is reading books around. The "Barefoot investor" is great, even if it's tailored for the Australians.

Here are the main rules:

1) Keep track of what you spend monthly and yearly. Don't waste too much time tracking every cent, but have a good idea of where things are going. How much do you spend on groceries, bills, phones, cars, etc...

2) NO DEBIT. The best investment you can make is to get rid of your debts. It doesn't make any sense to invest, and at the same time, you have debts with interest ~10 or 20%. Get rid of credit cards, loans or other shit like that. Put every money you can into getting rid of debts.

3) Once you get rid of the debts, you can start saving. It would be great to save ~50% of the income.

4) Allocate a budget you can splurge on a monthly base. Drinks, games, whatever you like and enjoy. You can spend this money without regrets, and you need to have fun. You deserve that. (~10% of the income)

5) If you start to gain more, it becomes natural to add more expenses because now you can afford that. Think about that twice. What impact have on your costs? Do you need that? How much money do these expenses cut from your savings? What if you start to gain less? I like to think about that in relative value. If you want to buy a car, what is the cost compared to your savings in %?
Sometimes, you have to do mandatory things, but you can reduce the impact of the expense if you're wise. Need a new car? Try to buy a used one that is good and doesn't impact too much on your money balance. Unless you are already in the Fastlane, you have to think that your saving is investments to build your business.

These are the guidelines. You can have more bank accounts to manage the money your way.

The following are just guidelines. Adjust the % based on your situation.

~ Expenses: 50% (monthly and yearly)
~ Saving/Business: 30% (after removed the debt)
~ Fun: 10%
~ Emergency: 10%

Bonus:

Kids: wonderful thing to have a family, but it's also time-consuming and costly. Consider that you also have a wife/partner to deal. I have three kids and a wife, and I'm lucky and happy, but it's like running a marathon with one leg only.

Mortgage: we are fighting for the Fastlane here. I would stay away from the mortgage. If I were alone and young, I would live in a van for some years.

 

[SPM_ENT]

Profit First by Mike Michalowicz hands down.

I haven't needed to read anything else since I read it. That book helped me get one of my previous companies out of 300k in debt. In my current company using the system, I have cash flow for operating expenses, enough money to invest in the future, and take home a salary + distributions.

The business principles can be directly applied to your personal life in the same way.

 

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