Personal Finance Book Suggestions?

luc13n asks: "I've seen others making requests for books or reading suggestions. I've been out of college and working professionally in the IT field for two years now. I have some money in the checking account and the savings account and I've started wondering... is there a better way to manage my money? Kinda the old adage 'make your money work fo you'. Does anyone have any good suggested readings to teach a 'young'n' how to 'make his money work for him'?"

Comments

"Your money or your life"

[Nutcase]

Before you run off and start investing and "making your money work for you" in the traditional sense, have a look at this. It certainly doesn't fall into the traditional "more more more" mindset of most people - instead if focuses on "what is enough" and making you happy.

In the words of the late, great Douglas Adams - "these people were extraordinarilly unhappy and attempted to correct their problem by spending all their time moving small pieces of green paper around - which is odd because on the whole it wasn't the pieces of green paper that were unhappy."

Just a different perspective from the norm - but one that may do more for you than any book on the money markets ever could.

Re:"Your money or your life"

[PD]

Right. There's two kinds of money - enough, and not enough. When I was in college I had no money. Just like a lot of people. I determined back then that when I reached the point where I could decide to go to the theater and see a movie, on a whim, any time I liked, without worrying about paying the phone bill, that would meet my definition of "enough" money. Everything past that would be gravy.

What I discovered was that it takes a surprisingly small amount of money to meet that definition. I'm not saying that you should set your goals as I did way back when I was a poor college student, but you should set some kind of goals first. What do you want to make the money for?

If your goal is to make a billion dollars in order to become a patron of the arts, that's a completely different strategy than to save two million dollars by the time you are 65, so you can go on a permanent RV camping trip driving between your children's homes.

Pick your goal first, figure out how much money is "enough", and center your life on the improvement of the person and not the acquisition of stuff in the meantime.

Go ask a fool

[hariya]

Check out the Motley Fool website. They have good advice on saving up based on your goals -- saving for that new car(dont lose principal) vs. saving for retirement (maximise returns). They also have a book and pretty decent advice in general. If you want one piece of advice, dont play the markets by buying individual stocks, just invest in an index fund.

Right out of college

[Glonoinha]

Honestly you will never be as rich as you feel the first three months of gainful employment right out of college (assuming you can find a job.)

The reason for this is you go from the +/- minimum wage paying job you had taking home $425 a month so you could afford Ramen and Peanut Butter and Dr. Pepper and Bacardi Rum and live in a small apartment with three other roommates ... have about $25 a month left over after bills, food, etc... to buy whatever you wanted - to a job bringing home $2250 a month after taxes, still living with 3 roommates still paying about $400 a month for bills and rent. All of a sudden you have 80x the amount of 'fun money.'

Then you go out, buy a new car, rent your own place, fill it up with stuff (all charged on your MasterCard,) start running the air conditioner, eat out all the time, pay the entire set of bills yourself (not split 4 ways anymore), actually get full coverage insurance on your car, have pizza delivered 5 times a week and Bingo! you are right back to $25 a month left over after you pay all the bills.

I think my monthly liquor bill now runs more than my entire monthly living budget when I was in college (+/- $400 a month) Granted I have been out of college for a little while now, but still.

-:-

Another thing to note - if you take the above and stretch it a little, anybody making $20k a year more than you is rich simply because you would consider yourself rich if you had another $20k a year. Problem is if you start earning another $20k a year you actually only take home about another $1000 a month and within a few months your lifestyle grows to absorb that.

-:-

Original Poster :

If your boss offers you a 401(k) and offers any matching whatsoever (ie matches $1 for each $1 you put in up to x% of your salary) be sure you are putting in as much as possible to maximize his matching funds. Even if the stock market is losing 10% a year, if your employer matches your contributions you are still earning 80% on your money the first year (which is AWESOME.)

Another thing, arrange credit NOW. While you have good cashflow look into overdraft protection on your checking account (no more bounced checks, not that you ever did that anyways, but having a $1,000 credit line attached to a checking account is one of the best things I ever did.) Build your good credit file, buy big work related items on your personal credit cards (travel works too) and pay them back in full at the end of the month (expense account.) In 5 years when you have awesome big credit and can buy a $250,000 house at 5% instead of at 8% you will really, reall thank me for this.

Find out what it takes to get the MBNA Quantum card. Do those things. Getting the card is less important than being able to get it.

Investing Help ...

[vorwerk]

Websites:

http://www.bylo.org
http://stingyinvestor.com
http://www.fool.com
http://www.moneysense.ca
htt p://www.canadianmoneysaver.ca

Books:

Random Walk down Wall Street (by Walkel)
The Intelligent Investor (by Graham)