What is a 401k? An IRA? Why should you open an emergency fund? What’s the difference between a ROTH and a traditional IRA? How much will your credit card debt cost you over time? Is it better to pay down loans or invest? What are the different types of student loans? How does compound interest work? What is the Rule of 72?
As longtime readers know, on Saturdays I usually do a review of a book that I’ve read – sharing the lessons inside and trying to give you an idea of the target audience so you can decide whether you should pick it up, skip it, take it from the library, or give it to a friend/family member.
To be honest I’ve spent too much time lately focused on the Personal Finance book genre. It was after reading this latest book, and finding so little new information in it, that I started to feel like I was stuck inside the movie Groundhog Day. So after next weeks review I’m going to move onto some other topics – ones that can help improve your money, work, and life – but are decidedly NOT personal finance basics books. I was hopeful for this one because it’s targeted at people in their 20’s and 30’s, just like me. But, nope.
Feeling Like A Personal Finance Weirdo
Whenever I read one of these personal finance books targeted at people my age, I’m reminded of just how much I’m not like…other people my age. Now, there’s nothing wrong with this book. In fact, I’d say that it’s a great comprehensive overview of all the major personal finance topics – debt, saving, investing, home purchases, and so on. Sadly, I’m almost always disappointed when I read personal finance books that are targeted at my age demographic. They’re just too basic for me, assuming that someone in their 30’s who doesn’t work in the industry knows absolutely nothing about finances. And they repeat a lot of the same old information.
This repetition in personal finance books actually came up in a discussion in the comments of my prior post recapping “Smart Couples Finish Rich” by David Bach.
Hatton1 was the first person to mention it in the comments, and it was echoed by Troy from Market History. There are sadly very few personal finance books that actually provide new information. If you’ve read one basics book, you’ve read them all. You might pick up a bit of new information , but you’ll soon find yourself skimming over large parts of them because they’re covering things you already know (what is a stock? what is a bond? why do bond prices go down as interest rates go up? And so on).
Why are all these books on the NY Times bestseller list? How do they sell hundreds of thousands, or millions, of copies without dispensing any new information?
My guess? It’s because there are so many people out there that don’t pay any attention to their financial lives. They’re busy out there living their real life – working, raising kids, having fun – and they’ve never given a thought to their finances. One day they hit a point where they figure out that they need to get smarter about money.
Perhaps they finally realize their debt is holding them back from living their dreams, keeping them stuck in the rat race, needing to run faster and faster just to stay where they are. They want to escape that rat race once and for all, and realize that their current financial picture isn’t where it needs to be to do so. So they decide to educate themselves, and they need to start somewhere.
So they hit Amazon, or their local bookstore (probably not the library), determined to get educated once and for all. They need a book that hits on everything they need to know about money, but isn’t a boring slog through all the technicalities or detailed technical information.
They pick up a book that skims through a summary of the basics of personal finance, hopefully one that’s written in a way that’s very readable. Maybe there are pictures or stories, or perhaps it’s just written at a very low reading level. Hopefully the book has easy, clear steps to getting your finances in order, and an introduction to the basic tools you should be using to save for emergencies, retirement, and pay off debt. An overview of the difference between stocks, bonds, index funds, mutual funds, and treasury bills might also be in order. And so on. It may, in fact, be the only personal finance book they ever read.
So the books sell millions of copies and help change lives. And that’s great! I have no issue with basic books, and I do like to be familiar with the new ones out there so I can make good recommendations to the kinds of people that don’t count personal finance as one of their hobbies. Since that’s most people in the USA (and probably in the world – Mrs. ETT can you confirm if it’s the same in Australia?) there’s always people out there that need a basic overview.
Reading Quickly Has A Downside
I’m an avid reader. I’m also a fast reader – that’s how I can do so many book reviews (Mr. Jumpstart, that info is for you – I remember you asking once in the comments how on earth I can review so many books). I can read a several hundred page book in just a few hours, and a thousand page book over the course of a few days. How can I read so fast? I honestly don’t know. I’ve always been able to read quickly, and retain the information I’ve read very well. It’s something I’ve inadvertently passed on to my kids, because they can read almost as fast as I can. The 13 year old can also finish a several hundred page book in just a few hours, and my nine year old is fast catching up.
Being such a fast and voracious reader has a downside, though. It means that I need to keep a rather large supply of books on hand to read, otherwise I’ll run out of material. I’ve come to use the library and my favorite used book store in Niantic, CT to keep me stockpiled with things to read. And when I get interested in a topic, it means that I can read a lot about it. It’s then I’ll start encountering a lot of repetition.
A quick side note – my ability to read so quickly has led a lot of people to tell me over the years that I should be a writer. I don’t think those people understand that reading and writing are two very different skill-sets, and being a good reader doesn’t somehow auto-magically make you a good writer (and vice versa). One of my big goals for this blog was to become a better writer, by…writing regularly. I do plenty of writing for work, and did for my MBA, but before this blog I did none for fun.
Where Are All The Advanced Books?
This personal finance Groundhog Day experience has made me wonder – where are all the advanced books? Where are the books for the next step in your financial journey – when you’re ready to go beyond the basics and are looking for guidance?
These personal finance basics books sell well because they’re targeted at the masses that aren’t knowledgeable about personal finance. Well, guess what book companies? Some of us out here are very knowledgeable about finance. We read the basic introductory books years ago, and although they were extremely helpful at the time, we’ve outgrown them.
We don’t have credit card debt, payday loans, personal loans, or car loans to pay off. We don’t have student loans. We don’t have mortgages, or we’re on track to have them paid off soon. We don’t have to make a decision between funding retirement and saving for college – we can do both. We’re millionaires, or well on the way. We’re financially independent, or headed there soon. And we don’t necessarily make millions of dollars a year as corporate executives. We got here by putting into practice all those personal finance basics, by saving and investing, and by socking away large amounts of our income while our peers were out spending.
Where are our bestselling books?
The lack of traditional media targeted at us is, I suspect, one of the reasons that blogs in this space have taken off. There are people out there like me (possibly you, if you’re reading this) that already know the basics. Sure, I love occasionally sharing basic information, and I like to be knowledgeable about the current best sellers so I can make recommendations to non-financially focused friends, family, and co-workers. I’m also always on the lookout for changes in the landscape, because those are new (example, the new 529 ABLE accounts). But people who’ve gone beyond Personal Finance 101 want something more.
We want to see other how other people put those basics into action, and to see other people on a similar financial path to them. Even though everyone is in a different life situation – different jobs, locations, industries, family situations – we’re all on a journey to pursue financial freedom and ultimate independence. We’ve gone “beyond the basics” and want to learn more.
So we turn to our peers – to others who are on that same journey. We read blogs (or write them, I suppose), join forums, and listen to podcasts. We cheer on and help out those who are behind us on the path, and learn from those that are ahead of us. We use the information that we learn from our peers to tweak our own plans, rethink our own perspective.
So Let Me Know – Books Beyond The Basics
For everyone else out there wanting to go beyond the basics, what are the best books to read? What have you read that changed your perspective on finance, work, or life? What should I start looking for at the library next? Let me know in the comments.
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