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. Â 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. Â 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). Â 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 –Â we’re all on a journey to pursue financial freedom and ultimate independence. Â 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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Personally, I like books that challenge the assumptions of mainstream investing, like Taleb’s “Fooled By Randomness” or “The Black Swan”. Also in the finance world, you can learn a lot from Michael Lewis’ books. He tells great stories and makes you question if Wall Street is really able to provide a fair and stable investment marketplace.
Unfortunately, while these books might make you smarter, they don’t really help with personal finances!
Good recommendations-I’ve read Liars Poker and I saw Moneyball-any other Michael Lewis books you particularly like?
I’d strongly recommend Nassim Taleb’s books. To Rich’s point, they do challenge conventional thinking from a historical and philosophical point of view.
This is a great review. I think a lot of people out there might feel the same about the repetition of these books but don’t want to say it.
I myself have stopped reading articles and posts about how to save on groceries because it’s always the same things: budget, meal plan, Ibota, etc. I know it’s helpful to a lot of people. But I’ve read it over and over everywhere, so now I want to cringe a little when seeing the words “budget” or “meal plan.”
What do I do instead? I started to write my own blog. I feel like I’ve taken into so much helpful information that I want to produce mine.
I agree with you writing and reading are different. But I think you also write very well.
Thanks! Writing has never really come easily to me, so I’m glad to hear that you think I write well. I’m with you on the same old advice-it’s pretty easy to find the basic information online/in books/in podcasts, but it’s very repetitive. There are a lot of sites and podcasts I used to visit regularly that I’ve given up on because there was nothing new to learn after a while.
I think you answered your own question in a way.
The basics are easy, mostly common sense when you think about it… the problem is most people don’t stop and think (many don’t think at all!).
Once understood the question is how to apply them, which I think is the niche the blogosphere sort of fills. A little bit of good advice, and awful lot of echoing, and eventually some uneducated “Chinese whispers” style oversimplification of those lessons to make things seem effortless and instant.
Once applied all that is required is patience, and the occasional monitoring. That doesn’t make a compelling plot for a book, not much room for character development either!
There is a reason for the findings in that fabled Fidelity study, where their most successful customers were those who were dead or had forgotten they had accounts: set & forget = patience
So true-the basics are pretty straightforward. It’s applying them over the long run, continuously, and avoiding mistakes that’s hard. Not a very compelling book.
The last book that I really took something from was I will teach you to be rich. I was able to glean some really interesting points but nothing like the FIRE stuff that bloggers mainly talk about. Although Dave Ramsey does talk about something called the Legacy Journey which I haven’t read but have taken the course. It was alright but I don’t really recommend it to folks.
When it comes to Ramsey, mostly what I see from others is that he’s great at motivating you to get out of debt and get you on the right financial track, but not so much at the end investing/building wealth part.
I think authors don’t write advanced books because the specific details are very tailored to every individual.
Let’s say you have 100 potential readers who are interested in PF. The author will probably write a generic run-of-the-mill topic that appeals to 90. If he were to write something advanced/specific, he would only appeal to 10. It’s just not good for business.
True, the more people it can apply to, the more product you’re going to sell.
I think it comes down to advanced pf is essentially about consistency, not some advanced hidden concept. Long term repetitive things don’t sell well. I prefer more books about financial events. Someone already mentioned Michael Lewis. There are other in this area though. I recently finished “Den of thieves” which takes a look at the prevelence of insider trading.
I think you’re right – it’s not that there are advanced secret strategies out there, it’s about applying the basic strategies consistently over time. I’ll check out Den of Thieves!
I agree with your assessment, which is why I’ve not read any of the basic personal finance books, with the exception of one and it is more of an investing one anyway – The Little Book of Common Sense Investing by John Bogle. Honestly, I think that the bajillion early retirement blogs out there provide more interesting and original ideas and information and even inspiration. I especially appreciate how folks are willing to own up to their mistakes and share what they have learned. Although it’s somewhat technical – William Bernstein’s The Four Pillars of Investing is a decent one though it’s not a quick read. Great post!
Thanks for the recommendations! I’ve read Bogle’s book, although it’s been a while, but I don’t think I’ve read the Four Pillars of Investing. I’ll need to see if it’s at the library.
It’s a bit of a slog, so be warned. But if you are into this stuff, it’s a good one to have read!
It’s the same in Australia, CMO. A recent bestseller was Scott Pape (The Barefoot Investor)’s latest. While I haven’t read it, my nephew proudly shared how he had followed Scott’s advice to move some of his money from his everyday bank account to a high interest savings account. So yes, quite basic, because it’s the same here – so many people here that aren’t even at that level yet.
Interesting that it’s the same around the world! What are the most popular personal finance books over there? Are they the same as America, or do you have different ones?
While you are a fast reader and it appears you read whole books, on the main people who buy books don’t actually read them! Only about 10% actually read it. Or so I hear tell. The trend appears to be more toward ebooks and quick gulps of information you can read it one sitting. So why not rewrite if the people who bought the first book didn’t read it after all and you can make money from them buying yet another? Maybe they can find new information in the first few pages of THIS BOOK…or not
Great review. It is insane how many of these offer the virtually the same “basics” without offering much in the way of new strategies or insights. I feel like there’s even a simple recipe with titles where you need to have a number and mention “secrets” and be ironic: “5 Secrets to Getting Rich by Staying Lazy,” etc.
I found myself going back to classics like “The Intelligent Investor” (Buffet’s fabled “favorite book”) by Benjamin Graham and “Security Analysis.” Both are actually quite approachable and led me to do more independent research doing my own research into new terms/ratios, etc. on Investopedia, etc.
I’m just getting into the blogging world and hope my niche will be more advanced/interesting concepts. (For instance, there what sound to be sophisticated things like the “Fama-French three factor model” (and now there’s a new 5-factor model..) that is actually pretty intuitive to apply when thinking about investments:
They found that a) small caps & b) stocks with high book-to-market ratios tend to do better than the entire market. Thus, this led me into considering allocating a higher percentage of my portfolio to a small-cap index fund since I’m not looking to dip into my funds for 30+ years. (More on that here: https://en.wikipedia.org/wiki/Fama%E2%80%93French_three-factor_model).
Also, it led me to learn about book-to-market ratio, which is pretty simple and can be calculated for any stock in a minute or two using data from google finance. (Book value is just the total assets – liabilities and market value is just the total value of all outstanding shares… it feels intuitive that if the value of a company’s assets – liabilies (say this equals $2bln) is greater than the market value (say all shares equal 1bln), then the stock might be undervalued and overperform over the long haul!
Hope I’m not too “in the weeds” here, but I really did want to share something possibly new or unexplored in most books like these!
Excuse the self-promotion, but I’ve got a great list of books on investing and what to do with your money once you are saving and out-of-debt on my blog in the “Books on Investing” page: https://wordpress.com/page/smallivy.com/6732 . These books really form the background needed to do well investing your own money. The last book is Atlas Shrugged, since if you don’t understand the lesson from that book, it won’t matter how well off you are financially since the looters and the moochers will just take it all from you.
Reblogged this on The Small Investor and commented:
Definitely true that a lot of the personal finance books are the same, but then again parents teach about as much about personal finance to their kids as they teach about sex, so it is no wonder that there is a lot of basic material out there. For some good books on how to manage money, once you have some, check out my “Books on Investing” page, or pick up a copy of the SmallIvy Book of Investing.
I picked up Dave Ramsey’s Total Money Makeover years and years ago and yawned thinking it was all the same stuff I had read over and over. About 5 years later, my husband (who doesn’t enjoy personal finance talk/admin/etc.) actually bought a copy and brought it home. That’s when I saw I totally missed what DR was offering – a solid basic plan with a good dose of attitude served up in a way a guy like my husband woud enjoy. If I had picked up on it earlier, we’d be even further ahead. I was “doing it right” but my nerdy monologuing was driving my poor husband crazy. It took DR’s aproach to break us free (and I think he helped our marriage more than our finances). All that to say, I’m glad there was more than one personal finance book out there.
When I first started learning about money I hit the personal finance section of the library and came to the same realization and craved for the “next level” and like some earlier commenters suggested, that’s what led me to blogs. I really do think we are a market that is left untapped!
Ooh maybe you should be a writer! You’re already blogging and you’re cranking out a lot of posts, might as well right? lol, whatever you choose, I’m rooting for you!
That might be fun! I’d have to make sure it was a fun & interesting book though. 😀
Rich Dad Poor Dad by Robert Kiyosaki and Awaken The Giant Within by Tony Robbins are two books that I have read recently that I found extremely beneficial. I think the key to personal development is to be sure to refer to multiple sources and compile what makes the most sense to you. Good luck!