beginner's guide to personal finance?

[NuclearNed]

Does anyone know of a good book or other resource that gives some good basics about personal finance?

I'm looking for something that defines the terminology and maybe has some good finance/investment strategies explained in ways that I can understand.

I suppose I'm like a lot of people when it comes to finance & investing - I'm doing things I think are probably sound & correct, but I get lost in conversations because I don't understand the language...

On Amazon I see "Personal Finance for Dummies" and have had good experiences with the "for Dummies" series - is there anything else?

 

[maddogchen]

I really liked the personal finance for dummies book by Eric Tyson. I would recommend starting there.

 

[SunnyD]

The beginning guide to personal finance starts with money. You first need money to have personal finances. I'm still working on figuring out that part.

 

[sunzt]

Rule #1: Don't spend what you don't have
Rule #2: Pay back credit cards in full

That's the gist.

 

[NowheremomEH]

I rose from the dead and collected my own life insurance

 

[mvbighead]

Rule #1: Don't spend what you don't have
Rule #2: Pay back credit cards in full

That's the gist.

I think he is looking at the more long term outlook. IE - When I am retired, what should I have done from age 20-60/70 to have plenty of money to get me by in the later years of life so that I don't have to have a full time job at 75.

While your points are solid, tucking money away in a mattress isn't a sound idea. What do you do with the money you don't spend?

 

[Texashiker]

Rule #1: Don't spend what you don't have
Rule #2: Pay back credit cards in full

That's the gist.

Pay yourself before you pay anyone else (put money in savings), then live off the rest.

 

[Baked]

You don't need a book to tell you how to spend your money, because there's a huge difference between knowing and doing, and most importantly having the self discipline to stick to the plan.

It takes 5 minutes to figure out the priorities of where your money should go every month. After your monthly must pays like mortgage/rent/finance/utilities/CC interest payments, you have your extra moneys which you can decide if you wanna put it in savings/investment, or spend it all on hookers/blow/coffee/liquor/toy. See, it's not even hard, took me less than a minute.

 

[polarmystery]

You don't need a book to tell you how to spend your money, because there's a huge difference between knowing and doing, and most importantly having the self discipline to stick to the plan.

It takes 5 minutes to figure out the priorities of where your money should go every month. After your monthly must pays like mortgage/rent/finance/utilities/CC interest payments, you have your extra moneys which you can decide if you wanna put it in savings/investment, or spend it all on hookers/blow/coffee/liquor/toy. See, it's not even hard, took me less than a minute.

While I completely agree with you, I know MANY people who don't understand the concept in bold. I'm not sure if they are able to develop critical thinking skills, or they are just doomed. Rest assured, I know many whom don't understand the money in & money out concept.

 

[kranky]

I spent many years reading up on stocks and other investment options. I understand options, commodities, futures, bonds, etc.

And my conclusion is that if you want to build long-term wealth with investments, the boring, steady approach is best. Keep expenses low by investing in index funds, practice asset allocation with rebalancing, and make periodic investments. The "Boglehead" approach.

And if you are determined to create more excitement, partition off some part of your investment capital and go crazy with individual stocks and more esoteric investments, but keep it limited to that part of your overall capital.

My opinion only. I know others do it differently. But this system has been exceptionally solid for me.

 

[Murloc]

books like that are stupid, websites keep sending out articles and guides about how to save money for retirement and shit and it's not an exact science, there will always be somebody else with new better advice.

Personal finance that is not long-term investment doesn't need a guide instead.
You buy something when you have money to pay for it, except the house in which case a mortgage should never be over 1/3 of your wage (also applies to rent), which also means you don't get in debt with your credit cards, so if you can't control yourself get other kinds of plastic like debit cards.

 

[ringtail]

``

 

[Exterous]

Well, it doesn't define much terminology but I found Millionaire Next Door to be informative and interesting as it (IMO) shows what good personal finance practices are. It was pretty easy to find at my local library as well.

For a primer I have heard excellent things about William Berstein's books although I have not read it personally:
http://www.amazon.com/gp/product/0470505141?ie=UTF8&tag=bogleheads.org-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=0470505141
(Not available at my library )

As far as websites go I think http://www.bogleheads.org/wiki/Main_Page provides a great free resource for starting out. The forums are good too although I find the atmosphere a little too dogmatic at times

 

[Sho'Nuff]

Khan Academy has a bunch of videos on finance. Worth checking out.

http://www.khanacademy.org/

My golden rules of personal finance and investing:

1. Dollars in must be greater than dollars out.
2. Never carry short term debt. Ever.
3. Retirement savings are for retirement. Not anything else.
4. Invest in businesses you understand. Otherwise you are just gambling.
5. Similar to #2 - If you don't understand how a business makes money, don't invest.
6. Try to invest like you would eat whole fish sushi - don't eat the head (highest reward, highest risk) or the tail (lowest reward, lowest risk). Rather, eat the middle (moderate reward, moderate risk) and be satisfied.
7. Investment models are often based on a theoretical 7-8% return. But that type of return has not been a reality for most businesses in a long time. Don't be duped by model numbers.

 

[blackdogdeek]

do you have any specific questions?

 

[DaveSimmons]

I spent many years reading up on stocks and other investment options. I understand options, commodities, futures, bonds, etc.

And my conclusion is that if you want to build long-term wealth with investments, the boring, steady approach is best. Keep expenses low by investing in index funds, practice asset allocation with rebalancing, and make periodic investments. The "Boglehead" approach.

And if you are determined to create more excitement, partition off some part of your investment capital and go crazy with individual stocks and more esoteric investments, but keep it limited to that part of your overall capital.

My opinion only. I know others do it differently. But this system has been exceptionally solid for me.

This is what I do. Also, in the immortal words of Douglas Adams: DON'T PANIC.

During the last couple of stock market downturns, people yanked out their money and moved it to bonds or money market funds. When the market recovered, they moved back into stocks. Most people lost a lot of money this way unless they timed it perfectly. They "sold low then bought high" the opposite of successful investing.

I left my money in stock funds, and kept buying more. The fund shares I left in place did fine, and the new shares I bought during the dip did very well.

 

[Fritzo]

Go check out one of those Edward Jones places. They give sessions about the same price as a book, and it's a lot more personalized.

 

[Pheran]

I really liked the personal finance for dummies book by Eric Tyson. I would recommend starting there.

Seconded, this book is good.

 

[Fritzo]

This is what I do. Also, in the immortal words of Douglas Adams: DON'T PANIC.

During the last couple of stock market downturns, people yanked out their money and moved it to bonds or money market funds. When the market recovered, they moved back into stocks. Most people lost a lot of money this way unless they timed it perfectly. They "sold low then bought high" the opposite of successful investing.

I left my money in stock funds, and kept buying more. The fund shares I left in place did fine, and the new shares I bought during the dip did very well.

My inlaws did this and to this day they think it was the right thing to do. My father-in-law had $89000 in a 401K, it crashed and went down to something like $32000, and the moron withdrew everything for $14000 after taxes. They keep repeating "If I left it in there, there wouldn't have been anything left!" I tried to explain to them that their funds normalized a month after the crash and would have been back up to the $50K range. I just don't think they want to admit they made a huge mistake.

Ugh, makes me sick.

 

[Exterous]

This is what I do. Also, in the immortal words of Douglas Adams: DON'T PANIC.

During the last couple of stock market downturns, people yanked out their money and moved it to bonds or money market funds. When the market recovered, they moved back into stocks. Most people lost a lot of money this way unless they timed it perfectly. They "sold low then bought high" the opposite of successful investing.

I left my money in stock funds, and kept buying more. The fund shares I left in place did fine, and the new shares I bought during the dip did very well.

This is also why Asset Allocation is important. If you were in the accumulation phase (Younger) they you should be really excited about a down market. (Yay - stock sale!). If you are in the preservation stage (close to retirement) you need to have a significant portion of your investments in more stable areas (Bonds, TIPs, etc) because you do not have the time frame to recover your losses from a down market

Fritzo's story is a very valid warning

 

[ichy]

Syndicated Dave Ramsey column in our local paper is good, and his web site has what you seek.
http://www.daveramsey.com/category/get-started/

Dave Ramsey is only great for simpletons.

 

[Vdubchaos]

Rule #1: Don't spend what you don't have
Rule #2: Pay back credit cards in full

That's the gist.

THis

And Investments are no different than casinos, a gamble (regardless what you read/learn).

Personally unless you are talking 401k, I don't gamble.

 

[blackangst1]

OP: go to the library and check out 4-6 back issues of Money magazine. It is written in layman's terms, for the most part, and they cover a gammut of money issues. Read them cover to cover. After the 5th or 6th one, it should "click" and somewhat make sense.

 

[AznAnarchy99]

Dont pop bottles at clubs when you dont have the money. That's my advice.

 

[Corporate Thug]

THis

And Investments are no different than casinos, a gamble (regardless what you read/learn).

Personally unless you are talking 401k, I don't gamble.

One is almost entirely based on chance, the other is heavily influenced by due diligence. Still a gamble, but the odds are way different than those in a casino.