From the Rummel Wealth Management mailbox, where, as always, these are real questions from real readers.
From Jane in Frankenmuth: My son is a junior in high school. He makes a few thousand dollars per year at a part-time job, and I think it’s time that he starts to learn more about money. What books would you recommend for a teenager or young professional to start them down the right path?
Marc: We love reading books on personal finance (NERD ALERT). There are tons of classics that are still popular today, because great financial advice really doesn’t change that much over time. But realistically, most of the classics are either too technical for the average reader, or just plain boring – especially for a high schooler. Personal finance ultimately boils down to a few key concepts: Spend less than you earn. Develop a budget. Save as much as you can, as often as you can. Manage your debt. Align your portfolio with your goals and risk profile. Pay attention to fees. Track your net worth. Let compound interest do its thing.
But to answer your question, here are a few books that we think are detailed enough to be impactful, but light enough for the average reader to actually finish.
1) Total Money Makeover by Dave Ramsey. This is hands-down the best book for getting out of debt and learning budgeting basics.
2) I Will Teach You To Be Rich by Ramit Sethi. IWT is the most practical personal finance book I have ever read. It demonstrates how to define your “Rich Life”, then lays out the actions steps needed to achieve it. Best of all, it teaches you money systems to automate your plan and improve your financial life without even having to think about it.
3) The One-Page Financial Plan by Carl Richards. The “Sketch Guy” Carl Richards helps take the stress and complexity out of financial planning by getting you to focus on the big picture.
1) The Tortoise and the Hare by Aesop. Gosh darn if the tortoise doesn’t win every time since Aesop wrote the fable. With investing, slow and steady beats quick and careless every time.
2) The Intelligent Investor by Benjamin Graham. Want to get your son’s attention? Billionaire Warren Buffet read this book at age 19 and says it changed his life. He calls The Intelligent Investor “by far the best book on investing ever written”. It does get a bit technical, so it may be more appropriate for a college student than a high schooler.
3) Think and Grow Rich by Napoleon Hill. This book is less about investing and more about wealth and success in general. Our biggest enemy is the person that looks back at us in the mirror each day. Read this book to help overcome.
4) The Millionaire Next Door by Thomas J. Stanley & William D. Danko. The authors interviewed hundreds of millionaires and found that those with a seven figure value are often hidden in plain sight – middle-class and blue collar neighborhoods, and not just white-collar communities. Learn the life-long habits that allowed them obtain such a significant financial position.
Marc: Those are our recommendations. Love ‘em? Hate ‘em? Have other suggestions? Let us know! And submit your questions to firstname.lastname@example.org to be answered in a future mailbag post.