Being Financially Literate
March 26, 2008 · Print This Article
One of the best investments you can make in yourself is to increase your financial literacy. In fact if you only have 10 hours this year that you can invest in self-improvement there are very few ways you can better spend that time than reading a book on investing and financial management.
Go ahead and take the time to visit your library and find a few books on investing and financial management. Even if you just skim the parts that look interesting you’ll find this small investment can make a big difference in your ability to plan financially for the future.
The Wall Street Journal has a good book on investing that I’d recommend. What do other people suggest? Is there a financial book that you would recommend?
Good management of your finances can have one of the biggest impacts on your productivity because it determines how efficient you convert your time into money into the things you need. On Wednesdays we are discussing the financial aspect of productivity. Watch for more financial posts in the future.
I recommend The Total Money Makeover by Dave Ramsey (www.daveramsey.com). He has a daily radio program of which an hour is downloadable free via podcast. I listen to it every morning on my commute to work. It’s really great material on the day-to-day aspects of money as well as the long-term perspective.
The Total Money Makeover by Dave Ramsey
For Spanish speakers, there is a book called “Finanzas para papá” (Finances for dad), which talks about personal finances and what you should do or expect depending on what “stage” you are in your life.
I have found The Bogleheads’ Guide to Investing by by Taylor Larimore, Mel Lindauer, & Michael LeBoeuf to be very insightful and I would highly recommend it.
The Total Money Makeover by Dave Ramsey - in fact - read EVERYTHING you can by this guy. It’s amazing.
Although, instead of spending at 10 hours reading - I’d spend the 29 hours and either go to his live event or watch it online.
What is the name of the Wall Street Journal book?
Wait… which book do you recommend? Maybe an Amazon link?
Dave Ramsey is good. He tends to focus on the behavioral aspects of personal finance, which for most people is appropriate.
I really like The Richest Man in Babylon by George Clason. I read it when I was about 12; it changed my life.
Also, Learn to Earn by Peter Lynch is a great introduction to investing.
In my mind, “financial literacy” is about much more than investing. Really, “literacy” implies basic skills and practices, that is, what you do to build a sound basis, which later provides opportunities for investment.
There are a number of free sources of information from banking associations, aimed at educating their customers. A good place to start is “myFICO” — you have probably heard about your “credit score” and its importance to your credit relationships. Visit http://www.myfico.com and take the “Credit Education” tab.
Another place to build financial literacy would be the MyMoney site, http://www.mymoney.gov, which, in spite of its name is actually a reliable government source (the Financial Literacy and Education Commission). Besides basic information about retirement planning, saving and investing, and so on, there are some handy “calculators” you can use to better manage your money and make financial decisions.
Many individual bank sites will also have links to independent sources of information. Getting the fundmentals of financial literacy down from these free sources is a good first step, so then you can save your money and “invest” it in books after you have learned enough to know what you don’t know, but want to.