Books that help your wallet
Every Sunday, The Simple Dollar reviews a personal finance book or other book of interest.
J.D. from Get Rich Slowly finally has a book out. It’s entitled Your Money: The Missing Manual and it’s part of O’Reilly’s “Missing Manual” series of books, which seek to essentially provide a “manual” for areas of life (usually technical topics) that certainly could use one.
I was a bit apprehensive when I heard that J.D. had a book coming out from O’Reilly. During my many years in the research world, I was involved in several large programming projects to facilitate data management and I had become intimately familiar with the books that O’Reilly produces. They’re great technical manuals, but they’re (almost) universally dry documents.
And there are an awful lot of dry personal finance books out there.
J.D.’s writing works because it’s not dry. The reason people read the better personal finance blogs isn’t because of the information alone – they can get that from any number of sources. They get read because the advice is relatable and realistic and rich with personal allusions and perspectives.
Would this go away in an O’Reilly book? I was unsure as I cracked the cover…
1 | It’s More Important to be Happy Than Rich
The book opens with the point that we’re seeking happiness, not riches. Money is merely a tool to get us to where we want to be. I like the analogy that money is like a very sharp knife – if used correctly, it can do amazing things, but if used incorrectly, it can make you bleed to death.
2 | The Road to Wealth Is Paved with Goals
How do you get to where you want to be in life? The key is goals. State exactly what you want. Write it down and make it very specific and concrete. Develop a step-by-step plan for getting there. Then, execute that plan. Without goals (and plans for reaching them), it’s very easy to simply walk in circles without getting anywhere.
3 | “Budget” Is Not a Four Letter Word
This chapter provides a short review of budgeting, including a brief look at some common budgeting techniques (like envelope budgeting). Given that budgeting is one of those things that works well for some people (and not very well at all for others – like myself), I think that this chapter’s focus on why we budget and the different pieces and techniques that can be tried is very good.
4 | Defeating Debt
Yes, debt. It’s often the enemy of personal finance success. When people finally realize how bad their debt situation is and decide to make a change in life, they’re often in very deep, with only a long, painful path leading them out. This chapter covers the basics of developing a debt repayment plan and getting your net worth headed in the right direction.
5 | The Magic of Thinking Small
Here, J.D. discusses frugality and the value of finding effective ways to trim your budget, both large and small. It’s a nice collection of frugality tips and, best of all, I’m quoted at length on page 91 of the book, discussing how trimming your expenses doesn’t have to be “un-fun” at all.
6 | How to Make More Money
Ask for a raise. Go for a second job. Start a small side business. All of these are great techniques for improving the “earn” part of “spend less than you earn,” and they’re all covered here. I personally think some of these, like the yard sale idea, are things that people should do quickly after figuring out their financial situation, because a quick boost of income can certainly get you started on the right foot when it comes to financial recovery.
7 | Banking for Fun and Profit
Your bank is a tool that can really help you get your finances in shape, but it can also be a chain around your neck. This chapter serves as a guide for finding a new bank and maximizing the value you get out of the services offered by a good bank today, from online banking to automatic transfers and competitive interest rates.
8 | Using Credit Wisely
The key to good credit is not to overuse it, and that theme runs straight through this chapter. Keeping your credit use under control keeps your credit rating high, your interest rates low, and your monthly cash flow in better shape.
9 | Sweating the Big Stuff
Obviously, when the time comes for major financial moves, you can save a lot of money by making those moves right. This chapter focuses on two major purchases (travel and automobiles) and largely concludes that you can do very well by thinking outside the box a little bit when it comes to those purchases.
10 | House and Home
Rent or buy? It’s a personal finance debate that seems to never end in personal finance writings. I think J.D. comes down in a good place here, focusing on the fact that buying a primary home is not an investment for most people, a mistake that many people make. I take it a step further and don’t even count the value of my home towards my net worth.
11 | Death and Taxes
This chapter covers a hodgepodge of topics, from insurance shopping to income taxes and life insurance. It doesn’t really seem to fit the flow of the rest of the book, but it does provide a lot of useful information for those who are picking up this book as a general personal finance reference.
12 | An Intro to Personal Investing
Here, J.D. focuses on the basics of investing – in other words, what do you do with your money when you’re consistently spending less than you earn? It’s all about goals, really. What do you want in the long term? Your investments are, in the end, merely tools to reach the goals you have in life.
13 | Retirement: the Final Frontier
For many people, retirement seems like a far-off thing that doesn’t need to be worried about right now. However, even saving a little bit right now will grow into a huge difference in your life later on because of the power of compound interest and the fact that saving a little bit all the way along simply adds up because of the scale of it.
14 | Friends and Family
The book closes with another “collection of topics” chapter, where things like loaning money to friends, dealing with marital issues, dealing with children, and charity are each covered in just a few pages. These sections each provide just enough food for thought to get you thinking.
Is Your Money: The Missing Manual Worth Reading?
The actual material covered in Your Money: The Missing Manual is pretty standard personal finance fare. Your Money: The Missing Manual really serves well as a single-volume personal finance primer, as it covers a broad range of information in one book. But, as I’ve mentioned many times, that’s a very crowded field of books. What makes Your Money: The Missing Manual stand out?
To put it simply, it’s the voice. J.D.’s voice comes through loud and clear in this book, much more than I expected it to given that it’s an O’Reilly title (which sometimes means a very technical voice). It’s that approachable, real tone that has made Get Rich Slowly a top personal finance blog, and it also works to make it seem like the advice in the book is actually real and that you can actually do it, too. This is something that’s missing in an awful lot of personal finance books, and it makes all the difference.
The voice sets this book apart, not the content. If you’ve read personal finance advice and never found it very approachable or relatable, Your Money: The Missing Manual is a great solution to that problem.
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