I never took a class on economics or personal finance in high school or college.1 I believe this more a reflection on the American educational system than own leaning prejudices, but I also believe that schools should teach children how to swim and teenagers how to drive stick shift. Until my mid-twenties, my formal financial education consisting of learning how to write a check in home economics in middle school; informally, it consisted of my father instilling in me with the idea that so long as one spent less than they made they’d get along just fine in life.
Sometime after college, when I was in my early twenties I picked up a used copy of Dave Kansas’ The Wall Street Journal Complete Money & Investing Guidebook. I did so for three reasons. First, I wanted to be an adult. Adults invested in things so it seemed natural that I should acquaint myself with the topic. Second, the cover had the words “The Wall Street Journal” emblazoned on the cover. I didn’t know a damn thing, but it seemed like a good and reliable source of information coming from a familiar, if not trusted name. Third, I marveled at the notion that such a book promised to be a “complete” guide and was only about 200 pages in length. Did I want to know everything about money and investing and not have to spend more than a few hours in the process of accumulating and absorbing such knowledge? You bet!
It was a devil’s bargain. I read the book and did not feel any more adult.2 I did not start investing. I did not need to know about options or futures. I didn’t need to know about hedge funds. I certainly couldn’t afford to throw money into one. I put off learning about money for another good five years.
Eventually, I came around and have since been exploring the topics of economics, finance and investing with fervor. This blog stands testament to that. It got me thinking about what I might tell someone today if they came to me having read The Complete Book of [insert money topic here] and finished disappointed.
If someone were to ask where to begin to learn about this stuff here’s what I’d tell them and some resources I’d recommend. First, don’t worry about knowing everything. You don’t need a complete guide to everything (or anything for that matter). You need a compelling guide to the money issues that concern you. For someone about to graduate college, this might be book about paying off student loans. For someone, who has a job and 401(k), this might be a book about low-cost index funds.
Second, find reliable and sensible experts on those topics that interest you. Some general writers I recommend include Jason Zweig, Beth Kobliner, Jonathan Clements, and Carl Richards. All have blogs or websites filled with a wealth of free information; they also all have written some wonderful books. Another resource that’s perfect for beginners (or people who want to beef up on a particular topic): Khan Academy’s Personal Finance course. It feature lessons on everything from Ponzi schemes to ETFs to renting versus buying a home.
Third, know that learning about the economics, finance and investing should fun and interesting. If it isn’t, you’re headed down the wrong path. I don’t know of anyone who learned to love eating vegetables because they were forced to eat their steamed broccoli.3 Ones tastes evolve when they’re exposed to different preparations and other vegetables. I came to appreciate salads when I realized they need not be composed of solely iceberg lettuce, shredded carrots and ranch dressing. I came to appreciate how interesting economics, finance and investing could be when I started listening NPR’s Planet Money podcast.4 Eventually, I started reading about this stuff again and discovered the three books I’d wished I encountered all those years ago (granted they hadn’t been written then):
- Jonathan Clements’ How to Think About Money
- Carl Richards’ The One-Page Financial Plan
- Burton Malkiel and Charles Ellis’ The Elements of Investing
Those three books really sent me down the rabbit hole. I still don’t know everything there is to know about the topics of economics, finance and investing, but I’m excited to learn which is something I never felt when being taught how to write a check in middle school.
1To be fair, there was a business requirement in high school, but this was easily fulfilled by class that taught me how to use PowerPoint and program in html. I would have arguably benefited much more if someone had merely taught me about the power of compound interest, but c’est la vie.
2The Wall Street Journal Complete Money & Investing Guidebook was not a horrible book; it just wasn’t the right book for me. That being said, it is worth noting that it has not been reissued since it’s original 2005 publication. It’s wildly out of date.
3I still don’t like broccoli, but I love broccoli rabe.
4Episode 668 “Brilliant vs Boring” is one of my favorites.