Everything You Need to Know about Personal Finance in 7 Minutes
If this is the year you finally resolved to get on top of your finances, now’s the time to start making smart decisions about your money. Not sure where to begin? Whether you’re fresh out of college or just starting to take your moolah more seriously, here are 10 tips from today’s top books on boosting your bankroll.
1. Get into the right mindset
from A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan by Ben Carlson
A Wealth of Common Sense
- 12 min reading time
- audio version available
Before you can become a financial phenom, it’s important to know where you stand now. Assess your current financial situation with an open and honest mindset, and commit to actively monitoring it. While you’re at it, agree to limit the influence of your personality and emotions over your investments. Realize that you don’t (yet) know everything there is to know about finances, and that you’re not going to get rich overnight.
2. Ask yourself why money matters, then make a plan to get it
from The One-Page Financial Plan: A Simple Way to Be Smart About Your Money by Carl Richards
The One-Page Financial Plan
- 12 min reading time
- audio version available
Why do you want to have more money? Everyone’s response is different, but once you answer that question you’ll have an easier time upping your income. Define exactly why you want to be more wealthy, then develop goals that align with your answer. Create a basic balance sheet that tracks your spending, saving, and investment habits, then tweak your behavior to make your objectives more obtainable. Develop a financial plan specific to your situation, and set flexible, realistic goals you can aim for.
3. Shop around for a better…everything
from Get a Financial Life: Personal Finance in Your Twenties and Thirties by Beth Kobliner
Get a Financial Life
- 12 min reading time
- audio version available
Don’t wait until retirement to start pinching your pennies. Make life easier on future you by choosing the most appropriate banks, insurance companies, and other service providers for your unique situation. Why continue to pay a $3 surcharge every time you withdraw cash from that nearby ATM, when you can simply open an account with that bank and save hundreds of dollars each year? Examine your expenses to find areas of excess spending, then refinance loans, renegotiate rates, and do whatever you can to lower or eliminate long-term fees.
4. Invest early, often, and all over
from Millennial Money: How Young Investors Can Build a Fortune by Patrick O’Shaughnessy
Millennial Money
- 15 min reading time
- audio version available
Money sitting in your savings account isn’t doing much good in terms of purchasing power. So if you’re not already investing, start now even if it’s only a modest amount. Spread your funds around to include investments all over the world. Not only will this tactic limit your exposure to a corporate or economic collapse, but it increases your odds of actualizing wealth. Buy cheap stock, but search for true bargains. Seek inexpensive shares that have experienced significant price increases in recent months, and you’ll be more likely to see sizable returns in the future.
5. Focus on the big picture
from The Intelligent Investor: The Definitive Book on Value Investing by Benjamin Graham
The Intelligent Investor
- 21 min reading time
- audio version available
For a failsafe route to financial success, follow in the footsteps of legendary investor Warren Buffett and embrace a long-term, risk-averse approach to the stock market. Rather than falling victim to a short-term earnings trap, buy stocks that are priced low relative to their long-term trajectory for growth. Only by examining a company’s financial history can you develop a knowledgeable perspective on this. Your best bet for long-term profits? Invest in AAA government debt securities and other high-grade bonds, as well as common stocks that grant you voting authority in major business matters.
6. If you’ve got debt, start rolling a snowball
from The Total Money Makeover: A Proven Plan for Finance Fitness by Dave Ramsey
The Total Money Makeover
- 16 min reading time
- audio version available
Got debt? If so, you’re far from alone. One winning strategy to escape from underneath what you owe is to embrace the debt-snowball method. This involves listing your debts in order of amount owed, then systematically paying down your smallest debt first while making minimum payments on all other accounts. This approach might not seem as intuitive as paying down high-rate debts first, but the satisfaction you’ll get from paying off smaller balances will provide you with the momentum you need to escape debt for good.
7. Break up with brokers and find a fiduciary
from MONEY: Master the Game: 7 Simple Steps to Financial Freedom by Tony Robbins
MONEY: Master the Game
- 13 min reading time
- audio version available
When it comes to working with stock brokers, it can sometimes be hard to tell if they’re looking out for your best interests or their own. Fortunately, there’s a type of financial advisor who doesn’t have a stake in the game and only cares about your bottom line. These experts, known as fiduciaries, are legally required to operate without any conflicts of interest, meaning you can trust their advice without wondering what’s in it for them.
8. Invest in owner-oriented CEOs
from Rule #1: The Simple Strategy For Successful Investing In Only 15 Minutes Every Week by Phil Town
Rule #1
- 15 min reading time
- audio version available
When choosing companies to invest in, opt for those run by owner-oriented CEOs. These execs make long-term decisions in their shareholders’ best interests and communicate honestly regardless of how well or poorly their stock is performing.
Keep an eye out for CEOs who prioritize their company’s long-term picture over short-term profits, and watch the value of your stock skyrocket over time.
9. Take advantage of tax laws
from The Little Book That Still Beats the Market by Joel Greenblatt
The Little Book That Still Beats the Market
- 12 min reading time
- audio version available
When it comes to investments, make the most of tax laws to maximize your profits. Hold onto each new stock you buy for around a year before selling it. Depending on whether you decide to sell a few days before or after that anniversary date can make a big difference in your bottom line. In the U.S., for example, profits on stocks held longer than a year are subject to a lower tax rate, while it’s best to sell losing stocks prior to the end of the year holding period. In the government’s eyes, this lowers your income and, therefore, taxes you owe.
10. Invest in yourself (and your network)
from Rich Dad, Poor Dad: What the Rich Teach Their Kids about Money – That the Poor and the Middle Class Do Not! by Robert T. Kiyosaki
Perhaps the single most important step in increasing your net worth is investing in your most valuable asset—yourself. Your financial knowledge and experience will do more to determine your relationship with money than any other single factor. So read books on investing or take a class at a community college. Spend time networking with experts active in your preferred area, and you could form long-lasting connections that propel you toward financial freedom.
Now that you know the basics of managing your money, take your education to the next level by reading (or listening to) the blinks to these books and the dozens of other finance titles in our ever-expanding library. There’s never been a better time to put your money to work for you, and Blinkist makes it easier than ever to start investing intelligently.
