8 votes

IWTL financial literacy

It's a very hard topic to research lately because of the crypto-bros lately and it's very hard to trust a stranger on youtube spouting financial advice.

Can tildes suggest any must-read books and/or resources to become more financially literate?

Background: I'm a software engineer from Germany, I'm making decent salary, but I've always been incredibly bad with money. I just spend what I need and almost never look after my financial state. The result, as you can imagine, is a very low rate of savings and a lot of unrealized gains.

Honestly, it's kind of embarrassing to ask, I lucked into a great industry, but has been so irresponsible with my money, I guess the first step is acceptance.

4 comments

  1. simplify
    (edited )
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    Your Money or Your Life by Vicki Robin. It's a great book, and it's been updated in the recent-ish past. I followed its teachings for a while when I was making good money but when I broke off on...

    Your Money or Your Life by Vicki Robin. It's a great book, and it's been updated in the recent-ish past. I followed its teachings for a while when I was making good money but when I broke off on my own and started my own business, the ups and downs of working for yourself made it harder for me to follow. I need to read it again.

    ETA: I would be remiss if I didn't also mention a book on minimalism. The thing about having money is that you feel the desire to spend it, often resulting in lifestyle creep. Lifestyle creep is inflating your lifestyle to match your income, often because you feel you "deserve" it. But materialism is no marker of success or happiness. Frivolous spending, to me, communicates that a person is trying to fill an emotional hole within themselves. It does not make me feel that person is secure or happy. The book I would recommend would be Goodbye, Things by Fumio Sasaki.

    5 votes
  2. onyxleopard
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    I can't recommend any specific literature, but I can recommend possibly consulting an independent financial advisor. That is, find someone who works for themself and is not paid to shill...

    I can't recommend any specific literature, but I can recommend possibly consulting an independent financial advisor. That is, find someone who works for themself and is not paid to shill particular products nor is associated with any financial institutions. Essentially, you want to pay them for their time to look into your individual situation and make recommendations. Note that this will likely involve some homework on your end to collect information about your income, assets, spending habits, etc. An advisor may also have recommendations on reading material.

    3 votes
  3. skybrian
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    It's been a long time since I read any books on finance, but I remember A Random Walk Down Wall Street as being somewhat academic but interesting. It's probably a good idea to read about why index...

    It's been a long time since I read any books on finance, but I remember A Random Walk Down Wall Street as being somewhat academic but interesting.

    It's probably a good idea to read about why index funds are a good idea. I haven't read it, but The Little Book of Common Sense Investing seems like it should be a good intro to "boglehead" style investing, considering that it was written by John C. Bogle, the guy who founded Vanguard and is credited with creating the first index fund.

    But those are more about deciding how to invest. There are also books about the deeper cultural and psychological issues people have relating to money and their spending habits. I don't know what to recommend there, but Your Money Or Your Life has a good reputation.

    Maybe if you talk about what sort of questions you want answered, we could give you more specific recommendations?

    (BTW, "unrealized gains" has a technical meaning in finance and it's probably not what you're thinking.)

    2 votes
  4. dedime
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    I'm not exactly a finance guy, but I read "The Millionaire Teacher" and that was good enough for me to get going with a sound investment plan. I invest via an e-trading platform, and I maintain a...

    I'm not exactly a finance guy, but I read "The Millionaire Teacher" and that was good enough for me to get going with a sound investment plan. I invest via an e-trading platform, and I maintain a balance of a 50% US total market index, 25% CAD total market index, and 25% world total market index shares.

    The book explains it in better, more thorough yet understandable terms, and it's been a while so I'm paraphrasing, but essentially:

    • Invest your money yourself via a trading platform. Avoid managed services, e.g. mutual funds, as they get a fee. Also they probably can't beat the market, especially when you account for the fact that to beat the market, they would have perform better than the industry standard return % + their cut.
    • Invest in index funds; index funds track a market as a whole rather than an individual company so the risk is quite low. Historically, index funds generate good returns over the long run - e.g. the S&P 500 had an annualized average return of around 10.5% since its 1957 inception through 2021, even including the recession etc.
    • Compound interest is your friend. Start investing early, contribute often, you will see wild amounts of gains. Plug in your financial details here with a conservative 7% interest rate: https://www.getsmarteraboutmoney.ca/calculators/compound-interest-calculator/
    2 votes