The Best Personal Finance Books for Young Families

best personal finance books for young families

best personal finance books for young families

Starting a family is one of the best decisions that any person can ever make, but it doesn’t necessarily mean that everything is going to be a bed of roses. In fact, a lot of young couples don’t realize the importance of managing personal finances. As a result, they end up either unable to buy things for themselves, or drowning in a sea of debt.

Why Do Young Families Struggle with Finances?

The truth is that many of us buy things that we really don’t need. You may have read stories of some individuals who became bankrupt after uncontrollable spending on unnecessary things.

Consequently, being unable to have self-control may somehow be linked to a psychological disturbance, which in reality may turn people into shopping addicts. Buying unnecessary things without careful planning may become for them a way of diverting their negative emotions into something that can mask these thoughts and make them do something that would make them feel good about themselves.

As for others, they simply don’t have enough knowledge to understand the concepts of wise purchasing, depreciating value, and correct investments.

Learning from Business Finance

While managing personal finances may not be as complicated as that of managing a business, you can actually learn a lot from business financial advice. After all, it’s important to know how to properly manage the money that comes in every month.

Some of the things that young families – and any other person for that matter – should learn from businesses include the following:

Risk Management and Assessment

No matter how big or small business has been established, company owners should know how to identify, measure and control the existing risks, the possibility of their occurrence, and their economic impact.

On their part, young families need to implement actions to manage the causes and effects of risks. Such an assessment should be done especially when greater uncertainties are anticipated, wherein there is a need to enhance risk management.

Cash Flow

Business owners need to determine the company’s financial capacity and to know how efficiently its resources are being utilized. By knowing these things, they can generate additional income for future investments. The same is true with private individuals and families.

Ratio of Profitability

This refers to the operational efficiency of a business.  This information helps businesses identify inefficient areas that may require modification, and helps in measuring the profit relationships with sales, total assets, and net worth. In a family perspective, we need to know how to grow our money by spending it in value-adding products and services.

Best Books on Personal Finance and Money, for Young Families

Managing your finances and be able to know how to control unnecessary expenditure can be made easier and more effectively by receiving advice on financial management. Additionally, there are various books that talk about financial growth and control, which you can use as great sources of information and inspiration.

Listed below are some of the best books to understand finance that can help young families in managing and controlling their finances.

“I Will Teach You To Be Rich” by Ramit Sethi

This book encourages its readers to follow a 6-week personal financial program utilizing a practical approach that is based on effective banking, saving, budgeting and investing.

“Rich Habits: The Daily Success Habits Of Wealthy Individuals” by Thomas Corley

This amazing resource has taken its author five years to study what both rich and poor people do. What Corley found out is that starting a good habit at a young age can make a striking difference in the lives of people in the future. Starting young means having to embrace several opportunities that can distinguish persevering individuals from those who just want overnight success.

“The Millionaire Next Door” by Thomas J. Stanley and William D. Danko

This incredible book teaches you how to spend less than you actually earn, avoid spending on unimportant things, and maximize and diversify your investments. It’s a truly must-read book that can put anyone financially independent and free.

“You’re So Money: Live Rich Even When You’re Not” by Farnoosh Torabi

Anyone can live within their means and be happy and fulfilled. You only need to learn how to prioritize expenses, know when and what to splurge on, and realize the things that you can save up for.

“Why Didn’t They Teach Me This in School? 99 Personal Money Management Principles to Live By” by Cary Siegal

The author originally intended this book to teach his own children about how to better manage their money. But eventually, he was able to come up with a lot of sound advice that would encourage more people in enhancing their financial management skills.

“Financially Fearless: The LearnVest Program For Taking Control Of Your Money” by Alexa Von Tobel

The LearnVest Program teaches people in the workforce how to properly budget the monthly salary in order to fulfill all obligations and still have some money left to splurge on something that brings them happiness. The tips in the book also talk about how to save a little more money for future use.

This book is not your conventional financial management book that focuses on a lot of financial or technical jargon. The witty author wrote this book in a way that would highly encourage young individuals to start early and start right.

“Thinking, Fast and Slow” by Daniel Kahneman

When we talk about managing our finances, this involves a number of decisions that need to be made. This book allows readers to understand what drives them to arrive at a particular decision.

These books can already do wonders to inspire young individuals on how they can properly manage their finances and become worry-free of getting stuck in debt, particularly when individuals may face uncertainties such as changing careers or welcoming more children in the family. Nevertheless, being able to gain financial control allows you to avoid further financial losses which could tremendously affect your quality of life.

By following the tips above and reading up on these finance books, you may discover new and highly effective strategies to properly budget the money that you have.

Kostas Chiotis is an economist, entrepreneur and blogger. He loves writing and sharing other people’s views in finances on his blog


Mint Money Audit: Managing Money When You Make Enough

Anna’s email requesting help with her finances began with a unique confession.

“Farnoosh, my money problem garners little sympathy,” the 32-year-old wrote. “My issue is that I make too much of it.”

Now, THIS is interesting, I thought. I immediately followed up with many questions.

Here’s what I learned through our conversation:

The Denver-based Mint user earns $220,000 per year as an engineer. Anna’s also benefited from years of big bonuses and her net worth, not including her home equity, is close to a million dollars.

After paying taxes and health benefits and maxing out her 401(k), Anna takes home between $8,000 and $10,000 each month. Her expenses mainly consist of a $1,200 mortgage payment, car insurance, gas, food and utilities, amounting to maybe a few thousand dollars per month.

The rest either goes into savings where she stashes about $5,000 to $10,000 for unexpected expenses or into a brokerage account where she has roughly $800,000 invested. A wealth management firm manages that portfolio and charges, she says, an annual 1% fee.

Anna has no consumer debt, besides her mortgage, which amounts to about $338,000. It’s a 30-year fixed rate loan with a 2.85% interest rate. The home has appreciated in recent years with about $100,000 in equity (including Anna’s initial 20% down payment).

So, what is the problem, exactly?

“My big worry is that I don’t have the habits to manage money well,” Anna told me. Her sizeable bank balance has her feeling financially free, although she worries about getting carried away with spending sometimes.

“When I see money in my bank account I rationalize that ‘yea, that vacation is doable. I don’t hold back on the things that may seem frivolous,’” she says. But It seems she wants more financial grounding and to be able to evaluate expenditures and price tags more critically.

Anna’s situation may be unique, but I think relatable in the sense that we all would like to feel more thoughtful with how we spend, save and invest. And while some may do well with earning money, it should not be assumed that they can also manage that money well.

I applaud Anna for wanting to be sure that, even with an impressive net worth, she is actually making wise financial decisions.

Here’s my advice.

Take a Deep Breath

No need to panic when spending on things and experiences that you enjoy. From what I can tell Anna’s prioritizing the serious financial stuff first like contributing the max to her 401(k) and saving all of her annual bonuses in a brokerage account. She has no credit card debt and pays all her bills on time. That’s terrific.

Sometimes we just want to hear that we’re on the right track with our money and I have a very simple way to measure this:

If you manage each paycheck by saving, investing and paying all your bills first, then by all means, you’re entitled to have fun with whatever is left without any fear or regret. Am I right?

If you’ve done the good work of taking care of your future with your money, then don’t hesitate treating yourself and others with the remaining funds today. Splurge away and enjoy your hard-earned money. And remember to enjoy the moment.

Ditch Your Money Managers

I do think Anna could find a better home for her investments.

Paying one percent of her managed assets to this firm may not seem that high of an annual fee. But when you think about Anna’s balance of $800,000, that’s $8,000 this year. What about next year and the decades after that as she contributes more to the account? That fee, compounded over the next 30 years, will amount to – conservatively – over one million dollars. Ouch.

That doesn’t even factor in the expense ratios for each mutual fund that’s in her portfolio.

If all Anna seeks is investment assistance, she may be better suited stationing her money with an automated wealth platform or robo-advisor where her money is largely invested in low-fee index funds or exchange-traded funds (ETF) and the portfolio management fee is typically 0.50% or less.

Of course, breaking up with your financial advisor is not always so simple. It’s especially hard for Anna, as she equated her money managers to “father figures.”

If I were Anna, I would just explain to my advisors over email something like, “I want be more conservative with my money and that includes being extra mindful of the various fees that I’m paying. To that end, I’ve decided to manage my money more independently. I’m sure you can understand. I appreciate your help over the years. Please let me know next steps.”

Planners know the drill and are used to having clients end relationships.  Stay strong. Nobody can really argue with the fact that saving money is a good thing!

Establish Short and Long Term Goals

Anna wants to spend and save with more conviction. I think having some concrete, tangible goals can help.

For example, she shared that she’d like to get married, have a family and own two homes – one near her office downtown and another in the mountains as a getaway.

So, the next step is to understand what these goals cost. What are, say, the going prices on a vacation home in her state? How much might she want to stash in a separate account for the future down payment on this property? Knowing the underlying costs of her goals can better direct how much to spend elsewhere.

Next time she’s planning a vacation, she may be more inclined to price compare or hunt down better deals, as opposed to just judge whether the trip is financially “doable” by the amount of money in her bank account. Now she’ll have the image of that second home and its costs and will make a more informed choice.

Contribute to a Cause

Last but not least, when you feel you make more than enough, like Anna does, this is a great opportunity to be extra charitable. If she’s seeking a way to give her money more meaning and feel purposeful in her financial life, this is a truly wonderful way to go about it. Discover a cause that you’re passionate about and make an impact as a volunteer and donor.

Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at (please note “Mint Blog” in the subject line).

Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.

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