How is Your Relationship with Money?
In the last newsletter on personal finance, I shared three YouTube channels you should watch to educate yourself on personal money matters, getting and staying out of debt, and saving for your future self. If you haven’t read it or this is your first time reading the TLLF newsletter, you can read it here.
Personal finance is tricky and looks different for everyone, but it definitely follows similar principles despite your background or earning level.
And it always starts at the same place – personal finance awareness.
You can’t solve that which you don’t know.
Same way, you cannot be not broke or build wealth if you’re not aware of the money behavior and habits that are stopping you in the first place. Are you afraid of money? Do you operate from a scarcity mindset? Do you spend recklessly? When was the last time you had a money talk with your friends? Are you living beyond your means? These are just but some of the questions you need to answer yourself before you can embark on your financial freedom journey.
To Get the Money You Want, You Need to Read a Book First!
To help you out, I want to recommend you three beginner books on personal finance. I’ve read tens of books on money and personal finance but these three stand out for me because they’re simple, practical, and easy to relate to whether your money is in dollars or Kenyan shillings. And the best part which you’ll appreciate is that they’re all about two hundred pages or less. Even for chronic non-readers, with some discipline, you should complete one book in one week. Two weeks if you’re that lazy or maybe going through a hectic phase.
But listen here, understanding personal finance requires a level of commitment and discipline. Being broke isn’t a good feeling. Being unable to offset an emergency is depressing. Earning a high income and never having anything to show for it is flat-out heartbreaking. The worst part is, no one is coming to save you.
As an adult now, it’s your responsibility to teach yourself about personal finance – telling your money where to go and not wondering where it went.
Wouldn’t be nice to not have to look at price tags all the time when you buy something?
Well, you and I aren’t there yet, so until then, we have to have the discipline to do boring things like reading books on personal finance.
But these books are far from boring, I guarantee you that. Once you get started, you’ll see what I mean. Besides, I cannot recommend boring money books. I’m on a mission to encourage you to cultivate a steady reading culture and get you to read more books on personal finance and other essential matters.
Anyways, are you ready?
The three beginner books on Personal Finance are….drumroll!!!
1. The Richest Man in Babylon by George Clason
2. The Psychology of Money by Morgan Housel
3. The Total Money Makeover by Dave Ramsey
The Richest Man in Babylon:
I talked about the Richest Man in Babylon when I covered the money habit of paying yourself first, but I’ll go through it again. This book covers three aspects of money; how to make money, how to keep money, and how to grow money. It tells the story of Arkad who became the Richest Man in Babylon from a lowly scribe by following certain principles told to him by a wealthy money lender. The book shares seven ways to cure a lean purse (read broke wallet) and explores the Five Laws of Gold and also how luck plays into one becoming rich. The book is written in a novel fashion. It’s like a storybook and it’s only 191 pages. I wish I had read this book in high school or in the first year I joined the university.
The Richest Man in Babylon by George Clason is the simplest and most practical book ever written on personal finance, and it’s so interesting the same money laws followed in Babylon eras still apply today.
The Psychology of Money:
Of all the personal finance books I’ve ever read, this is the most famous one. It has trended over the internet since when it was published in 2020. I hate to disappoint you because I read it, and yes, it deserves every inch of fame it received and continues to receive today.
In the Psychology of Money, Morgan Housel talks of the laws money follows to be what it is. Did you know money obeys only specific rules?
Some of them include:
1. The Compounding Rule – Money obeys time. When you start saving and investing early, time becomes your ally. Money left undisturbed compounds over time and at some point, exponentially explodes which explains why many people become millionaires and billionaires in their fifties, sixties, and seventies.
2. Wealth is what you don’t see – Wealth is built by money not spent. If you spend every cent you earn, you’ll never have anything to save and invest. So while you’ll look rich, you’re one crisis away from being broke.
3. Everything has a price (but not all prices appear on labels) – When you buy new clothes you don’t need, do you calculate how much you’re costing your future self? Are you willing to be uncomfortable short-term to be comfortable long-term? Nothing is free or easy. Nothing is risk-free. There’s no free lunch.
In nineteen strategies, Morgan drives the point that being wealthy isn’t about how smart you are or how much money you earn, but about how you behave. He also emphasizes how many money decisions aren’t made on logic but on an emotional level. Your ability or inability to make healthy money decisions is influenced heavily by your growing-up experiences, your beliefs, your story, your environment, and other factors that are specific to you. It is until you understand where your money behavior comes from will you be able to make progress and make better financial actions.
The book is only 256 pages and I dare you to give it a try!
The Total Money Makeover:
This book is an absolute gem. It’s a practical guide to building wealth by Dave Ramsey. It simply explains in depth the seven baby steps Dave talks about in all his talks and the Ramsey Show. No, it’s not a quick get-rich scheme. Not in a thousand years. Depending on your income, amount of debt, expenses, and financial goals, it could take you as few as eight months or seven long years to have a total money makeover. But the end result is the same. By the end of the seventh baby step to wealth creation, your life looks more or less like this:
1. Peace of mind and control of your money
2. A super-emergency $1000 saved
3. Out of all debt, including the home mortgage
4. A fully-funded 6-12 months Emergency Fund in place
5. Maxed out retirement investing
6. College funding for your children set up
7. Building wealth like crazy
8. Giving and donating to charity comfortably
9. Living like no one else
Reading this now may sound like a fairytale and impossible, but I ask you to withhold any criticism until after you read the book. Just read it. It’s only 229 pages!
That’s it!
There are hundreds of other books I can recommend but since it’s only the beginning, I will not overwhelm you.
Until next time, bye!
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