Review: Essentials Of Economics: A Brief Survey Of Principles And Policies

Essentials Of Economics: A Brief Survey Of Principles And Policies by Faustino Ballve
My rating: 5 of 5 stars



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Review: Edgy Conversations: How Ordinary People Can Achieve Outrageous Success

Edgy Conversations: How Ordinary People Can Achieve Outrageous Success by Dan Waldschmidt
My rating: 3 of 5 stars



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The 21 best personal finance books of all time

This is not your ordinary list of personal finance books. When you look at the other "best personal finance books" lists out there, they tend to be a list of books that talk about investing or budgeting and very little about the thinking behind building personal financial success. I have intentionally not included some very popular personal financial books in this list.

I have read every one of these books (at least once). I believe this list of books, if studied over a short period of time, can have a great impact on a person's personal finances. I have used principles from every one of these books either directly in my financial coaching or indirectly in how I go about coaching people in their finances. To get the best benefit these books should be read and discussed as a group (at least two people). Reading, applying, and sharing (or teaching) give the greatest impact in your life.

I've ordered the books from least impactful to most impactful. This was very hard to do as they are all great books in their own right. I tried to design the list in such a way that if you could only read ten of the books, reading the last ten in the list would give you the most benefit in your life.

21. Think and Grow Rich

 This is a classic book that links how we think to the success we see. Many successful and influential business owners have recommended this book and noted its influence in their rise to success. Author Napoleon Hill states he was commissioned by Andrew Carnegie to interview highly successful business owners of the day and share their secrets of success.

This book contains a combination of viewpoints on life and success with psychology and techniques to program your subconscious. It also covers networking and techniques to use networking techniques to create better results for everyone in the network.

20. Rich Dad, Poor Dad

This was one of the first books about money I ever bought. I was at a convention that Robert Kiyosaki was speaking at. I saw the book for sale in the halls. We didn't have children at the time and I thought, from the title, that it was a parenting book, so I had no interest in getting it.

Then I heard Robert Kiyosaki speak. His tale of growing up in Hawaii with his Rich Dad (his best friends dad) and his Poor Dad (his biological father) was inspiring. This book weaves stories from his life and the lessons learned. 

The first half of the book talks about the importance of getting your financial basics down. The second half talks about the value of generating cash flow from assets. I've found that many people get so excited reading the second half of the book that they completely forget the first half (getting your financial house in order). Make sure you pay just as much (if not more) attention to the first half.

19. The Autobiography of Benjamin Franklin 

The original franchiser, Franklin set a pretty good pattern for a successful life. He mastered a skill by apprenticing under a master. He pivoted from printing to writing. He developed a way to get passive income from his mastery. Once he had enough passive income from his franchises, he was able to pursue his passions in the natural sciences and politics.  

 

 

 

 

18. The Millionaire Next Door

When people hear the word millionaire, certain things come to mind like a nice house, luxury cars, fancy clothes. In The Millionaire Next Door they gather data on actual millionaires. What kind of clothes do they buy. How do they buy cars? How do they look at money and material things.

The most common views we have of millionaires are actually from people who will never be millionaires, mostly because of this show of "wealth." This book is a must read for anyone who really wants to be a millionaire.
 

 

 

17. 7 Habits of Highly Effective People

These seven habits (Proactive, Begin with the End in Mind, First Things First, Win-Win, Understand before being Understood, Synergize, and Sharpen the Saw) are not only important in business (and your career) and are fully applicable to your personal finances. Starting out with where you want to go (Begin with the End in Mind) is critical for charting your financial course. Having targeted savings and an emergency fund is being proactive. Investing in your career development and education is sharpening the saw. And so on.

As these are habits they should be applied to all areas of your life. I recommend clients focus on a single habit they would like to acquire for 12 weeks. Reading this book and working through all seven habits will not only help you in your finances but will help in all areas of life.

16. Peaks and Valleys

We all have ups and downs in life. Its how we look at and handle these times that make the difference in our lives. Peaks and Valleys is an allegory for going through the ups and downs in life, and how to use the valleys to our advantage and not let the peaks slow us down.

 

 

 

 

15. The E-Myth Revisited

Many people dream of starting their own business. Often when they start their dream business it turns into a nightmare. They feel like they have more pressure and stress than when they had a job.

The E-Myth Revisited is a classic which has been recommended to me by entrepreneurs from just about every field. It walks through how to systematize your business and turn your dream business into a dream lifestyle.

If you are considering starting your own business, the E-Myth revisited is a must read.

 

14. The Price of Everything

The Price of Everything is an intertwining of two stories, one of the United States shortly after a natural disaster and one of Cuba. Between the two stories they explore the ideas of supply, demand, and how understanding human nature and some economic principles can affect your life.

While not about your everyday finances, this book helps understand how your personal finances fit in the overall picture. This understanding of where you fit in can help in your longer term financial planning.

 

 

 

13. How I Raised Myself from Failure to Success

Most people see the word "selling" in the title and are immediately turned off. Don't let the title fool you. This is not just for used car salesmen. The principles in this book can be used in any field where you deal with people (which is just about all of them).

For instance, as an introvert I got a lot of value from the discussion in chapter 2 on enthusiasm. Some of the principles (like understanding the law of numbers) appear to be more sales oriented, there are tidbits that can have a great impact in other areas of your work.

Applying the principles found in the book can help just about anyone be more effective in their field.

 

12. The Cashflow Quadrant

Often referred to as ESBI, the Cashflow Quadrant idea was first introduced in his Rich Dad, Poor Dad book. In this book, Robert Kiyosaki dives deeper into the four quadrants and why it is so important to understand the benefits and drawbacks of the four ways of making money (Employee, Self Employed, Business Owner, Investor).

There are valuable insights that help make sure you're not self-deceived into think that as a self-employed person you are actually a business owner. Or thinking that because you have a 401(k) that you are an investor.

He also delves into the mindsets and values of each of the quadrants. This helps you better evaluate which quadrant you are really in and what perspective shifts you need to change quadrants.

11. Financial Fitness for Teens

When I first received my copy of Financial Fitness for Teens, I thought it was going to be a watered down version of Financial Fitness (which is later in this list). Boy was I wrong. 

The original Financial Fitness book was written for adults who have made financial mistakes. Financial Fitness for Teens is for youth who haven't gotten themselves into a financial hole yet. It gives them a hard-hitting and aggressive plan to excel at building your financial future.

My children were so inspired after reading this book that they immediately started saving vast amounts for Life Savings, Emergencies, and Targeted Savings. While they haven't always followed the formula from the book perfectly, they are far better off than if they had not.

Now I do not include this book in the list for your children. This book is a great ideal to work towards. Us adults have had financial setbacks and mistakes we have to overcome. Its always good to have a golden ideal to be working towards so we do not get complacent with the progress we have made and instead realize that we are still on the path towards the ideal.

10. The Magic of Thinking Big

The Magic of Thinking Big is a classic in expanding your vision and challenging your habits. Dr. Schwartz not only inspires the reader to stretch what they believe is possible, but also gives common pitfalls that can prevent chasing big dreams and practical aspects of daily life that you can integrate into your life. 

A young Lou Holtz, after being let go from his first job as an assistant coach was pulled out of depression when his wife encouraged him to read this book. He was so inspired that he made a list of over 100 amazing things to accomplish in his life. He excitedly showed his wife, who after looking over the list replied, "Can you add one more, get a job?" Coach Holtz accomplished a majority of the items on his original list, including being the head coach of the Notre Dame football team.

9. The Go-Getter

It’s a simple story. A man is given a task to perform by his employer that seems simple enough, until it appears impossible. When you give your word, is it based on the expected circumstances, or are you willing to give it your all to ensure you keep your word. This makes all the difference to an employer, a client, or a family. 

 

 

 

 

8. PAiLS

The age old question of should you follow your passion or work for the money. PAiLS takes a more holistic approach of looking at your life's work in stages. The early stages are more about getting experience, middle stages about making money, and later stages about following your passion, if done correctly. 

Chris Brady lays out a very helpful thought process to view your work at different stages of life. He discusses actualizing your potential leading to your legacy, but allows for what he calls "spillage" or not being perfect in your journey.

While designed for those on the younger side of life, the concepts can help anyone identify where they are in the phases of work so they can more clearly outline a path to their purpose. 

7. The 12 Week Year

New Year’s Eve comes every year and it’s almost a running joke that gym space is only at a premium until February. Why do we have such s hard time keeping our goals in sight? What if instead of seeing New Year’s Eve goal’s just in January, we set them every three months. That works adore us to see measurable progress without having 11 more months (plenty of time) to see the goal to completion. This is one of the concepts I’ve baked into my coaching, setting meaning l meaningful goals every 12 weeks.  

 

 

6. The Ant and the Elephant

The Ant and the Elephant is a wonderful allegory that teaches you how to train your subconscious to work for you instead of against you. You conscious mind stimulates around 2,000 neurons when you think a thought. Your subconscious mind stimulates around 4,000,000,000 neurons when it thinks a thought. This difference is roughly the difference in size between an ant and an elephant.

This allegory of an ant riding on the back of an elephant, trying to steer the elephant, contains several practical ways in which you can steer your subconscious to do a lot of the work for you. Your subconscious is always working, even when you're asleep. It is doing so much more work than you can with your conscious mind. Using the principles in this story you can take advantage of all that raw power.

5. The Slight Edge

The concept of the slight edge is that consistent actions in the right direction can have a huge impact over time. Most people get discouraged with the slow results, not understanding the power off compounding. 

Implementing the principles in this book can have a profound impact on your progress in any area. This book was a huge post in the development of my coaching material. 

 

 

 

 

4. The Richest Man in Babylon

The original personal finance book. The content for the book started out as a series of articles on personal finance. They became so popular they were published as a book. 

I’ve have had this book recommended by more people from more backgrounds throughout my life than any other book about money. The principles are timeless and echoed on the more modern books on personal finances. For instance the idea of paying yourself 10% originates here. 

Told as a story set in ancient Babylon, they principles are shown to be timeless (although the discussion on insurance feels a bit forced). If your looking for a story that teaches sound financial principles, The Richest Man in Babylon is a must read.  

 

3. Resolved

Originally written to the author’s children, this fantastic work is patterned after Benjamin Franklin’s resolutions. The book is designed to improve your life in every facet by focusing on improvement in one resolution per week for 13 weeks. Then continuously cycling through the resolutions, you would focus on reach for four separate weeks in a year and over time you would master all 13 resolutions. While finances is just one of the resolutions, the overall affect if following this program is to have wholistic improvement in every facet of your life.

 

 

 

2. Beyond Financial Fitness

This book contains what most people want to jump to when they talk about personal finance, investing. This is the most complete primer on personal finance I have found to date. Most investing books just jump right into the topic of investing assuming that you are at the point where investing makes sense and that your risk tolerance is right for their investment advice.

Beyond Financial Fitness starts out discussing if it is the right time to start investing (do you have the basics down yet?) and then walks through the levels of risk tolerance from extremely low risk (CDs and money market accounts) to extremely risky (venture capital and collectibles). 

They dive deep into stocks (markets, sectors, capitalization sizes, etc) and bonds (US treasuries, corporate bonds, municipal bonds, foreign bonds, etc) as well as discuss shortcuts (insurances, mutual funds, ETFs, etc) as well as types of accounts (i.e. tax advantaged) and what assets works best where. 

But it’s not just a book about what’s out there. They dive into market theory, discussing the Efficient Market Hypothesis and its affects in your investing decisions, the Markowtz Portfolio Theory and the prevailing asset allocation strategies. 

While the experienced investor may find some depth lacking In areas, they breadth and scope leaves the less experienced investors with a confidence in getting started and the experienced investor with an list of areas outside his or her main focus to investigate.  

 

1. Financial Fitness

And the number one personal financial book of all time ... Financial Fitness. I have found this to be the most complete personal financial book, covering the basics, offense, defense, and playing field of money, or in other words making more money, keeping more money, and understanding what money actually is.

This book is a collection of years of experience with helping thousands of people not just improve their finances but thrive. While the touted difference of this work versus others is the completeness of offense, defense, and playing field, the real difference is the Why. 

Why improve your finances? What is the purpose of finances? How does how you think about finances and money in general affect your ability to use money effectively in your life?

This book not only set me on the path to debt freedom but has been an essential tool in my financial coaching.

The two sides of “live within your means”

Often when people hear, “Live within your means,” they think of cutting back, scrimping, and reducing their lifestyle. That can often be the answer in the near term to get you on the right financial path, however it has is own dangers in having this as your dominant financial thought.

I see the phrase as having two parts. The first part is to spend less than you make. If you are spending more than, or even everything, you make you will never get ahead financially and need to make whatever adjustments to live well below what you make. You must have free cash flow that you can invest, first in yourself and then second into a business or the market, and the more free cash flow you have, the faster it can grow.

In the book The Richest Man in Babylon, the author describes this concept as viewing money as a worker who goes out and brings you back more money. As I started working on my financial thinking, I began to see that every dollar I spent was a dollar that would not be working for me to bring back more dollars.

The danger of focusing just on spending less than you make is that you start thinking like a miser. It starts to create thought patterns and habits that limit your potential. That’s why it is so important to know why you are improving your finances. What’s the end goal? Or as Stephen Covey put it in his book 7 Habits of Highly Effective People, “begin with the end in mind.”

So to support this growth mindset, this thinking pattern that sees growth and a bigger future, I would add a second, critical part to the phrase, “live within your means,” and that would be, “make more than you spend.”

You may be saying to yourself that making more than you spend is the same is spending less than you make, and you’d be right. The difference is on the emphasis. When you emphasize spending less than you make, it tends to lead to a limiting life, a dead end of doing no better than you are right now. But when you make more than you spend, it opens up a bright future of possibilities. 

That’s not to say that just making more than you spend of the answer. You need both, making more than you spend and spending less than you make. Yin and Yang. Breathing in and breathing out. One without the other will also leave you unbalanced.

I’ve seen people who live by the mantra "make more than you spend." They say things like, “I’ll just make so much money that I don’t have to even think about what I spend.” There may come a point in your life where that is the case, but along the way you’re going to have developed some frugal habits and thought patterns to even get to that point.

Ignoring spending less than you make and just focusing on making more leads to a never ending pursuit of money. You may make more but you’ll also end up spending more. I remember being just out of college and seeing how big that paycheck looked from my first professional job. I also remember how small it looked just a few short years later, after a few raises, when it felt like I was no better off even though I was making significantly more money. I never seemed to be able to have the free cash flow to turn into little workers that would bring me back more money.

How to check your social security

My son just looked at his first paycheck and lamented everything that was taken out. One of the notable amounts withheld from his paycheck was FICA, or the Federal Insurance Contributions Act.

The Social Security Act was signed into law by President Franklin D. Roosevelt in 1935 as part of the New Deal. Originally it was 2% of your income was sent to the government to make sure you would not be destitute when you reach old age. By 1966 when they added Medicare, it had risen to 7.7%. Today between employer contributions and withholding for both Social Security and Medicare, 15.3% of your income is put into the program.

There have been several discussions about the inability for Social Security to fulfill its promises sometime around the year 2035 (about the time I would qualify to start drawing from Social Security). This does not mean that Social Security goes away, but it will mean they will either raise taxes (again), reduce benefits, or a combination of the two.

You can see what you are currently promised for Social Security by visiting the Social Security website. This will allow you to see how much you can receive per month if you retire at 62, 67, or 70. It also shows you how much you could receive per month if you were disabled as well as how much your survivors could get if you were to pass away.

We don't know how much you will actually get, but this gives you an idea of what they are currently promising.

How to check your credit report three times a year for free

Your "credit score" is a number assigned by three agencies that receive reports on your credit history, Equifax, Experian, and TransUnion. These three companies collect data about the debt you have and the payments you make (and not just debt payments) and evaluate how risky it is to lend you money.

You can get an estimate of your credit score for free at websites like CreditKarma. These sites are great for getting an idea of the direction of your credit score, but don't give you much detail about what all is taken into account. 

Knowing the details of your credit history is important because identity theft is so common. If someone gets a hold of some of your personal information, they could open a credit account in your name, rack up the balance and then default on it. If you don't want to manage your credit yourself, you can get a identity theft insurance (which you may want to get anyway). 

There are a few things you can do to minimize your risk of identity theft for free. First, you can check your score estimate at CreditKarma (updated every week). You can also freeze your credit, which prevents anyone (including you) from opening new credit accounts in your name until it is unfrozen.

The last thing you can do for free is to get a look at everyone on your credit history. Normally you would pay to get a peek at your credit history. However, there is a service, Annual Credit Report, that allows you to peek at your credit history from each of the agencies for free once a year. It is a little convoluted of a process to prove that you are who you say you are (what banks have you banked with, what streets you've lived on, etc). 

Getting a peek at your credit history once a year is pretty nice, but you can actually look at it three times a year if you do it just right. Each of the agencies will give you pretty much the same information, so you can just get your report from a different agency every four months. This allows you to get a view into your credit history three times a year for free.

When you get your report from the agencies, save a copy for reference. Then look over the reports for accounts that don't look familiar or things that may have been reported incorrectly. If you see an unfamiliar account with hundreds or even thousands of dollars balance, that may be a fraudulent account and you should report it immediately.
 

 

The problem with massive action

Tony Robbins says, "The path to success is to take massive, determined action." I really like Mr. Robbins and so it is straining on me to find fault with this statement. The funny thing is that another author I really like (who incidentally doesn't like Tony Robbins) says in one of his books essentially the same thing.

Why do I have a problem with this statement? Because I have taken massive, determined action many times that has led to something much less than success. The problem was, I was quickly heading down a path that would not lead to success. Each of these times I did learn a lot, but did not attain the success I sought.

Does this mean that massive action can never lead to success? I think it can with some caveats. For instance, you had better make sure the path you're on is going where you want. Salesmen are often showing visions of success while selling wares that lead in the opposite direction (or at least a less than direct path). 

So before you go and take some massive action, let me offer a starting point. 

Never underestimate the power of consistently developing good habits.

I like encouraging people to develop habits that lead in the direction of success over massive action for two reason. First, habits are a way of automating your life. Massive action in the right direction is terrific, but can it be sustained? Think of Aesop's story of the tortoise and the hare. Consistently building habits towards success may start slowly but builds into an unstoppable force.

Second, it gives you opportunities to course correct. As you are in the process of developing habits, you can see if you are heading in the right direction and make course corrections along the way. Often as you start taking steps in the right direction you learn more and can see new steps you need to take. It becomes obvious that the path you thought you should take was mistaken as you learn more and find better paths.

As you start building these habits into your life, you can definitely start going faster as you are more sure of the path. One way to help speed up this process is to have a mentor who is already where you want to be. They can give you hints and suggestions and you can learn from their experience instead of just having to rely on your own experience. 

If you have a mentor that you fully trust has the experience to get you where you want to be, then maybe you can take Tony Robbin's advice and take massive determined action. Otherwise, start by gaining habits that put you on the right path and keep building your success one habit at a time until you find that mentor.