Money, money, money...
November 18, 2010 9:18 AM Subscribe
Recommendations for an introduction to financial planning for a mid 20s, grad student?
About me - I'm 26, in the US, have pretty much spent my whole life in school, minus one year in the real world. I'm currently in a PhD program with a stipend of 19,000, with about 2 and half more years to go. I've somehow managed to pay down my student loan debt from 20,000 to about 6,000 with about a 4% rate. I don't have any credit card debt, thankfully. I have only about 2,500 in savings. I currently only have about $200 dollars free each month to save/do anything with after bills and expenses.
I want to be prepared though, for when(if) I get a real job - what to do with money. I am completely lost when it comes to terms like 401k/roth IRA/etc mean. I have only ever owned a couple of CDs in my life. Any recommendations for good websites/books to explain these basic terms and to set me up for the right path to save? How do people learn this (other than the hard way of debt!)
As a side note - I don't understand why this isn't mandatory for high school or college students - certainly more useful to understand this stuff then Riemann sums or the literary themes of Tess of the d'Urbervilles!
About me - I'm 26, in the US, have pretty much spent my whole life in school, minus one year in the real world. I'm currently in a PhD program with a stipend of 19,000, with about 2 and half more years to go. I've somehow managed to pay down my student loan debt from 20,000 to about 6,000 with about a 4% rate. I don't have any credit card debt, thankfully. I have only about 2,500 in savings. I currently only have about $200 dollars free each month to save/do anything with after bills and expenses.
I want to be prepared though, for when(if) I get a real job - what to do with money. I am completely lost when it comes to terms like 401k/roth IRA/etc mean. I have only ever owned a couple of CDs in my life. Any recommendations for good websites/books to explain these basic terms and to set me up for the right path to save? How do people learn this (other than the hard way of debt!)
As a side note - I don't understand why this isn't mandatory for high school or college students - certainly more useful to understand this stuff then Riemann sums or the literary themes of Tess of the d'Urbervilles!
Best answer: I learned a lot from A Random Walk Down Wall Street when I was in your position. Though it's very heavy on the view (which I agree with) that smart investing is about managing risk, transaction costs, and tax liabilities, and not about choosing particular investments with a great deal of care, I think it would be helpful even for basics such as getting a handle on the terms you mention.
posted by deadweightloss at 9:41 AM on November 18, 2010
posted by deadweightloss at 9:41 AM on November 18, 2010
Best answer: I am in almost exactly the same situation as you as far as age, school, amount of debt and savings, etc. The only big difference is that I'm about to start a Master's program which is not funded, thus, I will be taking on a lot more debt!
I really enjoy reading the Business section of the LA Times, because they have a financial advice column and frequently have articles aimed at people like us. I find it helps with getting a better understanding of personal finance.
I learned a lot of the saving money/IRA/investing stuff from my dad, and some of it from Suze Orman's book Young, Fabulous and Broke (which my dad made me read).
I think your big question right now is probably going to be, should you use the extra you scrape together at the end of the month towards savings (i.e. emergency fund), paying down your student loan, or investing in a retirement account (which for you would probably be a Roth IRA)? I don't know the answer but I think it has to do with figuring out which would be the most advantageous, in terms of interest rates and whatnot. If you figure it out, lemme know!
posted by Dilemma at 9:49 AM on November 18, 2010
I really enjoy reading the Business section of the LA Times, because they have a financial advice column and frequently have articles aimed at people like us. I find it helps with getting a better understanding of personal finance.
I learned a lot of the saving money/IRA/investing stuff from my dad, and some of it from Suze Orman's book Young, Fabulous and Broke (which my dad made me read).
I think your big question right now is probably going to be, should you use the extra you scrape together at the end of the month towards savings (i.e. emergency fund), paying down your student loan, or investing in a retirement account (which for you would probably be a Roth IRA)? I don't know the answer but I think it has to do with figuring out which would be the most advantageous, in terms of interest rates and whatnot. If you figure it out, lemme know!
posted by Dilemma at 9:49 AM on November 18, 2010
Best answer: Basic primers on on finances for normal people Personal Finance for Dummies followed a year or two later by Investing for Dummies.
In my mind they cover nearly everything a normal person needs to know about financial matters, everything from basic budgeting, to insurance, to retirement investments.
posted by fief at 10:00 AM on November 18, 2010
In my mind they cover nearly everything a normal person needs to know about financial matters, everything from basic budgeting, to insurance, to retirement investments.
posted by fief at 10:00 AM on November 18, 2010
Best answer: Beth Kobliner's Get a Financial Life: Personal Finance In Your Twenties and Thirties, as the title says, is specifically aimed at people starting out to figure out their financial lives in their twenties and thirties.
The book was tremendously helpful to me when I started out on my first post-school real job.
posted by needled at 10:42 AM on November 18, 2010
The book was tremendously helpful to me when I started out on my first post-school real job.
posted by needled at 10:42 AM on November 18, 2010
Best answer: Check out Money Under 30. They cover everything from the basics to investment, real estate and retirement.
posted by godshomemovies at 11:56 AM on November 18, 2010
posted by godshomemovies at 11:56 AM on November 18, 2010
Best answer: I find it easy to relate to Dave Ramsey, who is plain-spoken in a Dr Phil way. Not much dancing around and BS in his lessons. Why use 1000 words when 100 will do?
posted by toastedbeagle at 12:19 PM on November 18, 2010
posted by toastedbeagle at 12:19 PM on November 18, 2010
Best answer: I kind of overdosed end of college / first year of working on financial blogs and planning. The ones mentioned above were definitely in my RSS reader back in the day, but I remember Suze Orman's Money Book For the Young, Fabulous & Broke being a good foundation for all the rest.
The blogs are great for daily reinforcement, but books (and this book in particulary) can give more of a general overview and makes sure you don't miss any fundamental area that a blogger may have just not gotten around to writing about.
posted by polexa at 1:41 PM on November 18, 2010 [1 favorite]
The blogs are great for daily reinforcement, but books (and this book in particulary) can give more of a general overview and makes sure you don't miss any fundamental area that a blogger may have just not gotten around to writing about.
posted by polexa at 1:41 PM on November 18, 2010 [1 favorite]
Best answer: The MeFi Wiki has a collection of personal finance AskMe threads that you might find helpful.
posted by rangefinder 1.4 at 8:05 PM on November 18, 2010 [1 favorite]
posted by rangefinder 1.4 at 8:05 PM on November 18, 2010 [1 favorite]
Best answer: Start reading personal finance blogs:
Get Rich Slowly
Bargaineering
The Simple Dollar
My Money Blog
iwillteachyoutoberich
posted by T.D. Strange at 10:31 AM on November 19, 2010 [1 favorite]
Get Rich Slowly
Bargaineering
The Simple Dollar
My Money Blog
iwillteachyoutoberich
posted by T.D. Strange at 10:31 AM on November 19, 2010 [1 favorite]
Best answer: I got my start in learning about finance, saving, and investing from The Only Investment Guide You'll Ever Need by Andrew Tobias, and I can't recommend it highly enough.
For a fantastic forum on financial advice, you can't go wrong with the Bogleheads.
posted by Ryogen at 6:15 AM on November 20, 2010
For a fantastic forum on financial advice, you can't go wrong with the Bogleheads.
posted by Ryogen at 6:15 AM on November 20, 2010
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Personal finance blogs like The Simple Dollar and Get Rich Slowly are great resources for figuring this kind of stuff out. I don't have a lot of up-to-date books to recommend, but The Complete Idiot's Guide to Personal Finance in your 20s and 30s is a decent introduction to personal finance in book form. There are better books for specific topics like investing and whatnot, but if you want one book that will cover everything without a lot of detail that is a good one.
Also here is my "What should I do with my money?" personal finance advice in single AskMe comment form.
posted by burnmp3s at 9:35 AM on November 18, 2010