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June 5, 2015 11:24 PM   Subscribe

I'm in my thirties and I just got my first 'grown-up' job. Now find me a book that teaches me grown-up finances.

I'm in my early thirties and I just started my first 'grown-up' job with a salary, benefits, options, etc. I've been getting by the last decade or so with waiting tables, nannying, freelancing, etc. I have a checking account with a low balance, a savings account with a low balance, a credit card with a high balance, high student loans that I have deferred, and general living expenses. I have half-assed my taxes (or not even filed) for years because so much of my income has been under the table and I've been poor as shit.

BUT NOW I have a decent job with all the bells and whistles and I really need to get my finances in order like an adult. I don't even know how to fill out a W-4 really. I mostly just guessed--Withholding? Allowances? Liability? Deductions? WUUUUUHHHH? Every source I look at online assumes some base-level knowledge that I barely understand. I've even looked at websites geared toward college-students and young adults and I feel like a dumb asshole. I sat with an accountant to try to get him to walk me through some stuff, but even then I felt like a dumb-dumb.

I've been okay at managing my credit (I have a decent score >700), but it's taxes and retirement and all that shit that I don't get.

Want I want is a comprehensive book that really breaks it down. TO THE BARE BONES BASICS, and then something that builds on these basics so I can try to cut out some kind of future for myself. Can you recommend something? Most of the books I see were published before 2009 and I would like something more current than that because I feel like the rules have changed somewhat (like with post-recession and obamacare stuff). I want to get on the right track. HALP!

Please don't give me nuggets of financial advice because part of my problem is piecing it all together. I'm looking for something very comprehensive. Thanks!
posted by anonymous to Work & Money (20 answers total) 65 users marked this as a favorite
When I was in your situation many years ago I found Beth Kobliner's Get a Financial Life: Personal Finance In Your Twenties and Thirties to be very helpful. I see the latest edition came out in 2009. It does break things down to the bare bone basics, and doesn't assume any base-level knowledge. I also appreciated the details it provided, such as how long I should keep financial documents. I also found it a helpful base from which I could move on to read on more specialized topics in personal finance and investment.

As it's a widely available book, I suggest going to your public library or a bookstore and leaf through it to see if the book is what you had in mind.
posted by needled at 3:53 AM on June 6, 2015 [3 favorites]

I recently read Jonathan Clements' Money Guide 2015 and found it to be very comprehensive. It's dense, but it covers a great many personal finance topics clearly and in straightforward language. However, like most personal finance books, it presupposes some knowledge of budgeting and debt management, so I'd only recommend it to you when you're a little further along.

Ron Lieber at the NYT lists some good "starter" personal finance books in this article. I remember finding the Kobliner book to be good when I was first starting out.

I can't speak to orher books directly, but you might want to look for books geared for 20-something folks entering the workplace.

On preview - consider me a second vote for Kobliner.
posted by cheapskatebay at 3:58 AM on June 6, 2015

Start googling credit counselors in your area. Look for ones associated with churches and avoid any that look the least bit scammy. Never give anyone full access to your stuff (passwords, social security number).

You need someone who can sit down with you and unravel this. The taxes are very concerning as they can be the most confusing. You may need an professional to help you with that.

People really seem to get into Dave Ramsey. Many churches will offer Dave Ramsey classes for free and they help lots of people who are in your situation.

In the meantime, go on a money diet. Stop spending on anything other than food, rent, car costs, and utilities for 3 months or until you get everything sorted out.
posted by myselfasme at 5:18 AM on June 6, 2015

I found Elizabeth Warren's "All Your Worth" to be extremely helpful for getting started with a budget. It's very bare bones.
posted by unknowncommand at 5:25 AM on June 6, 2015 [2 favorites]

Don't limit yourself to recent books if you want to learn about "grown up finances." While things like Obamacare may have some impact on your finances, the basics are very similar to what they were for my father's generation.

Example: The concept of compound interest, the time value of money, and other basic aspects of investing have not changed in your lifetime. The benefits of setting aside maximum funds for retirement and letting that build up for many years is well-understood. This means, currently, if your employer has a 401(K) program and they let you put away 15%, *do* 15%... and on top of it make the maximum contribution to a Roth IRA as you can. The more you put away at an earlier age, the more the money grows. By taking it out off the top of your income, before it shows up in your bank account, you quickly adjust to it as though it were any other tax... but it is a tax that directly benefits you. The specifics of "what to do" change slightly, like the Roth IRA was introduced in 1997, but before that, the same concept applied to a regular IRA.

Don't let that snow you under with the details. The takeaway is that the specifics might change a little now and then, but the underlying strategies for financial success do not. Find a book that gets you up to speed on those things you don't understand, and then move forward from there.
posted by jgreco at 5:25 AM on June 6, 2015 [5 favorites]

Also, once you've gotten up to speed on terminology and concepts, there's a very good, simple resource available in the form of

Dilbert’s One Page Personal Finance List

as reposted various places on the Internet. At first glance, you might think it a joke, but in the end, it really does boil down to what Scott Adams wrote.
posted by jgreco at 5:41 AM on June 6, 2015 [5 favorites]

Kind of off-topic but if you've been poor as shit and a lot of your income was under the table, there might have been tax credits that you could have qualified for. Tax credits are great because, if you're income is $0 and you qualify for a $1,000 tax credit, all you need to do if file claiming the credit and you get a $1,000 refund. If I remember correctly, you can re-file the previous three years' taxes so it might be worth looking into. I am not a tax professional/IANYTP. Always file your taxes, always.

I don't have a book to recommend but I could probably write one (and might someday). I've never seen the method that I use in a book anywhere but I think it's great for people who've been able to budget before or have been doing it long enough that looking at individual line items doesn't really do much for them any more and it's pretty simple.

Figure out roughly how much your monthly expenses are or about how much you need to have in your checking account to feel comfortable (but should be at least 1-month's expenses). Transfer money into or out of your savings account (also get a savings account if you don't have one already) so that your checking account is exactly that balance.

Throughout the month, don't use your debit card for anything other than getting cash from the ATM (and try to avoid that when you can). Instead, use a credit card with the best rewards program for you that you can find for ALL of your day-to-day purchases. This uses the bank's money instead of yours and since you have 1-months expenses in your checking account, you don't really need to worry about what the balance is at any given time and it's a bit less hassle to deal with fraudulent credit card transactions vs. debit cards. Monthly bills (rent/mortgage, car payments, utilities, etc.) can still get paid out of your checking account. Again, since you have a buffer there, you don't need to worry about the balance too much.

At the end of the month, pay the statement balance on the credit card. This means that you won't have to pay any interest so you got to use the bank's money for free over the last month. Now, transfer money into or out of your checking account to bring the balance back to your starting amount.

If you add up the deposits (easy since there will probably only be 2-4) and subtract whatever amount you transferred into savings, that's how much you spent that month. Put those numbers on a spreadsheet and you're done.

You still have the option of going line by line and assigning categories, using something like Quicken or or whatever but you're been poor, you know how to be frugal, as long as you can keep being smart about that, you might not ever need that level of detail. Plus, now that you're not living paycheck-to-paycheck you can afford to live cheaper by buying some things in bulk and buying higher quality items that save over time by not having to be replaced (shoes are a good example).

So if your monthly expenses are about $2,000 it looks like this:

Day 1 balance: $2,000
10th: Rent -$650, balance $1,350
14th: Payday +$1,574, balance $2,924
20th: Car payment -$300, balance $2,624
28th: Payday 2 +$1,574, balance $4,168
30th: End of month, pay off credit card -$1,078, balance $3,120
Transfer $1,120 to savings, balance $2,000

Total deposits: $3,148
Savings: $1,120
Expenses: $2,028

Your cycle doesn't have to start on the 1st but it's usually the easiest and you'll want to call your credit card company and have the setup your account so that the billing cycle starts on the 1st so it more-or-less lines up with your budget cycle.

Managing your accounts this way makes it really easy to track your expenses, still gives you the option of tracking every line item and that's easier because most everything that you'd be categorizing will be on the credit card, and it makes your cash flow far easier to manage and avoid stressing out about.

It will also make it easier to follow the other advice that you'll be getting out of the books that people here are recommending because you already know what your expenses are like, how much cash you save each month, makes it easier to figure how much to invest and where, and makes sure that you don't end up with a ton of money just sitting in your checking account (or a saving/money market account for that matter) when it could be in an investment account having money sex and making money babies. As long as you can still be frugal and keep yourself from spending your new found wealth on frivolous stuff you don't need (you can splurge a little, just make sure it's high-impact and high-value) don't get bogged down in the minutia of your monthly budget, keep it simple so you can focus more on stuff like the things on the list in jgreco's excellent link.
posted by VTX at 6:34 AM on June 6, 2015 [11 favorites]

I'd also like to speak in favor of Getting A Financial Life. I used it myself and I gifted it a couple of times as well, and everyone I know who has used it has found it to be very, very helpful.
posted by ourobouros at 6:36 AM on June 6, 2015 [1 favorite]

Not a book, but has a lot of articles and resources available for free. Looks like you'd have to create a profile to use some of the tools, and they do have financial planning services which cost $$. I've used learnvest and have found it to be helpful.
posted by bunderful at 7:06 AM on June 6, 2015

Enthusiastically seconding Elizabeth Warren's "All Your Worth." It's great for budgeting, and also for dealing with (i.e., getting out of) debt. I gave this book to my own kid when he graduated from college.
posted by merejane at 7:42 AM on June 6, 2015

A lot of this stuff you have to learn one piece at a time. Understanding how to save for retirement is something anyone can do, and so is knowing how to navigate the ACA for health insurance, and so are basic taxes, but they're not the same thing.

If you are feeling dumb and intimidated, you have to push through that. There is nothing you need to learn here that you cannot understand with a little persistence. You may have to take baby steps since you didn't absorb this stuff by osmosis from parents or over the course of years the way a lot of people do. That's OK. Take the baby steps. It would be fine to ask a bunch more questions here, for example.

(Note, lots of people, including professional, educated people, do a very bad job at personal finance. It's not unusual at all. But you'd rather not be one of them.)

I don't think you should get your hopes up too high about any one book. That's not to say you shouldn't try out the suggestions--I think you should. Just don't expect a one stop answer to everything.

I do think you can learn to handle all of this "grownup stuff" just fine if you take it a bit at a time and don't run away from dealing with it.
posted by mattu at 7:58 AM on June 6, 2015 [1 favorite]

The "personal finance" subreddit has some pretty good advice for what to do and in what order.
posted by Blue Jello Elf at 8:10 AM on June 6, 2015 [2 favorites]

Your Money: The Missing Manual by J.D. Roth is my go-to guide for basic financial stuff.
posted by bluecore at 12:23 PM on June 6, 2015

On My Own Two Feet is pretty solid and has a nice tone if you're feeling overwhelmed or intimidated.
posted by congen at 12:54 PM on June 6, 2015

Most of the books I see were published before 2009 and I would like something more current than that because I feel like the rules have changed somewhat (like with post-recession and obamacare stuff).

I wouldn't get overly caught up in up to datedness of things. Nothing new under the sun and all that. (Jesse Livermore is still on the shelves of plenty of professional investors, as is Benjamin Graham (Warren Buffett's inspiration).)

For non-professionals, Andrew Tobias is a good place to start on the investment side (though it has more than just investment stuff).
posted by BWA at 1:49 PM on June 6, 2015

if you're open to non-book resources:

i've found podcasts to be helpful because many of them take a specific topic and spend 40-60 minutes starting from the basics and discussing it from there.

i've found "Listen Money Matters" to be really accessible (it's literally just two guy buddies talking about money stuff while drinking beer), but there are so many different podcasts to try.

bonus: they are free, and you can listen on your commute, at the gym, wherever.
posted by carlypennylane at 3:37 PM on June 6, 2015 [1 favorite]

I'll third the recommendation of Beth Kobliner's Get a Financial Life as a starting place. It's comprehensive without being overwhelming.
posted by brianogilvie at 3:38 PM on June 6, 2015

My favorite book for money matters is Personal Finance For Dummies. Link goes to the 7th edition, published in 2012.
posted by The Almighty Mommy Goddess at 6:43 PM on June 6, 2015

You don't know everything yet, and that's okay. In fact, it's going to take a while before you understand all there is to Personal Finance (PF), and that's going to be okay too. You don't need to become an overnight expert, you just need to avoid some key mistakes while you're in learning mode.

Go to the library. Pick up pretty every book on personal finance you can, but avoid anything that has the author's face on the front cover or is written by someone with a TV or radio show. You will know because the library will have like a dozen books from them, and the blurbs say 'AS SEEN ON CNBC', etc. While it's true that tax law and obamacare have changed some things, the basic concepts of PF have not--Congress didn't outlaw living on a budget! The first book or two is going to be very slow going, but by the middle of the stack you will find yourself reading the same concepts repeatedly. This is useful in determining what parts of PF are essential, and which parts are personal choices of the author. One author might have a chapter dedicated to automating your bill payments, another might have a chapter on how awesome Roth IRAs are, etc. Feel free to adopt recommendations that make sense for you. But you'll also see they all tell you to create a realistic budget, live within your means, and pay your credit card in full every month.

As you learn more, you'll discover specific areas you want to know more about, and when that happens I recommend finding a NOLO Press book on the subject. Their origins is in DIY legal, so they tend to seek out authors who are practicing fiduciaries in the field. I've found their guides on retirement accounts useful, as very few books bother covering non-standard IRS regulated accounts like 457b's that I'm eligible for.

You may also find Yale's lectures from ECON 252: Financial Markets a useful primer when dealing with financial markets. The course explains in fairly simple math terms how financial markets work, and what the instruments (contracts) are. Shiller does a good job of putting concepts in historical context, which makes sense, given probably his most useful research to date has been the creation of the Case-Shiller index.
posted by pwnguin at 1:16 AM on June 7, 2015

I've recommended this before and I'll do it again. Here's the book you need: I Will Teach You to Be Rich by Ramit Sethi. Dumb title, but has great advice that I haven't seen anywhere else. Perfect for someone starting a career.
posted by islandeady at 5:57 AM on June 8, 2015

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