How my thinking about finances has changed as a result of reading finance books:
- I’m based in Canada and almost all of my investments are in Roboadvisors and index funds (WealthBar, WealthSimple, Questrade)
- I have a small amount of investments in LendingLoop (these are probably the ‘riskier’ investments I have
- I invest first (money is automatically taken out of my bank account and transferred into my investment accounts) and then spend whatever I have leftover
- I don’t keep a budget but I do try to keep track of all of my expenses (through Mint) that I regularly review – this is so that in case there are charges that I do not know of or bank fees, I will be on the phone right away to complain or to inquire about the fees to get those refunded.
- I heard this from the Minimalism Podcast – if you want to purchase something that costs more than $30, you have to wait at least 30 days to purchase it. If after 30 days, you still want to buy it, go ahead but often times, you will find that your desire will go away OR you will have done your research and found ways to save some money on the purchase.
The below books are ones that I have enjoyed the most on finances and wealth – enjoy! But if you are not interested in
- Unshakeable by Tony Robbins
- Millionaire Teacher by Andrew Hallam
- I will teach you to be rich by Ramit Sethi
- Rules of Wealth by Richard Templar
Unshakeable by Tony Robbins
- Fees from trades and such can destroy your profit – even a small fee on different trades or mutual funds can mean a significant amount over a long period of time
- Index funds that are not actively managed (and therefore have lower management fees) are the way to go – you also don’t have to think about what to buy, when to buy or how much to buy – you just invest the money and no matter if the market is great or doing awful, you will come out ahead in the long run
Millionaire Teacher by Andrew Hallam
I liked this book a lot – and I think I would have enjoyed it even more (and learned a lot more) if I had not read Unshakeable by Tony Robbins (above). I did learn a few new things though:
- Wealth is having enough money to never have to work again, if you choose; and wealth is having investments, a pension or a trust fund that can provide a person twice the level of their country’s median household income over a lifetime
- A balanced portfolio consists of index funds and bonds – at the end of every year, if you have more bonds, sell some to buy index funds; if you have more in your index funds, sell some of those to buy some bonds
- Again, similar to Tony Robbin’s book Unshakeable, fees are what kills your profits
- What I really liked about Millionaire Teacher was that he broke down investment vehicles by country – I find that some of the books I read on financial planning and wealth are often based in the US and while the underlying knowledge and principles are great, I think some readers probably do not want to do the work to find out what the best investment platform is in their country / region
I will teach you to be rich by Ramit Sethi
- Pay yourself first. Invest in your accounts right away. Make things automated so that you do not have to think about paying off your credit card or paying off those regular bills you have
- Do regular audits of what you pay for in terms of subscriptions – services such as Netflix, Cable, Phone or Internet. Call every year to ask for discounts if you can – saving $10 / month means you will save $120 a year.
- Most financial authors recommend a budget but don’t actually keep a budget themselves. Rather than trying to nickel and dime yourself (e.g., eliminating that coffee that you get every morning from Starbucks to save yourself $5), think about the biggest purchases that you make and determine a strategy for how to save money on those big purchase / big ticket items – items such as cars (buying used), houses (shopping around for mortgages), etc.
Rules of Wealth by Richard Templar
- Most people are way too lazy to be wealthy. Sometimes I feel this way – waking up early, sleeping late just to work on my book or the next big idea I have. But it’s good to get a slap in the face realizing that you won’t get wealthy just because you want to be, you have to work on your idea, in fact, you have to work hard even when no progress is seemingly made because even though many successful entrepreneurs have made it seem like they were an overnight success, they actually worked hard day and night to get their business off the ground.
- Know how the wealthy think (and emulate them). How do the wealthy think? A good book on this is The Millionaire Next Door by Thomas Stanley or Secrets of the Millionaire Mind by T Harv Eker. Who in your circle of friends is wealthiest? What kind of things are they doing? What type of books do they read? Scour the internet for interviews of wealthy people. I’m not saying go out immediately and do exactly as they do but dive into their mindset and try to derive insights from how they think about things (e.g., wealthy people like to buy cars that are reliable and have low maintenance – why?)
- You have to work hard to get rich enough not to have to work hard. You can’t just get rich enough not to have to work hard. You have to put in the hours first. This means starting early in the morning, working late at night, not taking long food breaks, not watching TV, not wasting time, to mention a few things. As Richard says, you need to work like you’ve never worked before. You also have to enjoy it. There has to be some sort of motivation for you. Learn how to sell (or as Richard calls it “the art of deal making”) Richard shares the story of Kyle MacDonald who traded away a single red paperclip to a house in the space of nine months. From Kyle’s story, here are some of the lessons you can take away:
- Never say you do not have anything to start with (Kyle didn’t)
- Always be open to opportunities
- Be adaptable and flexible
- Have a goal
- Work diligently
- Network like mad
- Take advantage of free publicity (like newsletters that go out to your office showing consultants)
- Think about what you have that others might want and how you can trade possessions, skills or your knowledge for something that you need in return. And like Kyle, maybe what you get in return is not something you need – how can you trade that again for something else that you might want (or on and on)?
- Real wealth comes from deals, not fees. One of the few rules that I took away going “huh!” – you probably will not get rich from your day job so you will have to learn how to start buying and selling if you are going to become a millionaire. Take a look at some of the highest paid day jobs out there: lawyers and doctors – some of them are very well off I’ll give you that but they probably are not rich unless they are doing something else (maybe they own the firm or they own the clinic – in which case they are buying and selling something other than their time). Think about what you can buy and sell (or with info products, think about what people would be wiling to pay you for).
- Work as if you did not need the money. “If people think that you need the money it gives them power over you and that makes you insecure”. A great quote – and something that I realized subconsciously when evaluating different job offers that I have received or doing side hustle work. It’s important to work as if you did not need the money because you are going to work much differently than if you work because you DID need the money.
- Get some money mentors. This is great advice – find people that you consider to be wealthy and invite them out to coffee to understand the actions they took to become wealthy. You don’t need to constantly pester them for their time but take them out for a coffee maybe 4 – 5 times a year to ask them for advice, guidance and suggestions. You can get a coach or a personal trainer for your fitness, why not get someone to help you with your finances? I’m not talking about financial advisors either – they are good for different things but you want someone that is not tied to you in any financial way to provide you with advice – advice that you follow because that’s what they would do if it was their money.
- Don’t try to get rich too quickly. I found myself smiling at this one and thought ‘who would actually slow down from getting rich?’ but the point that Richard is trying to make here is to slowly but surely build up your assets, establish different income streams and to diversify as much as possible. If you get rich too quickly, it might be because you put all of your eggs in one basket and gambled a bit and just as quickly as you built your wealth, you may lose it. Getting rich slowly can also help you learn as you go because not only do you need to learn how to make money, you also need to learn how to keep and grow your money.
- Don’t ever believe you’re only worth what you’re being paid. Those who change jobs frequently often get a pay raise each time (and therefore get paid more than individuals who stay in their jobs for longer). This doesn’t mean to change jobs all the time but what it does mean is that if you are staying long term in a job, make sure you are getting commensurate raises from time to time because those around you (the market) is paying more for people like you. Remember that no company is ever going to pay more for anything than they really need to. Plus, if you think you are always worth more, it makes you ambitious, restless, and it will make you work harder to get what you really want (and deserve).