The Motley Fool is all about helping people take charge of their financial lives, whether the topic is investing, debt, college savings, or what have you. A book that fits this Foolish notion is Edwards and Martin's The Rookie's Guide to Money Management. This book, while it seems a bit simple in places, contains much of the same advice you'll find on the Fool's discussion boards, such as Credit Cards and Consumer Debt or Living Below Your Means. But unlike those boards, you can read this book while on an airplane or relaxing on a beach.
The book starts off with the basics. You can't get to where you want to go if you don't make plans. In this case, the authors talk about financial plans, which can impact everything else in your life. Want to retire early? Plan for it, save, invest, and you'll get there. Be a spendthrift, though, not caring about money, and you'll end up working your whole life. The first chapter is about setting goals and the importance finances will play in reaching those goals.
The second chapter moves on to budgeting as a way to control your finances to reach those goals. It provides tips on how to see where your money is going, as well as what to do if it goes to the wrong places. Do you really spend $6.50 a day on lunch? That's $1,625 per year that might be usable elsewhere. And what about that soda in the afternoon? The vending machine eats $150 every year, while it would cost you only $62 or so if you brought your own soda to work each day. It adds up.
Other chapters cover the necessity of having emergency savings, using credit cards wisely, getting that credit card debt under control, organizing your financial paperwork (including what should be kept and what can be tossed), and even a description of how banks work. If you want to negotiate with MasterCard
The authors even discuss such topics as whether you should pay for both meals when you take your date to a restaurant. If things go well on that date and it leads to marriage, how will you handle your finances together? They have some ideas on that, too.
While the book is aimed at the freshly minted college graduate who, nowadays, often has credit card debt on top of student loans, its tips can be applied to anyone with positive results. Even if you are 40 or 50 years old, there is stuff to learn from this book. Of course, the sooner you start taking control of your financial life, the better off you will be, but it is never too late to start. I especially liked the authors' attitude that we are adults now, responsible for our decisions. Yes, they provide many tips to help, but it is up to us to put them into practice. They can't do it for us as if we were children.
A great part of the book is its 78-page list of definitions of various financial terms -- everything from abatement to zero-coupon bonds. If we want to talk finances and investing, we have to know the language. This is a great introduction to many of the terms that get tossed about.
All in all, I'd have to say The Rookie's Guide to Money Management is a great introduction to taking control of your financial life. It gives some good tips and shows you what can be achieved once that control is reached. Tired of paying a never-ending credit card bill every month? Read this book, follow its advice, and before you know it you'll be saving and investing that money instead of fattening the bottom line of those companies. Isn't that better?
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MasterCard is an Inside Value recommendation, and Bank of America and Washington Mutual are Income Investor recommendations.
Fool contributor Jim Mueller took control of his financial life some eight years ago, much to his wife's relief. He now has some investments, but none of them include the companies mentioned above. The Fool's disclosure policy is a model of clarity, cleverness, and other useful things beginning with "c."
