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I first learned about the difference between stocks and bonds during my sophomore year of college when I took an entry-level economics class. I only had to memorize the definitions for an exam, though, and I promptly forgot the difference once the class ended.
A few months later, I stumbled upon this video from Khan Academy:
After re-watching the video a couple times and jotting down some notes, the concept of stocks and bonds finally made sense to me. What I had failed to understand in a university course suddenly made perfect sense when explained in simple terms in a YouTube video.
I went on to watch several personal finance videos on Khan Academy and learned about mortgages, renting vs. buying, income taxes, retirement accounts, and several other personal finance ideas.
The Drivers of Learning
What I realize now is that my learning was driven by curiosity and applicability.
I was genuinely curious about the math behind renting vs. buying and why one wasn’t necessarily better than the other. Likewise, understanding income taxes and retirement accounts directly applied to my financial life.
When people ask me what personal finance books, sites, or podcasts to start with, I suggest that they start with topics that could directly benefit them.
For example, a couple considering buying a home should read some articles that discuss renting vs. buying or check out the Interactive Rent Vs. Buy Calculator created by Mike Bostock.
High school students about to enter college should read articles that explain the math behind student loans.
A young professional should learn about the benefits of contributing to a 401(k).
I find that personal finance topics stick with you more if you have a reason to directly apply the ideas you learned to your own life.
Early on, I personally found myself drawn to some classic personal finance books. I read Rich Dad Poor Dad by Robert Kiyosaki and learned that the rich get richer through buying assets that appreciate in value over time while most people tread water financially by constantly buying liabilities.
I now see that the fast path to wealth is through buying less stuff and buying more assets.
I then stumbled upon The Millionaire Next Door, which taught me that most millionaires in the U.S. practice stealth wealth and live in ordinary homes, drive normal cars, and wear simple clothing. By contrast, most of the people we think are millionaires with big houses and fancy cars are people who have high cash flow but a low net worth.
The real millionaires in the U.S. are the ones who pursue wealth and largely ignore status.
I kept jumping from one finance book to the next, constantly picking up bits of knowledge that slowly accumulated over time.
Then I discovered sites like JLCollinsNH. I learned about the efficiency of investing in stock index funds through Jim’s incredibly informative Stock Series.
I then found financial podcasts like The Mad Fientist and Afford Anything. I began listening to episodes on my commutes to work.
All of this learning lead me to open a 401(k) at my first job, invest in different assets in a brokerage account, switch my savings from a .01% annual interest account to a 1.6% annual interest Ally Savings Account, and pursue a high-income job to boost my savings rate.
The best part of all is that none of this learning has felt like traditional education. I haven’t forced myself to sit and read any boring textbooks. By following blogs, listening to podcasts, and watching videos, I have naturally accumulated a wealth of financial wisdom in a relatively short period of time.
And I believe anyone can do the same by seeking to convert their learning into real action.
Read about the efficient investing style of index funds, then go open your own brokerage account and start investing.
Find out how side hustles can increase your income. Then go start tutoring, freelancing, or dog-walking.
Learn about the financial benefits of minimalism. Then sell all that shit around your house that you never use.
If you want to increase your own personal finance knowledge, start with an area where you can directly apply your learning to your life.
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3 Replies to “The Best Way to Learn About Personal Finance (Hint: It’s not by Reading a Textbook)”
Hi Zach, I think you make some good points. Most of learn best by doing and when you put your money in you become much more interested about learning.
As an adult I took an investments class when I got my masters degree a few years ago. I enjoyed it and learned some things, but the content and text book was much more complex and theoretical than necessary and I had 25+ years of investing experience under my belt. A beginner would have been mostly lost and bored. Tom
“When you put your money in, you become much more interested about learning.” 100% agree – the money you put to work reinforces the learning and ensures that you understand what you’re doing with your money. Thanks for the feedback, Tom!
I think this is right on. This applies to topics other than personal finance too. The internet has made it so easy to learn about whatever we want. We are lucky to have it available.