There are some great books available to help consumers get a grip on their finances. But even some of the best books shouldn’t be taken as gospel. Here are some tips that will allow you to get the good from books and what needs additional consideration.
Look at the qualifications of the financial authors. Granted, being rich gives someone credibility about accumulating wealth. Even rich people, who can generally tell you how they made their money, might not be able to give you instructions that will make you rich. Also, many of these wealthy people hire professionals to handle the specifics of their money management. Sometimes the authors have personal experience in a specific area – debt, real estate, or investing. Their personal experience can’t always be replicated in your life. And their success in one field might not apply to other financial arenas. And success might not qualify them to give advice to others. Good advice for one person might not be at all appropriate for another. Credentialed financial professionals have training to analyze the needs of clients.
About 20 years ago, there was a popular book written by a group of women who had started an investment club. This group, often referred to as the Beardstown Ladies, documented their process for researching and buying stocks over several years as well as the returns on their portfolio. Some articles were subsequently published questioning the Beardstown Ladies’ return calculations and ultimately refuting their reported returns. It appears that the published miscalculations were unintentional, and the investment club did make money. But it’s a good example of how people who want to make money from sharing financial information might miss the mark.
Books might be a good source of general ideas about basic techniques. You can get tips on how to be organized, set up a budget, save more, pay down debt. But even these practices are part of a bigger financial picture. It’s unlikely that a book can address the multiple aspects of your life. After all, a book can’t ask how you feel about money, what your personal goals are, what your family needs are, how your health is, if you need to pay down debt, whether your extended family might need financial support, or other questions that help a financial professional give you alternatives that could help you manage your money.
If you’re going to get financial guidance from reading, read multiple authors. While one author might come up with some innovative ideas, if the thoughts are really unusual, it’s worth questioning whether the concepts are reasonable. For more complex ideas like investing, insurance, retirement projections, and other intricate recommendations, get professional advice before making decisions. If the advice in the book promises unbelievably fabulous results, you should definitely get professional advice before doing anything. As the old adage goes, if it sounds too good to be true, it probably is.