Sixty-five percent of adults said they think investing in the is either scary or intimidating, according to a 2018 Ally Invest survey

 Among their fears? Making the wrong investment, trusting the wrong sources, or not having enough money to invest.

Whether you're a new investor confused about the best strategy for your fledging portfolio or haven't taken the investment plunge yet, we've got you covered with our picks of the best investing books for beginners.

1. ‘Warren Buffett's Ground Rules,' by Jeremy C. Miller

The 7 Best Books for Young Investors in 2021

“Warren Buffett's Ground Rules” wasn't written by the famous investor and entrepreneur himself. But, this compilation of letters he wrote to his partners in the early days of Berkshire Hathaway still has lots of prudent advice from Buffett.

The letters outline his investing strategies, most notably his affinity for conservative investing. Buffett focuses on strategies for staying disciplined and growing returns by playing it safe, something everyone could use a reminder of in a market like this.

2. Best for Beginners: A Beginner's Guide to the Stock Market

A Beginner's Guide to the Stock Market by [Matthew R. Kratter]

Young investors who do not have experience with the stock market will learn the ins and outs of the market with this guide. Matthew R. Kratter breaks down the types of stocks and how they work, while explaining how to analyze stocks to find ones that should perform well in the short-term and long-term.

One key area this book addresses is the mistakes beginning investors often make and how to avoid them. “A Beginner's Guide to the Stock Market” also dives into investing strategies and the methodologies that are ideal for new, aspiring investors, making this a great first read among investing books

3. The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness

book cover of The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness

Money management isn't as math-centric as you might believe. Most financial decisions aren't made by spreadsheets; they're made by people, and people have emotions, biases and unique ways of viewing the world. These feelings and perspectives can cloud people's understanding of finance and ultimately get between investors and long-term success.

Recognizing this is the first step to avoiding the emotional blunders – like panic selling or jumping onto the hot-stock bandwagon right before it derails – that so often thwart beginning investors.

The second step to avoiding emotional biases: Reading Morgan Housel's The Psychology of Money.

As Housel will tell you, successfully managing your money is less about how intelligent you are and a lot more about how you behave. Even the smartest person can make a lousy investor if they can't keep their emotions in check when the market takes a tumble.

Housel's book lays out the 20 “flaws, biases, and causes of bad behavior” that people have concerning money, and how these flaws can lead to bad financial outcomes.

Beginning investors shouldn't think of this as a recipe for how to invest, but a means of sticking with whatever recipe you use to invest.

1685933937 555 The 7 Best Books for Young Investors in 2021

If you want to invest, then you may need to familiarize yourself with mutual funds at some point. Enter John C. Bogle's “Common Sense on Mutual Funds,” which was originally published in 1999. Keep in mind that a mutual fund is an investment vehicle through which investors pool their money to invest in securities; it's also an easy way to diversify your portfolio for a low price. The book's updated version covers topics from the basics of mutual fund investing to regulatory changes to how to build an investment portfolio with staying power. Bogle is also the author of “The Little Book of Common Sense Investing” and “Enough.”

5. RICH DAD, POOR DAD BY ROBERT T. KIYOSAKI

Rich Dad, Poor Dad

I first came across this gem on BookTok, which has catapulted this already-famous investment book to a wider audience. Rich Dad, Poor Dad specifically looks at how investors should think about money. For example, we have all been told that our house is an asset. Kiyosaki, however, asserts the opposite because houses equal mortgages, meaning they take away money from you rather than put it in your pocket. The book will help you unlearn some of the deleterious financial advice we've been fed through schools and other institutions.

6. THE INTELLIGENT INVESTOR BY BENJAMIN GRAHAM

The Intelligent Investor

Graham's classic book has sold over a million copies and for good reason. The Intelligent Investor is chockful of time-tested financial advice that also includes commentary on the realities of the 21st-century stock market as well as practical guidance on how to apply Graham's principles.

7. Best for Investing in Stocks: The Modern Guide to Stock Market Investing for Teens

the moden guide to stock market 3198213226d2400f9d4acdc4a0199fbe

“The Modern Guide to Stock Market Investing for Teens” covers key tips and strategies for those interested in investing in the stock market. Published in 2020, this quick read was written by a teenager in California, Alan John, who wanted to help young people see the importance in beginning their investing journeys early.

The author urges teens and college students to start investing with any amount of money they can spare, explaining how this invested dollar can grow over time, thanks to Compound Interest

What Is Compound Interest?Compound interest (or compounding interest) is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. Thought to have originated in 17th-century Italy, compound interest can be thought of as “interest on interest,” and will make a sum grow at a faster rate than simple interest, which is calculated only on the principal amount.
The rate at which compound interest accrues depends on the frequency of compounding, such that the higher the number of compounding periods, the greater the compound interest. Thus, the amount of compound interest accrued on $100 compounded at 10% annually will be lower than that on $100 compounded at 5% semi-annually over the same time period. Since the interest-on-interest effect can generate increasingly positive returns based on the initial principal amount, it has sometimes been referred to as the “miracle of compound interest.”
Key TakeawaysCompound interest (or compounding interest) is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan.
Compound interest is calculated by multiplying the initial principal amount by one plus the annual interest rate raised to the number of compound periods minus one.
Interest can be compounded on any given frequency schedule, from continuous to daily to annually.
When calculating compound interest, the number of compounding periods makes a significant difference.

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Understanding Compound InterestCalculating Compound InterestCompound interest is calculated by multiplying the initial principal amount by one plus the annual interest rate raised to the number of compound periods minus one. The total initial amount of the loan is then subtracted from the resulting value.
The formula for calculating compound interest is:
Compound interest = total amount of principal and interest in future (or future value) less principal amount at present (or present value)

= [P (1 + i)n] – P
= P [(1 + i)n – 1]
Where:
P = principal
i = nominal annual interest rate in percentage terms
n = number of compounding periods
Take a three-year loan of $10,000 at an interest rate of 5% that compounds annually. What would be the amount of interest? In this case, it would be:
$10,000 [(1 + 0.05) 3 – 1] = $10,000 [1.157625 – 1] = $1,576.25
Growth of Compound InterestUsing the above example, since compound interest also takes into consideration accumulated interest in previous periods, the interest amount is not the same for all three years, as it would be with simple interest. While the total interest payable over the three-year period of this loan is $1,576.25, the interest payable at the end of each year is shown in the table below. https://datawrapper.dwcdn.net/mWQuc/1/
Compounding PeriodsWhen calculating compound interest, the number of compounding periods makes a significant difference. The basic rule is that the higher the number of compounding periods, the greater the amount of compound interest.
The following table demonstrates the difference that the number of compounding periods can make for a $10,000 loan with an annual 10% interest rate over a 10-year period. https://datawrapper.dwcdn.net/VaCqj/2/
Compound interest can significantly boost investment returns over the long term. While a $100,000 deposit that receives 5% simple annual interest would earn $50,000 in total interest over 10 years, the annual compound interest of 5% on $10,000 would amount to $62,889.46 over the same period. If the compounding period were instead paid monthly over the same 10-year period at 5% compound interest, the total interest would instead grow to $64,700.95.1
Excel Compounding CalculationIf it's been a while since your math class days, fear not: There are handy tools to help figure compounding. Many calculators (both handheld and computer-based) have exponent functions that can be utilized for these purposes. If more complicated compounding tasks arise, they can be done using Microsoft Excel—in three different ways.
    The first way to calculate compound interest is to multiply each year's new balance by the interest rate. Suppose you deposit $1,000 into a savings account with a 5% interest rate that compounds annually, and you want to calculate the balance in five years. In Microsoft Excel, enter “Year” into cell A1 and “Balance” into cell B1. Enter years 0 to 5 into cells A2 through A7. The balance for year 0 is $1,000, so you would enter “1000” into cell B2. Next, enter “=B2*1.05” into cell B3. Then enter “=B3*1.05” into cell B4 and continue to do this until you get to cell B7. In cell B7, the calculation is “=B6*1.05”. Finally, the calculated value in cell B7 – $1,276.28 – is the balance in your savings account after five years. To find the compound interest value, subtract $1,000 from $1,276.28; this gives you a value of $276.28.
    The second way to calculate compound interest is to use a fixed formula. The compound interest formula is ((P*(1+i)^n) – P), where P is the principal, i is the annual interest rate, and n is the number of periods. Using the same information above, enter “Principal value” into cell A1 and 1000 into cell B1. Next, enter “Interest rate” into cell A2 and “.05” into cell B2. Enter “Compound periods” into cell A3 and “5” into cell B3. Now you can calculate the compound interest in cell B4 by entering “=(B1*(1+B2)^B3)-B1”, which gives you $276.28.
    A third way to calculate compound interest is to create a macro function. First start the Visual Basic Editor, which is located in the developer tab. Click the Insert menu, and click on Module. Then type “Function Compound_Interest(P As Double, i As Double, n As Double) As Double” in the first line. On the second line, hit the tab key and type in “Compound_Interest = (P*(1+i)^n) – P.” On the third line of the module, enter “End Function.” You have created a function macro to calculate the compound interest rate. Continuing from the same Excel worksheet above, enter “Compound interest” into cell A6 and enter “=Compound_Interest(B1,B2,B3).” This gives you a value of $276.28, which is consistent with the first two values.
Using Other CalculatorsAs mentioned above, a number of free compound interest calculators are offered online, and many handheld calculators can carry out these tasks as well.
The free compound interest calculator offered through Financial-Calculators.com is simple to operate and offers to compound frequency choices from daily through annually. It includes an option to select continuous compounding and also allows input of actual calendar start and end dates. After inputting the necessary calculation data, the results show interest earned, future value, annual percentage yield (APY), which is a measure that includes compounding, and daily interest.
Investor.gov, a website operated by the U.S. Securities and Exchange Commission (SEC), offers a free online compound interest calculator. The calculator is fairly simple, but it does allow inputs of monthly additional deposits to the principal, which is helpful for calculating earnings where additional monthly savings are being deposited.
A free online interest calculator with a few more features is available at TheCalculatorSite.com. This calculator allows calculations for different currencies, the ability to factor in monthly deposits or withdrawals, and the option to have inflation-adjusted increases to monthly deposits or withdrawals automatically calculated as well.

The Frequency of CompoundingInterest can be compounded on any given frequency schedule, from daily to annually. There are standard compounding frequency schedules that are usually applied to financial instruments.
The commonly used compounding schedule for savings account at a bank is daily. For a CD, typical compounding frequency schedules are daily, monthly, or semi-annually; for money market accounts, it's often daily. For home mortgage loans, home equity loans, personal business loans, or credit card accounts, the most commonly applied compounding schedule is monthly.
There can also be variations in the time frame in which the accrued interest is actually credited to the existing balance. Interest on an account may be compounded daily but only credited monthly. It is only when the interest is actually credited, or added to the existing balance, that it begins to earn additional interest in the account.
Some banks also offer something called continuously compounding interest, which adds interest to the principal at every possible instant. For practical purposes, it doesn't accrue that much more than daily compounding interest unless you're wanting to put money in and take it out the same day.
More frequent compounding of interest is beneficial to the investor or creditor. For a borrower, the opposite is true.
Time Value of Money ConsiderationUnderstanding the time value of money and the exponential growth created by compounding is essential for investors looking to optimize their income and allocation.
The formula for obtaining the future value (FV) and present value (PV) are as follows:
FV = PV (1 +i)and PV = FV / (1 + i) n
For example, the future value of $10,000 compounded at 5% annually for three years:
= $10,000 (1 + 0.05) 3
= $10,000 (1.157625)
= $11,576.25
The present value of $11,576.25 discounted at 5% for three years:
= $11,576.25 / (1 + 0.05) 3
= $11,576.25 / 1.157625
= $10,000
The reciprocal of 1.157625, which equals 0.8638376, is the discount factor in this instance.
The “Rule of 72” ConsiderationThe so-called Rule of 72 calculates the approximate time over which an investment will double at a given rate of return or interest “i,” and is given by (72/i). It can only be used for annual compounding.
As an example, an investment that has a 6% annual rate of return will double in 12 years. An investment with an 8% annual rate of return will thus double in nine years.
Compound Annual Growth Rate (CAGR)The compound annual growth rate (CAGR) is used for most financial applications that require the calculation of a single growth rate over a period of time.
Let's say your investment portfolio has grown from $10,000 to $16,000 over five years; what is the CAGR? Essentially, this means that PV = -$10,000, FV = $16,000, and nt = 5, so the variable “i” has to be calculated. Using a financial calculator or Excel, it can be shown that i = 9.86%.
According to the cash-flow convention, your initial investment (PV) of $10,000 is shown with a negative sign since it represents an outflow of funds. PV and FV must necessarily have opposite signs to solve for “i” in the above equation.
CAGR Real-life ApplicationsThe CAGR is extensively used to calculate returns over periods of time for stock, mutual funds, and investment portfolios. The CAGR is also used to ascertain whether a mutual fund manager or portfolio manager has exceeded the market's rate of return over a period of time. If, for example, a market index has provided total returns of 10% over a five-year period, but a fund manager has only generated annual returns of 9% over the same period, the manager has underperformed the market.
The CAGR can also be used to calculate the expected growth rate of investment portfolios over long periods of time, which is useful for such purposes as saving for retirement. Consider the following examples:
Example 1: A risk-averse investor is happy with a modest 3% annual rate of return on her portfolio. Her present $100,000 portfolio would, therefore, grow to $180,611 after 20 years. In contrast, a risk-tolerant investor who expects an annual return of 6% on her portfolio would see $100,000 grow to $320,714 after 20 years.
Example 2: The CAGR can be used to estimate how much needs to be stowed away to save for a specific objective. A couple who would like to save $50,000 over 10 years towards a down payment on a condo would need to save $4,165 per year if they assume an annual return (CAGR) of 4% on their savings. If they are prepared to take a little extra risk and expect a CAGR of 5%, they would need to save $3,975 annually.
Example 3: The CAGR can also be used to demonstrate the virtues of investing earlier rather than later in life. If the objective is to save $1 million by retirement at age 65, based on a CAGR of 6%, a 25-year old would need to save $6,462 per year to attain this goal. A 40-year old, on the other hand, would need to save $18,227, or almost three times that amount, to attain the same goal.
CAGRs also crop up frequently in economic data. Here is an example: China's per-capita GDP increased from $193 in 1980 to $6,091 in 2012. What is the annual growth in per-capita GDP over this 32-year period? The growth rate “i” in this case works out to be an impressive 11.4%.

Pros and Cons of CompoundingWhile the magic of compounding has led to the apocryphal story of Albert Einstein calling it the eighth wonder of the world or man's greatest invention, compounding can also work against consumers who have loans that carry very high-interest rates, such as credit card debt. A credit card balance of $20,000 carried at an interest rate of 20% compounded monthly would result in total compound interest of $4,388 over one year or about $365 per month.
On the positive side, the magic of compounding can work to your advantage when it comes to your investments and can be a potent factor in wealth creation. Exponential growth from compounding interest is also important in mitigating wealth-eroding factors, like rises in the cost of living, inflation, and reduction of purchasing power.
Mutual funds offer one of the easiest ways for investors to reap the benefits of compound interest. Opting to reinvest dividends derived from the mutual fund results in purchasing more shares of the fund. More compound interest accumulates over time, and the cycle of purchasing more shares will continue to help the investment in the fund grow in value.
Consider a mutual fund investment opened with an initial $5,000 and an annual addition of $2,400. With an average of 12% annual return of 30 years, the future value of the fund is $798,500. The compound interest is the difference between the cash contributed to investment and the actual future value of the investment. In this case, by contributing $77,000, or a cumulative contribution of just $200 per month, over 30 years, compound interest is $721,500 of the future balance.
Of course, earnings from compound interest are taxable, unless the money is in a tax-sheltered account; it's ordinarily taxed at the standard rate associated with the taxpayer's tax bracket.
Compound Interest InvestmentsAn investor who opts for a reinvestment plan within a brokerage account is essentially using the power of compounding in whatever they invest. Investors can also experience compounding interest with the purchase of a zero-coupon bond. Traditional bond issues provide investors with periodic interest payments based on the original terms of the bond issue, and because these are paid out to the investor in the form of a check, interest does not compound.
Zero-coupon bonds do not send interest checks to investors; instead, this type of bond is purchased at a discount to its original value and grows over time. Zero-coupon bond issuers use the power of compounding to increase the value of the bond so it reaches its full price at maturity.
Compounding can also work for you when making loan repayments. Making half your mortgage payment twice a month, for example, rather than making the full payment once a month, will end up cutting down your amortization period and saving you a substantial amount of interest.
Speaking of loans…
Telling if Interest Is CompoundedThe Truth in Lending Act (TILA) requires that lenders disclose loan terms to potential borrowers, including the total dollar amount of interest to be repaid over the life of the loan and whether interest accrues simply or is compounded.
Another method is to compare a loan's interest rate to its annual percentage rate (APR), which the TILA also requires lenders to disclose. The APR converts the finance charges of your loan, which include all interest and fees, to a simple interest rate. A substantial difference between the interest rate and APR means one or both of two scenarios: Your loan uses compound interest, or it includes hefty loan fees in addition to interest. Even when it comes to the same type of loan, the APR range can vary wildly between lenders depending on the financial institution's fees and other costs.
You'll note that the interest rate you are charged also depends on your credit. Loans offered to those with excellent credit carry significantly lower interest rates than those charged to those with poor credit.
Frequently Asked QuestionsWhat is a simple definition of compound interest?Compound interest refers to the phenomenon whereby the interest associated with a bank account, loan, or investment increases exponentially—rather than linearly—over time. The key to understanding the concept is the word “compound.” Suppose you make a $100 investment in a business that pays you a 10% dividend every year. You have the choice of either pocketing those dividend payments as cash, or reinvesting those payments into additional shares. If you choose the second option, reinvesting the dividends and compounding them together with your initial $100 investment, then the returns you generate will start to grow over time.
Who benefits from compound interest?Simply put, compound interest benefits investors, but the meaning of “investors” can be quite broad. Banks, for instance, benefit from compound interest when they lend money and reinvest the interest they receive into giving out additional loans. Depositors also benefit from compound interest when they receive interest on their bank accounts, bonds, or other investments. It is important to note that although the term “compound interest” includes the word “interest,” the concept applies beyond situations where the word interest is typically used, such as bank accounts and loans.
Can compound interest make you rich?Yes. In fact, compound interest is arguably the most powerful force for generating wealth ever conceived. There are records of merchants, lenders, and various business-people using compound interest to become rich for literally thousands of years. In the ancient city of Babylon, for example, clay tablets were used over 4,000 years ago to instruct students on the mathematics of compound interest. 
In modern times, Warren Buffett became one of the richest people in the world through a business strategy that involved diligently and patiently compounding his investment returns over long periods of time. It is likely that, in one form or another, people will be using compound interest to generate wealth for the foreseeable future.
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“>compound interest and market growth. Young investors hesitant about investing will find simple strategies for starting a portfolio, while also gaining Personal Finance
What Is Personal Finance?Personal finance is a term that covers managing your money as well as saving and investing. It encompasses budgeting, banking, insurance, mortgages, investments, retirement planning, and tax and estate planning. The term often refers to the entire industry that provides financial services to individuals and households and advises them about financial and investment opportunities.
Personal finance is about meeting personal financial goals, whether it's having enough for short-term financial needs, planning for retirement, or saving for your child's college education. It all depends on your income, expenses, living requirements, and individual goals and desires—and coming up with a plan to fulfill those needs within your financial constraints. To make the most of your income and savings, it's important to become financially literate, so you can distinguish between good and bad advice and make smart decisions. https://55376bea6145f2f9522dbb1425d63610.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html
Key TakeawaysFew schools have courses in how to manage your money, so it is important to learn the basics through free online articles, courses, and blogs; podcasts; or at the library.
Smart personal finance involves developing strategies that include budgeting, creating an emergency fund, paying off debt, using credit cards wisely, saving for retirement, and more.
Being disciplined is important, but it's also good to know when to break the rules—for example, young adults who are told to invest 10% to 20% of their income for retirement may need to take some of those funds to buy a home or pay off debt instead.

10 Personal Finance StrategiesThe sooner you start financial planning, the better, but it's never too late to create financial goals to give yourself and your family financial security and freedom. Here are the best practices and tips for personal finance.
1. Devise a budgetA budget is essential to living within your means and saving enough to meet your long-term goals. The 50/30/20 budgeting method offers a great framework. It breaks down like this:
50% of your take-home pay or net income (after taxes, that is) goes toward living essentials, such as rent, utilities, groceries, and transport
30% is allocated to lifestyle expenses, such as dining out and shopping for clothes
20% goes towards the future—paying down debt and saving both for retirement and for emergencies

It's never been easier to manage money, thanks to a growing number of personal budgeting apps for smartphones that put day-to-day finances in the palm of your hand. Here are just two examples:YNAB, aka You Need a Budget, helps you track and adjust your spending so that you are in control of every dollar you spend. Meanwhile, Mint streamlines cash flow, budgets, credit cards, bills, and investment tracking—all from one place. It automatically updates and categorizes your financial data as info comes in, so you always know where you stand financially. The app will even dish out custom tips and advice.
2. Create an emergency fundIt's important to “pay yourself first” to ensure money is set aside for unexpected expenses such as medical bills, a big car repair, rent if you get laid off, and more.
Between three and six months' worth of living expenses is the ideal safety net. Financial experts generally recommend putting away 20% of each paycheck every month (which of course, you've already budgeted for!). Once you've filled up your “rainy day” fund (for emergencies or sudden unemployment), don't stop. Continue funneling the monthly 20% toward other financial goals such as a retirement fund.
3. Limit debtIt sounds simple enough: To keep debt from getting out of hand, don't spend more than you earn. Of course, most people do have to borrow from time to time—and sometimes going into debt can be advantageous, if it leads to acquiring an asset. Taking out a mortgage to buy a house is one good example. But leasing can sometimes be more economical than buying outright, whether you're renting a property, leasing a car, or even getting a subscription to computer software.
4. Use credit cards wiselyCredit cards can be major debt traps. But it's unrealistic not to own any in the contemporary world, and they have applications other than as a tool to buy things. Not only are they crucial to establishing your credit rating, but they're also a great way to track spending, which can be a big budgeting aid.
Credit just needs to be managed correctly, which means the balance should ideally be paid off every month, or at least be kept at a credit utilization rate minimum (that is, keep your account balances below 30% of your total available credit). Given the extraordinary rewards incentives on offer these days (such as cash back), it makes sense to charge as many purchases as possible. Still, avoid maxing out credit cards at all costs, and always pay bills on time. One of the fastest ways to ruin your credit score is to constantly pay bills late—or even worse, miss payments. (See Tip No. 5.)
Using a debit card is another way to ensure you will not be paying for accumulated small purchases over an extended period—with interest.
5. Monitor your credit scoreCredit cards are the main vehicle through which your credit score is built and maintained, so watching credit spending goes hand in hand with monitoring your credit score. If you ever want to obtain a lease, mortgage, or any other type of financing, you'll need a solid credit history behind you. Factors that determine your score include how long you've had credit, your payment history, and your debt-to-credit ratio.
Credit scores are calculated between 300 and 850. Here's one rough way to look at it:
720 = good credit
650 = average credit
600 or less = poor credit

To pay bills, set up direct debiting where possible (so you never miss a payment), and subscribe to reporting agencies that provide regular credit score updates. By monitoring your report, you will be able to detect and address mistakes or fraudulent activity. Federal law allows you to obtain free credit reports from the three major credit bureaus: Equifax, Experian, and TransUnion. Reports can be obtained directly from each agency, or you can sign up at AnnualCreditReport, a site sponsored by the Big Three; you can also get a free credit score from sites such as Credit Karma, Credit Sesame, or Wallet Hub. Some credit card providers, such as Capital One, will provide customers with complimentary, regular credit score updates, too.
6. Consider your familyTo protect the assets in your estate and ensure that your wishes are followed when you die, be sure you make a will and—depending on your needs—possibly set up one or more trusts. You also need to look into insurance: auto, home, life, disability, and long term care (LTC) insurance. And periodically review your policy to make sure it meets your family's needs through life's major milestones.
Other critical documents include a living will and healthcare power of attorney. While not all these documents directly affect you, all of them can save your next-of-kin considerable time and expense when you fall ill or become otherwise incapacitated.
And while your children are young, take the time to teach them about the value of money and how to save, invest, and spend wisely.
7. Pay off student loansThere are myriad loan-repayment plans and payment reduction strategies available to graduates. If you're stuck with a high-interest rate, paying off the principal faster can make sense. On the other hand, minimizing repayments (to interest only, for instance), can free up income to invest elsewhere or put into retirement savings while you're young and your nest egg will get the maximum benefit from compound interest (see Tip No. 8). Some federal and private loans are even eligible for a rate reduction if the borrower enrolls in auto pay. Flexible federal repayment programs worth checking out include:
Graduated repayment—progressively increases the monthly payment over 10 years
Extended repayment—stretches the loan out over a period that can be as long as 25 years
Income-driven repayment—based on your income and family size, it limits payments to 10–20% of your income.

8. Plan (and save) for retirementRetirement may seem like a lifetime away, but it arrives much sooner than you'd expect. Experts suggest that most people will need about 80% of their current salary in retirement. The younger you start, the more you benefit from what advisors like to call the magic of compounding interest—how small amounts grow over time. Setting aside money now for your retirement not only allows it to grow over the long term, but it can also reduce your current income taxes if funds are placed in a tax-advantaged plan like an individual retirement account (IRA), a 401(k) or a 403(b). If your employer offers a 401(k) or 403(b) plan, start paying into it right away, especially if they match your contribution. By not doing so, you're giving up free money! Take time to learn the difference between a Roth 401(k) and a traditional 401(k), if your company offers both.
Investing is only one part of planning for retirement. Other strategies include waiting as long as possible before opting to receive Social Security benefits (which is smart for most people), and converting a term life insurance policy to a permanent life one.
9. Maximize tax breaksDue to an overly complex tax code, many individuals leave hundreds or even thousands of dollars sitting on the table every year. By maximizing your tax savings, you'll free up money that can be invested in the reduction of past debts, your enjoyment of the present, and your plans for the future.
You need to start each year saving receipts and tracking expenditures for all possible tax deductions and tax credits. Many office supply stores sell helpful “tax organizers” that have the main categories already pre-labeled. After you're organized, you'll want to focus on taking advantage of every tax deduction and credit available, as well as deciding between the two when necessary. In short, a tax deduction reduces the amount of income you are taxed on, whereas a tax credit actually reduces the amount of tax you owe. This means that a $1,000 tax credit will save you much more than a $1,000 deduction.
10. Give yourself a breakBudgeting and planning can seem full of deprivations. Make sure you reward yourself now and then. Whether it's a vacation, purchase, or an occasional night on the town, you need to enjoy the fruits of your labor. Doing so gives you a taste of the financial independence you're working so hard for.
Last but not least, don't forget to delegate when needed. Even though you might be competent enough to do your own taxes or manage a portfolio of individual stocks, it doesn't mean you should. Setting up an account at a brokerage, spending a few hundred dollars on a certified public accountant (CPA) or a financial planner—at least once—might be a good way to jump-start your planning.
Three key character traits can help you avoid innumerable mistakes in managing your personal finances: discipline, a sense of timing, and emotional detachment.
Personal Finance PrinciplesOnce you've established some fundamental procedures, you can start thinking about philosophy. The key to getting your finances on the right track isn't learning a new set of skills. Rather, it's about understanding that the principles that contribute to success in business and your career work just as well in personal money management. The three key principles are prioritization, assessment, and restraint.
Prioritization means that you're able to look at your finances, discern what keeps the money flowing in, and make sure you stay focused on those efforts.
Assessment is the key skill that keeps professionals from spreading themselves too thin. Ambitious individuals always have a list of ideas about other ways they can hit it big, whether it is a side business or an investment idea. While there is absolutely a place and time for taking a flyer, running your finances like a business means stepping back and truly assessing the potential costs and benefits of any new venture.
Restraint is that final big-picture skill of successful business management that must be applied to personal finances. Time and time again, financial planners sit down with successful people who somehow still manage to spend more than they make. Earning $250,000 a year won't do you much good if you spend $275,000 annually. Learning to restrain spending on non-wealth-building assets until after you've met your monthly savings or debt-reduction goals is crucial in building net worth.
Learn About Personal FinanceFew schools offer courses in managing your money, which means most of us will need to get our personal finance from our parents (if we're lucky) or pick it up ourselves. Fortunately, you don't have to spend much money to find out how to better manage it. You can learn everything you need to know for free online and in library books. Almost all media publications regularly dole out personal finance advice, too.
Personal finance education onlineA great way to start learning about personal finance is to read personal finance blogs. Instead of the general advice you'll get in personal finance articles, you'll learn exactly what challenges real people are facing and how they are addressing those challenges.
Mr. Money Mustache has hundreds of posts full of irreverent insights on how to escape the rat race and retire extremely early by making unconventional lifestyle choices. CentSai helps you navigate myriad financial decisions via first-person accounts. The Points Guy and Million Mile Secrets teach you how to travel for a fraction of the retail price by using credit card rewards, and FareCompare helps you find the best deals on flights. These sites often link to other blogs, so you'll discover more sites as you read.
Of course, we can't help tooting our own horn in this category. Investopedia offers a wealth of free personal finance education. You might start with our tutorials on budgeting, buying a home, and planning for retirement—or the thousands of other articles in our personal finance section.
Personal finance education through the libraryYou may need to visit your library in person to get a library card, but after that, you can check out personal finance audiobooks and eBooks online without leaving home. Some of the following bestsellers may be available from your local library: “I Will Teach You to Be Rich,” “The Millionaire Next Door,” “Your Money or Your Life,” and “Rich Dad Poor Dad.” Personal finance classics like “Personal Finance for Dummies,” “The Total Money Makeover,” “The Little Book of Common Sense Investing,” and “Think and Grow Rich” are also available as audio books.
Free online personal finance classesIf you enjoy the structure of lessons and quizzes, try one of these free digital personal finance courses:
Morningstar Investing Classroom offers a place for beginning and experienced investors alike to learn about stocks, funds, bonds, and portfolios. Some of the courses you'll find include “Stocks Versus Other Investments,” “Methods for Investing in Mutual Funds,” “Determining Your Asset Mix,” and “Introduction to Government Bonds.” Each course takes about 10 minutes and is followed by a quiz to help you make sure you understood the lesson.
EdX, an online learning platform created by Harvard University and MIT, offers at least three courses that cover personal finance: How to Save Money: Making Smart Financial Decisions from the University of California at Berkeley, Finance for Everyone from the University of Michigan, and Personal Finance from Purdue University. These courses will teach you things like how credit works, which types of insurance you might want to carry, how to maximize your retirement savings, how to read your credit report, and what the time value of money is.
Purdue also has an online course on Planning for a Secure Retirement. It's broken up into 10 main modules, and each has four to six sub-modules on topics such as Social Security, 401(k) and 403(b) plans, and IRAs. You'll learn about your risk tolerance, think about what kind of retirement lifestyle you want, and estimate your retirement expenses.
Missouri State University presents a free online video course on personal finance through iTunes. This basic course is good for beginners who want to learn about personal financial statements and budgets, how to use consumer credit wisely, and how to make decisions about cars and housing.

Personal finance podcastsPersonal finance podcasts are a great way to learn how to manage your money if you're short on free time. While you're getting ready in the morning, exercising, driving to work, running errands, or getting ready for bed, you can listen to expert advice on becoming more financially secure.
The Dave Ramsey Show is a call-in program that you can listen to anytime through your favorite podcast app. You'll learn about the financial problems real people are facing and how a multimillionaire who was once broke himself recommends solving them. NPR's Planet Money and Freakonomics Radio make economics interesting by using it to explain real-world phenomena such as “how we got from mealy, nasty apples to apples that actually taste delicious,” the Wells Fargo faux-accounts scandal, and whether we should still be using cash. American Public Media's Marketplace helps make sense of what's going on in the business world and the economy. And So Money with Farnoosh Torabi combines interviews with successful business people, expert advice, and listeners' personal finance questions.
The most important thing is to find resources that work for your learning style and that you find interesting and engaging. If one blog, book, course, or podcast is dull or difficult to understand, keep trying until you find something that clicks.
Education shouldn't stop once you learn the basics. The economy changes and new financial tools, like those budgeting apps, are always being developed. Find resources you enjoy and trust, and keep refining your money skills from now to retirement and even after it.
Things Classes Can't Teach YouPersonal finance education is a great idea for consumers, especially youthful ones, who need to understand investing basics or credit management. However, understanding the basic concepts is not a guaranteed path to fiscal sense. Human nature can often derail the best of intentions aimed at achieving a perfect credit score or building a substantial retirement nest egg. These three key character traits can help you stay on track:
DisciplineOne of the most important tenets of personal finance is systematic saving. Say your net earnings are $60,000 per year and your monthly living expenses—housing, food, transportation, and the like—amount to $3,200 per month. There are choices to make surrounding your remaining $1,800 in monthly salary. Ideally, the first step is to establish an emergency fund, or perhaps tax-advantaged health savings account (HSA)—to be eligible for one, your health insurance must be a high-deductible health plan (HDHP)—to meet out-of-pocket medical expenses. Let's say that you've developed a penchant for designer clothes, and weekends at the beach beckon. Lacking the discipline required to save rather than spend could keep you from saving the 10% to 15% of gross income that could have been stashed in a money market account for short-term needs.
Then, there's investing discipline; it's not just for thick-skinned institutional money managers who make their living buying and selling stocks. The average investor would do well to set a target on profit-taking and abide by it. As an example, imagine that you bought Apple Inc. stock in February 2016 at $93 and vowed to sell when it crossed $110, as it did two months later. But you didn't; you ended up exiting the position in July 2016 at $97, giving up gains of $13 per share and the possible opportunity for profit from another investment.
A sense of timingThree years out of college, you've established the emergency fund and it is time to reward yourself. A Jet Ski costs $3,000. Investing in growth stocks can wait another year, you think; there is plenty of time to launch an investment portfolio, right? Putting off investing for one year, however, can have significant consequences. The opportunity cost of buying the watercraft can be illustrated through the time value of money. The $3,000 used to buy the Jet Ski would have amounted to nearly $49,000 in 40 years at 7% interest, a reasonable average annual return for a growth mutual fund over the long haul. Thus, delaying the decision to invest wisely may likewise delay the ability to reach your goal of retiring at age 62.
Doing tomorrow what you could do today also extends to debt payment. A $3,000 credit card balance takes 222 months to retire if the minimum payment of $75 is made each month. And don't forget the interest you're paying: at an 18% APR, it comes to $3,923 over those months. Plunking down $3,000 to erase the balance in the current month offers substantial savings—about the same as the cost of the Jet Ski.
Emotional detachmentPersonal finance matters are business, and business should not be personal. A difficult but necessary facet of sound financial decision-making involves removing the emotion from a transaction. Making impulsive purchases or loans to family members feels good but can have a big impact on long-term investment goals. The cousin who has already burned your brother and sister will likely not pay you back either—so the smart answer is to decline his requests for help. Sure, sympathy is hard to turn off, but the key to prudent personal financial management is to separate feelings from reason.
Breaking Personal Finance RulesThe personal finance realm may have more guidelines and “smart tips” to follow than any other. Although these rules are good to know about, everyone has individual circumstances. Here are some rules that prudent people, especially young adults, are never supposed to break—but should consider breaking anyway.
Saving or investing a set portion of your incomeAn ideal budget includes saving a small amount of your paycheck every month for retirement—usually around 10% to 20%. While being fiscally responsible is important, and thinking about your future is crucial, the general rule of saving a given amount each period for your retirement may not always be the best choice, especially for young people just getting started in the real world. For one, many young adults and students need to think about paying for the biggest expenses of their lifetime, such as a new car, home, or post-secondary education. Taking away potentially 10% to 20% of available funds would be a definite setback in making those purchases. Additionally, saving for retirement doesn't make a whole lot of sense if you have credit cards or interest-bearing loans that need to be paid off. The 19% interest rate on your Visa would probably negate the returns you get from your balanced mutual fund retirement portfolio, five times over.
Also, saving some money to travel and experience new places and cultures can be especially rewarding for a young person who's still not sure about their path in life.
Long-term investing/investing in riskier assetsThe rule of thumb for young investors is that they should have a long-term outlook and stick to a buy-and-hold philosophy. This rule is one of the easier ones to justify breaking. Being able to adapt to changing markets can be the difference between making money or limiting your losses versus sitting idly by and watching as your hard-earned savings shrink. Short-term investing has its advantages at any age.
Now, if you're no longer married to the idea of long-term investing, you can stick to safer investments, as well. The logic was that since young investors have such a long investment time horizon, they should be investing in higher risk ventures; after all, they have the rest of their lives to recover from any losses they may suffer. However, if you don't want to take on undue risk in your short- to medium-term investments, you don't have to. The idea of diversification is an important part of creating a strong investment portfolio; this includes both the riskiness of individual stocks and their intended investment horizon.
At the other end of the age spectrum, investors near and at retirement are encouraged to cut back to the safest investments, even though these may yield less than inflation, in order to preserve capital. Certainly, it's important to take fewer risks as the number of years you have to earn money and recover from bad financial times dwindles. But at age 60 or 65 you could have 20, 30, or even more years to go. Some growth investments could still make sense for you.
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“>personal finance and retirement investment knowledge. Overall, this book tackles often complex and out-of-reach topics in an approachable way.