There is a financial book out there that's so powerful, you only need to read the first half to change your life.
Yes, seriously.
(If you are one of those people that scrolls down to find the book and doesn't read the actual post – I feel you homie. I too have the ADHD. Thanks for stopping by at least.)
One of the most common questions that I get on twitter or through email is: “What books would you recommend to learn more about money?!?” I wish that I had the resolve to actually write my own right now, because then the answer would be really simple and put some cash in my pocket.
Unfortunately, I'm busy. Kinda.
My stock answer is usually: “Rich Dad Poor Dad” by Robert Kiyosaki. It's a great, easy read that is extremely popular in the personal finance community. However, it's not actually the book that changed my life.
The book that eventually spurred the creation of M$M, helped me become debt free, and drove me to a positive net worth is so obscure that I couldn't even remember it's name or the author's name for that matter. In fact, I literally just forgot the title again because I closed the browser and had to go back through my computer history to find it. *sigh*
Trading For a Living by Dr. Alexander Elder
Whammo. There it is.
Now, if you are wondering what makes this book so spectacular, the reasons are twofold:
1. You can get it used for 3 bucks on Amazon
Okay – that is not a reason to get this book at all, but it's like $45 brand new, just FYI.
1a. Its message is incredible
While you would think that the book is solely about learning how to trade in the stock market, it's really not. This book deals with the psychology BEHIND traders who fail, which happens to be the same psychology that causes most ordinary people to fail financially. It's not necessarily a personal finance book, but the lesson it teaches translates easily.
Traders who lose money attach emotions to the act of trading, as well as all money in general. Dr. Elder describes most traders as adrenaline junkies. They look at their computers every day, waiting to see what everyone else in the market is doing and if they made money. If the trader makes money, they are temporarily happy. If they lose money, they are temporarily sad.
It becomes an addiction solely because it makes them feel differently than they usually do. (I'll explain more below). Here is the important part that this book addresses – our emotions cause us to make poor financial decisions.
This book teaches you to separate money from your emotions, which is the most powerful financial lesson you can learn in life.
After I started reading this book during my first year of teaching, I realized that most people live their lives like zombies. They go to work for a paycheck, sleepwalk through the day, and go to sleep after a beer or three. Rinse and repeat, every [email protected]$n day. They try so hard to make just enough money to retire that by the time they are done, they're almost dead.
That was the path I was on before I read this book.
So what do people do to make a mundane life less boring? Buy crap they don't need. Big financed purchases like a car or a house become the adrenaline shot in the arm that makes them feel alive again. Even if it's just for a moment and prolongs their working life with debt payments, it feels good to buy something big…because it feels different.
This is a random picture. The 2nd reason you should read this book is below!
Every time I made a payment towards my student loans I felt a little tinge of pain in my stomach. I thought about how my larger payments were keeping me from having the nice stuff my friends had. I could just make the minimum payment and have fun like everyone else.
After I read Dr. Elder's book, my mental approach to my finances completely changed.
From that point forward when I made a debt payment, I tried as hard as I could to feel nothing. I started to look at my payment for exactly what it was – numbers on a screen. Here is the important thing: I did the same for my balance that was getting smaller and smaller. I literally trained myself to feel no emotion towards my loan payment or the reality that I was almost done with my student loans.
Less than 2 years later, I was debt-free on a teacher's salary after having $40,000 in student loan debt. Read this book.
I started approaching everything related to finances in the same way. No emotions towards money, whether it's a potential investment or a check coming to me in the mail. If I catch myself feeling happy when I look at my bank account, I literally lecture myself (not out loud, because that would be weird).
If you are feeling skeptical that a cyborg-like discipline towards your money actually helps you make better financial decisions, give it a try for yourself and then come back to tell me that I was right.
2. You only have to read the first half of the book
The funny thing about Trading For a Living is that I never actually finished it. The first half is mainly about financial psychology, and the second half is a hard-core option trading book. At the time I barely had any financial knowledge, so the second half went too far over my head to keep my interest. (I have the ADHD, remember?)
This actually makes the book a fairly short read, which is great for people like me that aren't interested in reading all the time. If you want to change your perception towards money with more intelligent and research-laden reasons than what I just gave you, please read this book (even just the first half).
Trading For a Living helped me pay my loans off early and have enough guts to quit my day-job.
What could it do for you?
Live differently. Your bank accounts will thank me later. – M$M
Rich Rabbit says
Dec 3, 2015 at 8:34 amHaven’t read this one yet. I will definitely check it out now. Great review, highlighting the main point!
Millennial Money Man says
Dec 3, 2015 at 10:14 amThanks! It’s a great read, I’m planning on going back to finish the option trading section.
Maggie @ Northern Expenditure says
Dec 3, 2015 at 10:40 amThanks for the recommendation. I’ll have to check it out. Honestly, the books that influence me the most aren’t financial books. The Elegance of the Hedgehog is my favorite book ever. It’s rich in philosophy but still tells a story. And it’s about how we pretend to be people we aren’t because we think that’s what people expect from us. It’s beautiful, insightful, and it changed me.
Millennial Money Man says
Dec 3, 2015 at 11:31 amNo problem! I’ve discussed this topic with a close friend of mine that recently left his job as well. A lot of the financial books out there are targeted towards people that hate their job. I’m fortunately not in that position anymore, so I have a hard time sitting down with a book that focuses on financial freedom. Elegance of the Hedgehog has an intriguing enough title to make me check it out – thanks for the suggestion!
Alexander @ Cash Flow Diaries says
Dec 3, 2015 at 2:42 pmPerfect timing. I have just now finally starting reading about investing with stocks and stuff and im looking for material to read and learn up on it. Im mainly a real estate investor but feel I need to diversify into the markets.
Good review!
Millennial Money Man says
Dec 3, 2015 at 3:23 pmThanks, glad you liked it!
Alyssa @ GenerationYRA says
Dec 3, 2015 at 7:48 pmNice! I will need to check this out. I am all for the psychology behind everything because that’s typically the root of all financial triumphs & pitfalls. I have a couple of books that truly inspired me (usually it’s just for one particular part of the book, not the whole thing). I read a lot though – and typically draw a huge lesson from huge book even if it isn’t PF related! The cool part is when they all start to intertwine & you can connect what you’ve learned from the previous book. I digress, sorry!…
1. The Eventual Millionaire by Jaime Tardy (which inspired me to start my blog)
2. I Will Teach You to be Rich by Ramit Sethi (which got all of my money systems/automation & place and build more confidence to negotiate)
3. Linchpin: Are You Indispensable? by Seth Godin (just because he is so inspiring & challenges you to go against the grain – not exactly PF centered, but helps when you are doing things differently money related!)
All fairly quick & smooth reads – I’d highly suggest them!
Millennial Money Man says
Dec 4, 2015 at 12:26 amThanks for the suggestions. I’m not a big reader (ADHD)….but my wife is! 🙂
Mr. Groovy says
Dec 8, 2015 at 6:49 amHey, Millennial Money Man. Here’s a weird one for you. The book that changed my life was Milton Friedman’s Free to Choose. It’s not a personal finance book. It’s a political book. But the interesting thing about it is how I came to read it. Up until I went to college, I wasn’t a reader. To me reading was only something you did if a teacher assigned it to you. Then during my freshman year (1979), I was leafing through a friend’s Playboy. That issue contained an interview with Milton Friedman (he recently won the Nobel Prize in economics). For some reason, I read the interview and his ideas intrigued me. His most recent book, Free to Choose, was mentioned in it. The next day I went to the school’s library and checked it out. It was the first time in my life that I voluntarily chose to read a book. I’ve been a reader ever since. So I guess I owe my intellectual awakening to two things: a nudie magazine and a book written by a right-wing economist. Go figure.
Millennial Money Man says
Dec 8, 2015 at 11:14 amHaha this is awesome – I didn’t know there was readable material in Playboy 😉
The Bearded Dragon says
Dec 8, 2015 at 10:05 amInteresting recommendation. You’re right, I’ve never heard of it before. But I’m always looking for good books so I’ll add this one to the list. Thanks!
I know you didn’t ask, but my number one recommendation is Millionaire Next Door. It’s awesome if you haven’t read it yet. Really drives home the idea that millionaires don’t usually have exorbitant tastes, and are responsible stewards with their money. Anyway, thanks for the suggestion, cheers!
Millennial Money Man says
Dec 8, 2015 at 10:58 amMillionaire Next Door is great! Definitely changed my perspective on what it means to have a million dollars!
Michael @ NTPNW says
Dec 8, 2015 at 4:49 pmGreat review which has made me interested and now I must add it to my reading list. To be honest I have read many books on PF but the one that truly impacted my financial future was the bible, Proverbs to be exact. The other was the millionaire next door. I never was a big reader until about five years ago and now I find that I can not get enough. Reading had completely changed my life and I too recommend it to everyone.
Millennial Money Man says
Dec 8, 2015 at 5:07 pmGlad you liked it Michael! Interesting take with the Proverbs comment – my mother-in-law talks about the financial impact that the bible has had on her all the time. As I get older I’m realizing the value of reading other people’s wisdom.
Barb says
Dec 8, 2015 at 7:10 pmHands down…the oldie but goodie, “Your Money or Your Life”. It changed my life and I still hand it out to anyone who will listen. The investing advice is outdated but it doesn’t matter…like your recommendation, read it for the first half or so.
Millennial Money Man says
Dec 8, 2015 at 8:10 pmGreat suggestion!
MrRicket says
Dec 9, 2015 at 3:20 amThanks for your recommendation. That book has been added to my To Read list (thank you one note) 🙂
Cheers
MrRicket
http://www.myricketyroad.com
EL @ Moneywatch101 says
Dec 18, 2015 at 8:40 amHey man that’s great you paid off all your debt and quit to pursue other passions. The book is that good huh, I might just give it a read in early 2016. Good luck and thanks for the motivation.
Millennial Money Man says
Dec 18, 2015 at 10:08 amIt’s really a good read, definitely put my views on money into perspective.
Mortimer says
Jan 3, 2016 at 8:51 pmI listened to this as an audiobook today on your recommendation. I have to say I think this is a very dangerous recommendation to make, although I think you emphasize the one kernel of good content in it. The book basically encourages you to become an options trader because through “intense training” (read: significant, repeated losses) you can learn how to outfox the market and earn better returns, while somehow reducing costs through active trading. Unfortunately this premise is totally factually flawed for 99.9999% of people over time periods longer than several months. (Of course, many people will read this statement and think, “Oh, but I *am* the .0001% of people who can beat the market consistently through active trading!” But that’s the very cognitive bias the book attempts to warn against.) Good luck trading so efficiently that you somehow reap a higher profit than an S&P 500 Index Fund with net expense ratio of 0.04%.
That said, the part of the book you like the most, about removing emotional attachment from market ups and downs, is better made by Jack Bogle (founder of Vanguard) in The Little Book of Common Sense Investing, and with more cogent advice about how to reap market returns at the very least and avoid chasing yesterday’s returns. If you want to read a better psychology book about how 99% of active traders are lying to themselves, read Daniel Kahneman’s Thinking, Fast and Slow.
Cheers!
Millennial Money Man says
Jan 4, 2016 at 10:58 amThanks for the recommendations! Like I mentioned in the article, I didn’t even dig into the option trading section because it’s not something that I’m particularly interested in from an investing standpoint. Even if that information is “dangerous”, I still think people should check out the first few chapters of the book. Had a major impact on me!
J says
Feb 16, 2017 at 1:06 pmHi there!
I am definitely going to have to check out this book. The $3 part is definitely a good selling point, hooray for Amazon! About a year and a half ago I had a similar realization of oh my goodness everyone is spending their lives as zombies and I don’t want to be a part of it. That came from reading about early retirement and controlling spending in little ways that seem so obvious and simple to me now, but at the time it seemed impossible.
Cheers!
J