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Preparing for Your Financial Future

Financial Book Recommendations

This month is the start of most seniors’ last semester as an undergraduate at American. Many will begin their job search soon if they haven’t already, and that’s in addition to a full class load that includes papers and exams. No doubt they’re worrying about entering the adult world in just a few months. Recognizing January as National Financial Wellness Month and National Book Month, economics professors share some recommendations for soon-to-be college graduates’ financial bookshelves.

Professor Robert Lerman suggests Risk Less and Prosper: Your Guide to Safer Investing by Zvi Bodie. Bodie’s book is a must-read for those who think they know what they’re doing when it comes to investing. He, along with coauthor Rachelle Taqqu, debunks common investment myths and recommends different investments depending on your goals. Are You a Stock or a Bond?: Create Your Own Pension Plan for a Secure Financial Future by Moshe A. Milevsky addresses the management of risk and provides ways to ensure financial security throughout life—something many young people are worrying about right now.

Professor Martha Starr’s favorite personal finance book is The Wall Street Journal Complete Personal Finance Guidebook by Jeff D. Opdyke. “There are all kinds of books out there, and most of them are reasonably accurate and helpful. But a lot of them are dull,” says Starr. “It doesn't help people get their financial lives on the right track if they buy a book, put in on their nightstand, and never read beyond page five. The WSJ's Guide is intelligent, engagingly written, colorful, and concise, and students might actually enjoy learning the ins and outs of bank accounts, credit cards, 401(k)s, and all the other important dimensions of personal finances.”

She identifies a couple of books specifically targeted to young people, including Get a Financial Life: Personal Finance In Your Twenties and Thirties by Beth Kobliner, The Money Book for the Young, Fabulous & Broke by Suze Orman, and The Wall Street Journal Guide to Starting your Financial Life by Karen Blumenthal. “These are good, although some of them are really too extensive for people in their 20s,” says Starr. “It’s important to start contributing to your 401(k) as soon as you start working and to avoid credit card debt like the plague, but it really isn't important to know how to write a will if you don't yet have any assets to bequeath. These books are most useful once you have the basics under your belt and want to learn more about wise ways to spend, save, borrow, invest, and insure.”

The number one financial concern for graduating seniors is getting a job, says Starr, and then when student loans start to come due. After securing a job and receiving a steady paycheck, it can be tempting to spend all of it and let credit card balances increase. “But people should think twice about this,” she says. “It’s important to begin to build up some savings for graduate school or for a rainy day, and it’s particularly important not to run balances on credit cards because the interest rates are exorbitant.”

But Starr notes there are upsides of post-college life. “So many of the best things in life are free or cheap, so life after college can be plenty fun and exciting without needing to spend lots of money.”