like reading older personal finance books that aren’t part of the current craze of “Get Rich Quickly” books that seemed to get published daily. That’s why I love used book stores, and last week I found this gem, Money Game, which was published in 1967. The author is George Goodman, who published the book under the pseudonym, ‘Adam Smith’, the 18th Century economist. The Money Game is at times quite funny and at other times I was checking the number of pages until the end of the chapter. But the book has a lot of wisdom that is equally applicable today. And it reminded me that there is nothing new under the sun. The good personal financial advice from yesterday trumps all the new schemes of today, and it always will. Here is some wisdom from the book for your consideration:
- If you don’t know who you are, the stock market is an expensive place to find out: If you don’t know how you’ll react when the market drops 30% or rises 50% (remember, mistakes are made going up as well as going down), you may end up paying a lot to find out.
- Do you follow the crowd: You come upon a car that appears to have hit a tree and is upside down in a ditch on the side of the road. Nobody else is around. What do you do? I think most of us would get out to see if anybody’s hurt and to call 911. Ok, same thing but a crowd of 15 people are standing a few feet from the car talking casually. Now what do you do? Most of us would just keep driving. Why? The crowd can’t be wrong. Certainly they wouldn’t be standing there if someone was hurt just a few feet away. The point is, we follow the crowd more than we’d like to admit. Following the crowd in the stock market can be dangerous to your financial health.
- A case of jam tomorrow, and never jam today: Money, like life, requires balance. I’m reminded of the book The Millionaire Next Door where the author describes multi-millionaires agreeing to an interview so they can get a free lunch. Where is the balance in that?
- The Stock/Mutual Fund doesn’t know you own it: Don’t fall in love with your investments; they don’t love you.
And here is the upshot. For all the get rich quick schemes and books you can buy, personal finance comes down to just three simple things:
- How much do you make?
- How much do you spend?
- What do you do with the difference?
Published or updated April 20, 2011.