Think of the last personal finance book you read. What did you get out of it? How did it change your life? What are you doing differently today with your finances as a result of reading the book?
These are some of the questions I started asking myself as looked through my large collection of books on money. The answer was depressing. In many cases I had little recollection of the book. In most cases, I couldn’t identify even a concept from the book that had an affect on how I handled money.
So I started reading books differently with two goals in mind. First, I wanted to read a book faster. I’m a very slow reader. I’ve tried the speed reading courses to no avail. Getting through a book faster was an important goal. Second, I wanted to remember and apply the concepts that resonated with me.
The result is what I call the Read for Wealth System. Here’s how it works.
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Step 1: Physical book vs. ebook
I like physical books. I take comfort in my library and it’s a joy to hold a good book in your hands. Yet physical books didn’t help me achieve my two goals–reading faster and retaining more. So I switched to reading personal finance and investing books on my iPad.
Reading on an iPad has several advantages. I can take my entire library with me wherever I go. It’s easy to look up books you’ve read in the past. And an iPad takes up a lot less space than a thick finance book.
An iPad or other Kindle device isn’t necessary to implement the system I’ll describe below, but reading on an iPad makes it a lot easier. You’ll see why in just a minute.
Step 2: Don’t read every word
You either read every-single-word-of-the-book or you haven’t read the book. At least that’s what I once believed. Silly.
Particularly with finance books, there’s often a lot of material that can be skipped. The author takes a detour into a story that’s of no interest to you. Skip it. The author covers a topic you’ve already mastered. Skip it. Or the book goes into a subject that doesn’t apply to you. Skip it.
The key is to skip over any part of a book that won’t advance your knowledge in a meaningful way.
Step 3: Take notes
It sounds painful. Yet taking notes is critical to the Read for Wealth System. Fortunately, it’s extremely easy to do with the Kindle app on an iPad.
As I’m reading, I highlight important text using a 4-color system:
- Orange: Important concepts or ideas.
- Red: Books, articles and other resources to read later
- Yellow: Key terms
- Blue: Key quotes
This simple system enables me to highlight everything of value in any book. It’s value becomes clear in the next step.
Before moving on, however, one more thing. You can implement this step with a physical book. Using a highlighter and some post-it notes, mark up the book as you read (unless it’s from the library, of course). This is not my preferred approach, but it gets the job done.
Step 4: Reread the book
A week to a month after reading and highlighting the book, read it again. This time, however, only focus on the text that you highlighted. This is the payoff.
It’s during the rereading of the book that you put the great information to use.
- Tools: Start using or evaluating any great tools you found in the book
- Concepts: Implement any ideas that resonated with you. This could many anything from a change to your asset allocation plan to the way you budget.
- Key Terms: One of the hurdles with personal finance is learning the language of money. As you encounter new key terms (e.g., emerging markets, APY, credit utilization), keep a list of them and what they mean in your favorite note-taking tool (mine is Evernote).
- Resources: Look up those books, articles and other resources you highlighted in the book. Read those resources that can be read quickly. Add longer articles and books to your list of items you plan to read (again, Evernote is an ideal tool for this).
Tip: Rather than reread the book on your kindle device, use the Kindle app on your computer. I reread every book on my Macbook Pro, which makes it easy to copy and paste important text into Evernote or WordPress.
Following this system is easy and very rewarding. It helps you take the ideas out of the book and apply them in your life. With Kindle books, you can also search for key concepts, which is particularly useful months or even years after you’ve read the book.