One of the questions I am asked over and over again is whether there are books I can recommend that offer an accessible, readable, and enjoyable overview of personal finance.
My own education in Personal Finance started about 10 years ago when I was compelled to pick up David Bach’s book Smart Women Finish Rich: 9 Steps to Achieving Financial Security and Funding Your Dreams in an airport newsstand. Over the course of a 5-hour flight from California to Michigan I was shocked, amazed, and slapped in the face by how much I wasn’t doing to prepare for the future. Wading through page after page of self-helpy gobbledygook, this first look into personal finance opened my eyes to the damage I was doing through regular, unconsidered spending, and how much I was giving up by not taking advantage of the awesome power of automating savings. Though at times cringe-worthy, this one paperback started me on the path I am on today, where I absorb as much financial and economic content as I can. From that one flight trapped with Smart Women Finish Rich, I got the bug for personal finance and in an instant I had traded my trashy novels for 1000 pages of Jane Bryant Quinn’s Making the Most of Your Money Now: The Classic Bestseller Completely Revised for the New Economy, and equally long text books on the theory and practice of personal financial planning. I was in deep, and I loved it.
After spending years reading books, creating plans, and learning from professionals, I am calm and confident with the financial structure I’ve built for myself. And the resulting sense of wellbeing and safety grew from picking up that one book.
So I’d like to encourage you to stick your toe in the water and see how it feels. Below is a concise list of (mostly) recent books I’ve read that have helped form my understanding of all things personal finance. My strategy has always been to read the perspectives of many authors, because everyone describes the theories in a different way. Layering these explanations from different sources has helped solidify the concepts for me, and by doing this, I’ve developed a deeper understanding of how to apply them to my own weird and unique finances.
The Sm*artly Reading List:
The One-Page Financial Plan: A Simple Way to Be Smart About Your Money
By Carl Richards, 2015
I recently took this book on vacation, and found it to be an absolute joy to read (no I’m not kidding). Carl Richards writes about personal finance with such understanding and empathy, demonstrating that he not only ‘gets it’, but how he personally waded through a lot of mistakes that real people make with their money. The The One-Page Financial Plan: A Simple Way to Be Smart About Your Money doesn’t dive into crazy minutia about the specifics, but he give you a framework on how to make appropriate decisions, and take positive action. If you’re looking for a good starter book — this is it. It’s short and sweet, and is loaded with Richard’s celebrated napkin drawing featured in his regular Sketch Guy column in the New York Times. I highly recommend it
The Power of Habit: Why We Do What We Do in Life and Business
By Charles Duhigg, 2014
When The Power of Habit: Why We Do What We Do in Life and Business hit bookstores in early 2014, it seemed to set off a firestorm of blog posts from gurus of all stripes and colors who were compelled to connect success in their field to the practice of habit forming. And well over a year later references to this book still pop-up everywhere in the blogosphere as people continue to discover it. Having read it myself, I’d say there’s good reason behind the frenzy. When you are able to identify mindless, unproductive habits, and replace them with positive, productive behavior — then you win. If you can put two and two together to weave this practice into your personal finances — you’ll be collecting your winnings in real dollars and cents.
The The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness
By Dave Ramsey, 2013
In debt and need a kick in the pants to start digging your way out? Dave Ramsey will gladly provide that kick in the pages of the The The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness. But be ready for some scolding, because this book is no woo-woo, warm hug and a gentle whisper. Ramsey’s approach embraces the sort of pull-down-your-pants-in-broad-daylight harsh reality check meant to shake you awake to the fact that high-interest, consumer debt will always keep your finances on the edge of disaster.
This book has had avid super-fans for decades who have followed Ramsey’s ‘Baby Steps’ to financial freedom, and 100% debt-free living. However, he has his fair share of critics as well. In his often-referenced ‘Debt Snowball’ strategy Ramsey recommends paying off your smallest debts first to feel the momentum of immediate wins. In contrast, most financial advisors will council that for the bigger win you should focus on the highest-interest rate (most expensive) debt first — freeing up resources quicker, ultimately settling your debt faster and for less. If you’re in deep, it’ll be up to you to decide what motivates you more.
The Investment Answer
By Gordon Murry and Daniel Goldie, 2011
This book can be seen as a dying man’s last words. Written by Gordon Murray (with help from Daniel Goldie) while he battled cancer, the former banker and Wall Street veteran was compelled to share his hard won philosophy of diversified, Index Fund investing by asking readers to make 5 simple decisions. This simple, deliberately short read (Murray purposely kept the page count under 100), is a great introduction to investing at any level.
The Millionaire Next Door: The Surprising Secrets of America’s Wealthy
by Thomas J. Stanley and William D. Danko, 1996
This classic 1996 book by Thomas J. Stanley and William D. Danko showed me that as an artist living a simple, frugal life, I could potentially build significant assets. The Millionaire Next Door: The Surprising Secrets of America’s Wealthy isn’t about artists per se, but in my eye it’s about the underdog. Through exhaustive research and case studies the authors show how frugality, living below your means, and entrepreneurial spirit can be far more powerful at building wealth than a high salaried, high-status job. Stanley and Danko are not expert wordsmiths, so The Millionaire Next Door is a bit of a clunky read. Nevertheless, I truly believe their message is a powerful one for the arts community.
The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money
By Carl Richards, 2012
After reading The One Page Financial Plan, I wanted to feed the need for more Carl Richards, so I dialed up his first book, The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money. Here Richards makes a fascinating study of the painfully common, self-defeating behavior so many of us fall into when it comes to our money — particularly in the realm of investing. He lays out how to side-step the emotional reactions we all have to market uncertainty which ensure poor returns. The Behavior Gap is a fun and useful read, particular if you enjoy reliving the folly of the 2000, and 2008 market crashes, through simple and hilarious ven diagrams.
MONEY Master the Game: 7 Simple Steps to Financial Freedom
By Tony Robbins, 2014
Last year Tony Robbins blasted into the world of Personal Finance with his book MONEY Master the Game: 7 Simple Steps to Financial Freedom. If you know anything about Robbins, you know he works in the business of inspiration, and since I enjoy pairing inspiration with personal finance, I thought I’d take a look. The hubbub surrounding Money: Master the Game in personal finance news was massive (don’t tell me you missed that?!), so I read all 688 pages, and found myself whipped up into a frenzy about fees, 401ks and annuities. I thought he was right on the money in his discussion of the damaging effects of high fees in the financial industry, and the power of early and regular saving, but I was wary of his All Weather asset allocation, and his love affair with annuities. Conveniently, the first half of the book is where I’d focus. It’ll get you excited about getting your finances in order, automating good behavior, and setting lofty goals. If you make it all the way to the All Weather portfolio just do some of your own research and soul searching before you implement it as your asset allocation.
Multiple Streams of Income: How to Generate a Lifetime of Unlimited Wealth!
By Robert G. Allen, 2005
All I needed was to hear the title: Multiple Streams of Income, to feel my heart racing, my head pounding, the universe expanding — heck, why didn’t I realize it before, I need Multiple Streams of Income: How to Generate a Lifetime of Unlimited Wealth!. I went out immediately in pursuit of this book — however, after 336 pages of this 2005 best seller, I realized that the most powerful message is in fact the title. Being ten years old the ‘ten revolutionary new methods for generating income’ are now quite dated. Despite the fact that what was once revolutionary is now obvious (people are using the internet for everything!), author Robert G. Allen makes a compelling case to build on multiple fronts, and it’s a lesson that’s worth taking to heart.
I Will Teach You To Be Rich
By Ramit Sethi, 2009
Ramit Sethi’s personal-finance-for-millenials-bootcamp in book form, is a good place to begin if you’re just getting started. Sethi’s approach is perfect for the blissfully uncomplicated finances of the single, pre-child, job-worker. I Will Teach You To Be Rich helps you to take full advantage of company benefits, automating savings and bill-paying, while maximizing on the compounding potential that twenty, and thirty-somethings have with decades to go before retirement. I got the strong sense that this book was written by a young, single dude with no kids, for other young, single dudes with no kids, so some of the humor fell flat with me. However, there is a lot of wisdom and motivation in these pages, making it good overall shove in the right direction…
I’d love to hear about your favorite personal finance books too. Leave a note in the comments or send me an email directly at firstname.lastname@example.org. Happy reading!