1) The Total Money Makeover by Dave Ramsey – This book is absolutely essential for those who want to get started on the path to financial freedom. If you are up to your neck in credit card debt and struggling with pay check to paycheck living, this easy to read book by famed radio and TV talk show host Dave Ramsey was written for you. In this book, he talks about the importance of taking baby steps through his system of working hard, paying what you owe, and staying out of debt. Ramsey is an anti-credit preacher and is constantly imploring his readers to use cash for everything (while I don’t quite agree with his sentiments about credit card usage, I can certainly appreciate it on a practical level). If you are struggling with debt, you will want to take a look at the Dave Ramsey snowball debt payoff method. The snowball debt repayment method is not the most mathematically logical way to pay off debt, but it harnesses the power of human behavior and personal motivation to accomplish its debt free ends.
The book is sprinkled with many of Dave Ramsey’s own personal and devout Christian morals and practices, but even those who are not overtly religious can still appreciate his advice and recommendations such as adopting a “gazelle intensity” behavioral system to stay ahead of the financial game. The Total Money Makeover is very inspirational and not technical – definitely an easy read.
2) Your Money Or Your Life by Vicki Robin & Joe Dominguez – In this updated and revised version of a personal finance classic, the authors continue as champions of the simplicity movement. In Your Money Or Your Life, readers are implored to sit down and really re-evaluate the priorities in their lives, especially when it comes to their jobs and relationships. The book is a bit new age-ish but not controversial. It examines numerous financial truths about the interplay between life and money, encouraging readers to break out of the doomed cycle of forever trading time for money by pursuing passive income sources. If you are unhappy with your financial life and want to learn how you can break out of your current rut and live a more time efficient and value orientated life, this money book is a must read. It will change your perspective on money and life – and help you understand that it’s not just about working and buying more stuff (not exactly a shocker, but the authors really hammer the concept home).
3) The Millionaire Next Door by Thomas Stanley & William Danko – If you are a shopaholic or one who is obsessed with acquiring material possessions, the core message of this book will fly at you like a punch in the face (in a good way of course). The book is quite fascinating as it profiles and surveys the characteristics of very ordinary millionaires (you won’t find hip hop stars or athletes in this book). In their research of the lives and habits of everyday millionaires, the authors of Millionaire Next Door discovered that true millionaires don’t act, eat or even dress like millionaires, as most of them blend quite well into ordinary society due to the surprisingly frugal and cost effective lives that they live. Much of their wealth was developed by simple practices of living below their means and by making smart decisions with their money.
Other than the advice that it’s important to find the right high income producing job, you won’t find any information here on how to make money or increase your cash flow. The book is extremely pro-frugality and cites saving money and delayed gratification as the pinnacle keys to accumulating wealth. The book focuses a bit too strongly on the importance of frugality in my opinion, but the testimonies and stories on the need to vigilantly resist materialistic peer pressure and fight the urge to earn and spend are eye openers for anyone who’s ever wanted to become wealthy, financially free, and possibly even become a millionaire one day.
4) The Money Book For The Young, Fabulous, and Broke by Suze Orman – I highly recommend Suze Orman financial books for beginners. For those who don’t already do so, I also recommend watching the Suze Orman Show on CNBC every week (her show is actually more entertaining than Dave Ramsey’s show in my opinion). Some people criticize her for the way she berates her readers and viewers on the bad financial decisions they make, but I think I think it’s frequently well deserved. None of Suze Orman’s advice is ever ground breaking or particularly inspirational, but she does a great job of making difficult to understand subjects palatable for beginners and newbies to personal finance.
This particular book focuses almost exclusively on the financial needs and situations of young adults – addressing the needs of students and young adults in their 20′s and 30′s, struggling with credit card debt, credit reports, and student loans. However, with its emphasis on introductory financial topics, the book is also quite suitable for even older readers looking to dip their feet into personal finance. Click on the title link above for more Suze Orman books on a variety of introductory financial subjects, pre-chewed and presented for your reading pleasure.
5) The Bogleheads’ Guide to Investing by Larimore, Lindauer, & LeBoeuf - The title of the book – “Bogleheads” – refers to folks who admire John Bogle, founder of the world renown Vanguard mutual fund investment company. If you want to educate yourself on the most important fundamentals of stock investing, this book will deliver that to you. While not particularly earth shattering for personal finance veterans, the book’s lessons are must reads for those new to investing and those who are currently too scared to get started. The book’s main themes focuses on the investment advice and philosophies of legendary John Bogle and addresses the long term investment benefits of diversification, asset allocation, low cost and low fees, and index funds. I know the book’s subject matter sounds rather techy and dry, but the financial advice it offers up is excellent and the writing style is remarkably entertaining and easy to read – making it one of the most definitive but yet accessible personal finance books on investing out there.
6) The Automatic Millionaire by David Bach – As the title makes clear, the author is a big proponent of the need to automate one’s financial life. After reading this book, one of things I came away with is that there are really no secrets to becoming wealthy and no special get rich schemes that can get me there quicker. All that’s really required is a bit of money saving common sense, the ability to live within your means, and the understanding that you must “pay yourself first”. One of the most crucial and emphasized principles of Automatic Millionaire is the need to avoid the so-called “Latte Factor”. To have the ability to save up enough to make contributions towards a retirement plan or savings account, one must make the affirmative decision to stop racking up debt and reduce spending on day to day expenses such as on frivolous and wasteful items like coffees, lattes, and cigarettes. This book is highly recommended and a must read for those looking to start saving for the future and those interested in starting up a retirement account by opening a Roth or IRA. The advice David Bach offers is quite excellent and recommended for both beginners and seasoned personal finance readers looking for a refresher course.
7) Debt is Slavery by Michael Mihalik – The message of this poignantly titled book is exceedingly clear – money is a powerful and liberating tool, but it can also shackle you and bind you into a life of miserable servitude. The philosophies that author Michael Mihalik writes in this book are succinct and direct but all are designed to force you, the reader, into a call for action to gain control of your finances and get rid of the shackles of bad debt. In fact, one of the most interesting and somewhat controversial concepts in the book is the author’s distinction between good debt (loans that will produce value – college student loans or loans to start a business) and bad debt (loans such as credit card debt accrued to fund an unsustainable and unaffordable lifestyle).
If you want a personal finance book that will help you understand and respond to the terrible problem of consumer debt, turn to this easy to read book. Perhaps the next time you pull out that trusty credit card to make a purchase, you’ll be reminded of the mantra – “debt is slavery” (* insert loud thunder crack *).
8) The Joy of Simple Living by Jeff Davidson – This book is a perfect resource for someone like my mother. As I have griped in prior blog posts, my mom is a chronic lifelong hoarder and a person who seems to find more and improved ways to make her life more complex and difficult. For someone like that in your life (maybe that person is you), this nice yellow book contains over a thousand very actionable methods, broken down into specific topics, to simplify all aspects of life and home. Rather than merely share philosophies and theories of frugality and simplicity, The Joy of Simple Living offers specific tips and techniques on how we can all eliminate clutter, streamline our work habits, save money, organize our possessions, and ease our mind to eliminate stress. It’s a handy book.
9) The Only Investment Guide You’ll Ever Need by Andrew Tobias – When it comes to sound investment advice, some things never change. Andrew Tobias helps you navigate the convoluted world of treasury bills, municipal bonds, mutual funds, and Roth IRA accounts without making the subjects too dry or difficult to understand. The crux of his preachings encourages readers to save as much as possible, and put those savings into safe, no load, and diversified mutual funds for the long term. Don’t go around betting and speculating on individual stocks because all that will lead to is you losing your money.
I didn’t expect it to be, but the book was actually a pretty entertaining read, although sometimes Tobias’ witty writing style and jocular side commentaries had a tendency to cloud up the personal finance message intended. But overall, the book is an excellent introduction to the nuances of personal finance and does a great job of keeping the reader attentive and continuously interested.
10) Real Money By Jim Cramer – Straight from the crazy CNBC financial guru/lunatic who got famously hammered on the air by Jon Stewart – comes Real Money, by the emotional booya man himself – Jim Cramer. I know some say that Jim Cramer has lost all credibility in the eyes of serious investors due to his propensity and history of offering dubious advice, but the fact of the matter is that while he is definitely starting to attract a growing cadre of haters, he still attracts a very loyal investor following and knows a lot about the business. Honestly, individual stock picking isn’t for everyone, but if you’ve ever wanted to know more about the science and psychology behind this somewhat risky business, you might as well learn it from a very entertaining author on the subject.
The reality is that there is no one out there who has a perfect stock picking record and frankly, such an activity is really an educated crap shoot. But Jim Cramer’s Real Money and his other books are still fairly decent guide books chocked full of very good investing advice – tidbits such as, you shouldn’t risk your life savings in the stock market and most definitely not in any single stock. It’s one of the few books out there where you may just wind up loving and hating it at the same time. Try it for a spin.
11) The Richest Man in Babylon by George Clason – When I first started reading The Richest Man in Babylon, like many people, I was initially taken back by the compactness of the book and the weird story. But after having read it, I must say, I really enjoyed it. This book should be read by everyone from high school students to corporate executives alike – it’s that enlightening and all encompassing. Essentially the book contains a series of parables set in ancient Babylon. It teaches all the principles of basic personal finance and money management through the use of these classic life lessons. By reading the very entertaining stories, you gradually begin to see parallels in your life and gain a better understanding of how good and bad habits affect how one spends, lends, budgets, and invests money. This book was originally written in the 1920′s, but the fictional stories and life lessons imparted are still very relevant today.
12) The Wealthy Barber by David Chilton - If you enjoyed the preceding title, The Richest Man in Babylon, then you will definitely enjoy The Wealthy Barber as well. This book is written as a novel built around a central story plot set inside of a barber shop, with personal financial self help lessons sprinkled throughout. Some of the stories have characters engaging in discussions regarding important financial concepts such as proper saving habits, investing strategy, and tips on buying a house. The book offers the usual rehashed financial advice that other books offer, but with clear practical examples and in narrative form. If you are intimidated by traditional financial books about money, then this book’s conversational story book form will definitely appeal to you. It’s a great book about money and life for beginners to the subject.
13) The Intelligent Investor by Benjamin Graham & Jason Zweig – Praised by billionaire Warren Buffet as the best book on investing ever written, The Intelligent Investor by Benjamin Graham is that good. This current revised edition contains additional modern day commentary by author Jason Zweig who applies the classic principles to modern day relevance. If you are a speculative day trader looking for short term trading tips, look elsewhere. This book focuses exclusively on the fundamentals of long term value investing and the importance of buying undervalued stocks of great companies for the long term. This book offers a tremendous amount of investment wisdom but is rather dense and comprehensive. Some say it’s a bit technical, but I didn’t find that to be the case (but I’m pretty comfortable with occasional numbers).
14) What Color is Your Parachute? by Richard Bolles – Year after year, the author releases a new updated revised edition of this bible of sorts for job hunters and career change seekers, one that is always chocked full of new advice and resources. The current edition was clearly written with job loss sufferers of the current economic recession in mind as it contains plenty of advice on how to cope and save money in difficult times. This book is an excellent read for anybody who is actively searching for a job or contemplating a career change. The book services as a career guidance counselor that helps you discover your true aptitude, based on your skills, talents, and interest – to help you find a profession that maximizes your potential. The author’s writing style is very thorough and complete, and some people might be slightly turned off by the way he painstakingly hand holds the reader through every explanation in great obvious detail. But regardless, the Parachute series of self help books is a great resource and offers great advice on how to approach prospective employers, tackle interviews, and discover your true calling.
15) A Random Walk Down Wall Street by Burton Malkiel – Don’t be fooled. This best selling book is a must read for those who want to understand more about why it’s nearly impossible to beat the market and why following the advice of so-called stock picking gurus can be detrimental to your financial health. This book discusses the famed random walk theory and dives into the intricacies of behavioral finance, which studies the social psychology of investment decisions – with reviews and discussions of past historical stock market bubbles and investment crazes. The message of the book is clear – the market, while not perfectly efficient, is efficient enough to make it very difficult and extremely cost prohibitive to beat. At the end of the day, a savvy investor is better off holding an extremely broad basket of all available market index funds for the long term than trying to seek out the undervalued stocks and hidden gems. This book will make you think twice the next time you blindly adhere to the financial tips that you glean from popular financial publications and financial quacks on TV. In most cases, picking individual stocks is really just a flip of the coin and a prayer. According to the author, these sources have absolutely zero predictive value in the success of individual stocks.
The book is somewhat more technical than some people might like, but I think the average reader can handle the basic charts, graphs, and ratios introduced in the text. The book is definitely not a short or quick read, but it will definitely make you think. I definitely recommend it.
16) The Complete Tightwad Gazette by Amy Dacyczyn - This book by Amy Dacyczyn, a self proclaimed “frugal zealot”, is the ultimate bible of frugality if there ever was one. Completely actionable, this detailed guidebook offers thousands of money saving ideas for everything imaginable, from the simple and common-sensical to the absolute extreme and borderline cheap. Unlike some of the other personal finance books that focus on intangible concepts and motivational philosophies, The Complete Tightwad Gazette is a step by step guide on how to save money in everything that you do in life. If you are already a thrifty guy or gal, this book will frankly blow you away in reverence. Her tips and advice on how to save money on food and household groceries are particularly useful in this current economy.
17) Rich Dad Poor Dad by Robert Kiyosaki – Almost everyone and their uncle who has ever been interested in personal finance or money has either read or heard about Rich Dad Poor Dad by motivational guru Robert Kiyosaki. In all of its controversial glory, it’s become quite a lightening rod for fans and critics alike. The book uses the story (the truth of this testimony is still up for debate) of two fathers, the author’s own dad, and his best friend’s father, each who dealt with money differently – to highlight the need for a new approach to achieve financial freedom and success in today’s climate.
Personally, after having read it a few times over the years, I continue to have mixed feelings about the book. It’s an admittedly motivational and rather fascinating read, but there are very few truly practical or actionable lessons in the book to take away. There is a call to action in the book, an urge to seek out higher income producing assets, but the author is rather light on specifics and makes such efforts sound too simplistic. One thing that readers must keep in mind is that the book was written during the whole real estate bubble and housing hype era. Much of the cash flow and passive income messages in the book center around Kiyosaki’s own successes in real estate purchases and sales during the booming era. Frankly, I have reservations whether those same sentiments are still entirely relevant in today’s depressed housing market. But despite its flaws, the book remains inspirational and a rather reluctant must read. Go read it and you’ll know what I mean.
18) How To Win Friends and Influence People by Dale Carnegie – The book was first published during the World War 2 era, but even today, it is still a dominant bestselling classic. Some things in life, particularly those that involve the interplay of human emotions and social interaction, remain timeless and forever relevant. Same species, different decade – know what I mean?
So why is this title included on a list of the best personal finance books you might ask? After all, this particular title is not directly related to the issue of money, fiscal responsibility, or investing. Well, I believe personal finance and the pursuit of financial freedom goes far behind just dollar signs and percentages. It also encompasses issues of psychology, life’s motivation, and emotional drive towards the pursuit of this ever elusive happiness. To acquire this happiness, the human and relationship elements are ever present. After all, financial success, as the author notes quite astutely, is mostly due to the “the ability to express ideas, to assume leadership, and to arouse enthusiasm among people.”
The book is filled with incredibly practical anecdotes that illustrate the best way to respond and maximize the relationship building opportunity in almost every situation. It doesn’t matter if you are a corporate tycoon, a church leader, or a college student on the rise, this book will guide you in your inevitable relationships and social objectives. The book is not exactly a thrilling page turner with exciting cliff hangers at every twist, but it’s an essential read for life long success.
