I frequently get e-mail from people seeking book recommendations. Most messages are like the one Cody sent yesterday: “What is the first book that I should read that tells me how to invest?” These are easy to answer. In January, Bobby asked a broader question:
I was wondering if you have a list of PF books that you have in your personal library. I use the library frequently and am very interested in furthering my own education in the PF area. It is also a personal goal for 2007 (one educational book a month.)
This is a great goal and a great question. Eventually I’ll have a subsection of this site devoted to personal finance books. But for today, I’ll list the books I refer to frequently. (These aren’t all the books I own — I own many that aren’t worth having.) I’ve marked the books I consider essential with a happy star *.
Please note that these recommendations are based on how well a particular book has worked for me. Your mileage may vary.
Basic Personal Finance
These books offer a wide view, discussing many aspects of money. They offer advice about saving, investing, and getting out of debt. They don’t go into much detail about any one subject, but they provide motivation to get started. And that’s what’s most important.
The Millionaire Next Door by Stanley and Danko
The authors interview and survey a pool of millionaires, attempting to find common connections among them. They discover that millionaires live below their means. They budget. They let their adult children make it on their own. This book introduces several key concepts, including degrees of wealth accumulation. It’s a bit tedious in spots, at least in the audio version. This is one of just a few books to cover both sides of the wealth equation: saving money and earning money. [My review.]
*Your Money or Your Life by Dominguez and Robin
A classic, and one of the foundation books for the simplicity movement. The authors play off the concept “time is money” in a very literal sense. They encourage readers to sort out priorities, to cut expenses, and then to seek passive income in pursuit of financial independence. A little New Age-y in spots. An excellent book. [Frykitty reviewed this book last year.]
*The Total Money Makeover by Dave Ramsey
Ramsey is an anti-credit zealot. He made a $4 million fortune by his mid-twenties, and then lost it to bankruptcy. Now he runs a personal finance empire. He takes a lot of criticism for his support of the Debt Snowball, which he describes in detail here, but the thing is: his methods work. If you are struggling with debt, there is no better starting place than this book. Ramsey’s advice is permeated with his Christianity, but you can get a lot out of this book even if you’re not religious.
The Wealthy Barber by David Chilton
This book offers good, general personal finance advice in the guise of a novel. Several friends meet once a month at the barber shop where the titular character dispenses wisdom on saving, investing, buying a house, and so on. The advice here is excellent, often backed by clear examples. The book’s conversational tone may appeal to some who might otherwise be turned off by personal finance. [My review.]
The Richest Man in Babylon by George Clason
Clason offers personal finance wisdom in the form of parables. These nuggets of wisdom were originally distributed as pamphlets at banks and insurance companies during the 1920s. The most popular were collected into book form. This is the grand-daddy of personal finance (Benjamin Franklin is the great-granddaddy), and many of modern admonitions — “Pay yourself first”, “Invest for the future”, “Learn the power of compound interest” — can be found here.
Saving money is a key skill to develop if you hope to get rich. (Read The Millionaire Next Door if you don’t believe me.) Here are four books that can help you learn to cut corners, to save money in ways that may not have occurred to you.
How to Live Well Without Owning a Car by Chris Balish
Balish begins by explaining why you’re better off not owning a car — financially, ecologically, and socially. He spends the rest of the book describing how to survive without one. He offers tips for mass transit, walking, bicycling, and more. This book has a narrow focus. But if you’re in its target audience, it’s worth a read.
Miserly Moms by Jonni McCoy
Don’t judge a book by its cover. Sometimes it’s the most unassuming of books that offers the best advice, that can actively help you on your quest to get rich slowly. Miserly Moms is ostensibly a guide for stay-at-home mothers, but is actually filled with useful tips for anyone who is concerned with frugality (especially parents with young children). [My review.]
*The Joy of Simple Living by Jeff Davidson
This book is packed with tips. Davidson covers a wide range of topics, and for each he offers several ways to save money. If this book were a weblog, it would feature digg-able entry after digg-able entry. A great resource for anyone wanting to cut down the clutter of life.
Wealth on Minimal Wage by James Steamer
If you’re a young adult just starting in life, this book is a fine choice. It offers hundreds of ideas on how to avoid debt, maximize your wages, save on insurance and utilities, and generally live a frugal lifestyle. A bit out of date, and maybe a little radical, but filled with good advice. (I’ve had a copy out from the public library for six months. It’s been battered and worn by previous patrons — a sure sign of a good book.)
Another highly-regarded book on frugality is The Complete Tightwad Gazette by Amy Dacyczyn. I’ve never read it, but it’s near the top of my list of books to borrow from the library.
This set of books deals specifically with investing. The four books I keep at hand are user-friendly. They’re not technical, but offer a good introduction to the topic.
The Automatic Millioinaire by David Bach
There’s more to David Bach than “the latté factor”. The system he recommends here is excellent. If you’ve been meaning to open an IRA, but have never actually done so, then read this book! He’ll explain how to set it up so that it’s painless. (Ad: Buy Stocks for $4 at ShareBuilder.)
*The Only Investment Guide You’ll Ever Need by Andrew Tobias
Andrew Tobias is an entertaining writer. His jocular, conversational tone will keep you interested as he describes mutual funds, bonds, and treasury bills. There’s a good section on how to handle a windfall (lottery, inheritance). This is an excellent introduction to the subject of investing.
*The Bogleheads’ Guide to Investing by Larimore, Lindauer, and LeBoeuf
You want expet investment advice? You can’t beat the info found here. These devotees of Vanugard founder John Bogle are big on slow, sure investments like indexed mutual funds. They tap their decades of experience to teach about diversification, inflation, and asset allocation. It’s not nearly as boring as it sounds. Highly recommended.
Yes, You Can…Achieve Financial Independence by James Stowers
Despite the odd title, this is a solid book on investment from one of the richest men in America. It does cover some basic personal finance information, but mostly gives tips on how to invest. I haven’t read the entire book, but I often use it as reference when preparing entries here. It’s a sort of bridge between overviews like Tobias and more technical books like Graham or Malkiel.
Two other classics on investing are The Intelligent Investor by Benjamin Graham and A Random Walk Down Wall Street by Burton Malkiel. I have both, but have read neither. They’re both quite technical.
Wealth is about more than money. These books will help you become a well-rounded person, will help you develop skills that will indirectly aid your personal finances.
*50 Success Classics by Tom Butler-Bowdon
Butler-Bowdon selected fifty important books from success literature. For each, he created digest versions, summarizing each volume in only a few pages, distilling its key points. He also provided biographical information on each author, and attempted to explain why each book is relevant, placing it in a larger context. This is a wonderful way to find other books to read. [My review.]
Secrets of the Millionaire Mind by T. Harv Eker
There’s a little personal finance advice here (all of it solid), but mostly this book is about changing the way you think about money and about yourself. I found Secrets inspirational. It’s a good choice for somebody with big goals, or somebody trying to overcome negative thinking. [My review.]
*How to Win Friends and Influence People by Dale Carnegie
One of the classic success books. Carnegie uses anecdote after anecdote to illustrate the best way to make the most of human relations. It all boils down to this: “To win others to your way of thinking, put yourself in their shoes.” The devil is in the details, though, and Carnegie’s simple prose does a fine job of pointing the way. You can find this book cheap at almost any used book store. [My review.]
Getting Things Done by David Allen
Little needs to be said about this book — it’s a geek classic. Allen describes his formalized system for creating greater efficiency. Though I’ve found it difficult to maintain the precise system for long, I use elements of it all the time. If you have trouble procrastinating or staying organized, this book is for you. [My review.]
Never Eat Alone by Keith Ferrazzi
I’ve been meaning to review this book for weeks. I have a love/hate relationship with it. Parts of it are fantastic — you can learn how to relate to people, how to establish contacts and maintain connections, how to create a social network. But parts of it are creepy — networking for the sake of networking puts me off. The endless name-dropping gets old fast. Worth reading if you have contact with a wide group of people.
One book that’s not in my library is What Color is Your Parachute? This is a classic on changing careers. I’m locked into Get Rich Slowly and the family box factory, but if I were job hunting, I would pick up a copy of this book without hesitation.
Kids and Money
Many parents are unprepared to teach their children about money. You needn’t be one of them. These books suggest methods for getting kids to understand how money works.
What Color is Your Piggy Bank? by Adelia Cellini Linecker
This slim volume is a great choice for kids from 10-14 who are beginning to show an interest in entrepreneurship. Linecker covers the world of jobs, setting up shop, and how to manage money. I hope to provide a complete review of the book in the next few weeks.
You Call the Shots by Cameron Johnson
This is a new book from a young entrepreneur. It’s in my “to-read” stack. I ordered it based on high praise from Flexo at Consumerism Commentary, who wrote: “This book should be required reading for any young adult showing an interest in entrepreneurship.”
Living Simply with Children by Marie Sherlock
Sherlock offers tips for how to raise children that aren’t part of the consumerist culture. She encourages strong family ties as a counter to the relentless purchase to acquire “stuff”. There’s some great advice here.
Though I’ve linked to the Amazon pages for each of these books, I encourage you to get them free from your public library. I acquired most of the books in my personal finance library for cheap from garage sales and thrift stores.