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Here’s an interesting tidbit about many incredibly successful people: they read. A lot.
Bill Gates estimates that he reads roughly 50 books a year. That works out to nearly a book a week. Warren Buffett reportedly reads an average of 200 pages a day; many other wealthy individuals have exceptional reading habits as well.
Why reading? Because it’s an excellent and super accessible way to pursue continuing education.
You didn’t think Bill Gates was working his way through the Twilight series did you? Of course not. Like many others who are highly successful, he spends a huge chunk of what leisure time he has reading newspapers, magazines, news articles, and nonfiction books.
Reading provides all kinds of benefits, but perhaps the most obvious reason to read more is because it’s an easy, often completely free way to gain knowledge. Books are chock full of information that we can utilize for growth and learning.
If you want to learn how to manage your money better, reading books (and blogs!) is a fantastic way to do so. Below are 5 must read personal finance books to add to your reading list before the end of the year, several of which are also on my recommendations page. (P.S. I’ve included a favorite quote from each one just for the fun of it.)
1. Get a Financial Life: Personal Finance in Your Twenties and Thirties by Beth Kobliner
This is a comprehensive, easy-to-read, introductory guide to personal finance. It covers a huge variety of money topics, including credit, debt, banking, investing, retirement, home buying, insurance, and taxation. It even contains military specific benefits topics. Really, this is a one-stop-shop for someone looking to boost their overall financial literacy. It is an excellent choice for anyone wanting to make better financial decisions.
Better yet, it provides actionable advice for getting your financial house in order and for turning your less-than-ideal financial situation around. Beth has been researching and writing about money for 30 years and knows her stuff. What I like most about this book is that each chapter stands alone so you can skip around and focus first on the areas you need to work on the most. As an added bonus she even includes a list of books and websites she personally recommends for further reading.
I truly consider this #1 on my list of must read personal finance books. I actually liked it so much that I bought a copy for my son as a high school graduation gift.
Erin Lowry is the author of the book Broke Millennial as well as the site Broke Millennial. I’m recommending this book because 1) it’s a genuinely solid resource and 2) because I really like the way she’s able to break down complex topics into easily digestible material. Erin’s writing style is very approachable. This book provides a complete roadmap for those who are just beginning their financial journey and is appropriate for anyone who needs to improve their money management skills. That said, it’s definitely geared toward millennials specifically – she includes an entire chapter on how to handle living at home after college, entitled “Paying Rent to Your ‘Rents'”.
Erin wrote this in such a way that each chapter can be read independently of the next so you can easily skip from credit basics to debt management all the way to retirement. I especially like chapter 2 because it covers some of the psychological money blocks that we all have but usually aren’t aware of.
3. Financial Freedom: A Proven Path to All the Money You Will Ever Need by Grant Sabatier
Grant is the founder of the Millennial Money site where he writes about his passion for “connecting and helping as many people as possible make smarter financial decisions, build more successful companies, reach financial independence, and live richer lives.” He says this book will provide you a “step-by-step path to make more money in less time, so you have more time for the things you love.” It offers an in-depth look at what it takes to achieve financial freedom, from side hustles to hacking your 9-to-5 and more.
There is, frankly, good reason to believe he’s an expert on the subject. In 2010 he had a whopping $2.26 to his name and just five years later, at age 30, his net worth was more than $1.25M. In addition to his own story, he provides multiple real life examples of others who are working toward or who have achieved financial freedom in order to demonstrate that the techniques he writes about do, in fact, work.
I really like that he details exactly how to determine your “number” – i.e. how much money you need to reach financial freedom (which, he says, is probably less than you think). Another bonus? He does a lot of the math for you throughout the book. For example, he includes 5 pages of tables that clearly and comprehensively outline how many years it will take to reach your number based on 5 different levels of income and multiple levels of expenses.
This book is great for anyone who wants to live life on their own terms – it would be difficult not to feel motivated and inspired after reading this. I had a hard time putting it down and ended up finishing it, cover to cover, in two sittings.
This book isn’t new – it was first published in 2004 – however, its messages are timeless. This book is all about 1) paying attention to your latte factor, 2) paying yourself first, and 3) simplifying your finances by automating.
Bach discusses at length how understanding your “latte factor” can help you save money. Essentially, you need to examine your expenses and cut down on all of the small money drains that add up over time – these could be actual lattes you buy everyday, or any number of other expenses that aren’t needs. He says that wealth is not about what we earn, but about how much we spend.
He then covers the importance of paying ourselves first and how automating removes the difficulties associated with doing so. This is a financially sound tactic for growing wealth – especially for retirement. I can personally vouch for automating because it’s how my husband and I have managed to sock away as much as we have. The system works.
This book is a fairly quick read with a ton of actionable tips. The writing itself, in my opinion, isn’t the best but I think the concepts he presents more than outweigh his overly simplistic (sometimes infomercial-esque) style.
5. The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and William D. Danko
This is my favorite personal finance book of all time so I guess you could say that I’ve saved the best for last. Again, this book isn’t new – in fact, it’s been around since 1996 – however, the classics are classics for a reason. This book is a classic.
The gist of this book is that the way we think of wealth is wrong. Many of us believe that high incomes, big houses and fancy cars equate to wealth. In truth, most millionaires live modestly while those who appear to be rich probably aren’t. Generally, millionaires aren’t lottery winners or flashy celebrities; they’re regular Janes and Joes who work hard, save, invest, and aren’t concerned with keeping up appearances.
The authors found that there are seven common characteristics that were shared among the wealthy they interviewed, including that (#1) they spend less than they earn and (#6) they are proficient in targeting market opportunities. A key idea they discuss is that wealth is not dictated by income. They describe how a high-earner can be an Under Accumulator of Wealth (UAW) because their expenses keep up with their salary, while a modest earner can be a Prodigious Accumulator of Wealth (PAW) – i.e their net worth is ≥ their age x total income x 10% x 2.
Interestingly, the authors found that the vast majority of America’s millionaires are first generation rich. (That means there’s a lot of hope for folks like you and me!) This is an excellent read and one that will likely have you rethinking the way that you live, spend and save.
Questions? Advice to share? Let me know in the comments!