You may have noticed I’ve been writing in the personal finance section of my site a bit more lately. That’s because I’m committed to paying off my five-figure student debt by the end of 2019. As I think about my own situation though, I’m reminded of the countless others who are in the same boat, and so I want to share the tools and tips I’m using to help put myself in better financial shape.
That’s what today’s post is about. I’ve done a lot of reading on personal finance over the years, tearing through dozens of books on the subject. Only a handful stand out as worth keeping on the bookshelf though, and I’ll share five of those books with you here.
Written by, you guessed it, an author who used to work as a teacher, The Millionaire Teacher is an excellent guide on how to save money on a modest salary.
In this book, the author talks about how to invest in index funds, the techniques financial advisors use to sell their products to you, how to remove emotion from your investing, and what really determines your wealth (spoiler – it’s your savings rate, not your income). This book is about more than investing – it’s about building wealth, and all of the tools that you can use to help you do that.
Bottom line: It’s no wonder the book has 162 reviews and 4.5-star rating on Amazon Canada (and 273 review and the same rating on Amazon US) – this is an absolute must-read book, and the one I recommend most highly on this list.
The main premise of this book is that the idea of what it means to be a millionaire that most people holds in their minds is a wildly inaccurate view of what it really means to be a millionaire. The fact is that you wouldn’t be able to tell most millionaires from anyone else on the street.
The author breaks the book down into seven key features of people who ultimately reach the big milestone:
- They live well below their means (the most important one)
- They spend their time, money and energy in ways that help them build wealth
- They believe that financial independence is more important than showing the world how successful you are through status symbols (second most important)
- Their parents didn’t bail them out of every situation financially
- Their kids (if they have any) are financially self-sufficient
- They are skilled at identifying and jump on market opportunities
- They chose the right job.
Bottom line: this is a book that really dives into the psychology of people who are able to save a lot of money, and that psychology is worth learning about and adopting in certain important ways.
Another highly-recommended read. The Four Pillars of Investing moves beyond practical tips, explaining the underlying principles (or, you know, pillars) behind them.
Those pillars dive into the theory of investing, the history of investing, the psychology of investing and the business of investing. Topics within those pillars include the relationship between risk and reward, how stocks make money, what a good portfolio looks like, why the market moves up and down (and what to do when it does), and much more.
A word of warning though: This book is one of the more complex on the list, and I wouldn’t start here if you’re brand spanking new to the world of personal finance (#5 on this list isn’t a bad place to start if you’re in that camp).
Bottom line: This is one of the most comprehensive books on investing I’ve read to date. The principles are sound, the explanations are valuable, and I finished this book feeling extremely motivated to get my financial world in order.
Another personal finance book that focuses strictly on investing, this book was written by the retired CEO of Vanguard (a mutual fund company)… the guy knows a thing or two.
This book talks about investment styles that would work best for the average investor (read: you and I), whether paying a financial advisor is worth it, the different kinds of index funds out there, and why trying to beat the market is a loser’s game over the long term. It’s written in a way that is easy enough for the average reader to follow, and there are some important investor psychology insights outlined within its pages.
Bottom line: Combine this book with The Four Pillars of Investing, and you’ll be way ahead of most people in your knowledge of investments and the stock market.
My wife is perhaps the most allergic to all things personal finance of anyone I will ever know… and she loves this book. In fact, it’s the only book on personal finance she’s read cover-to-cover. That alone gives me enough of a reason to include it in this list, but of course there’s more!
A book written for Canadian twenty-somethings (but applicable to all), Wealthing Like Rabbits is way more conversational and casual than most personal finance books you’ll read. It’s actually engaging. The topics covered within are pretty unique compared to many of the books I’ve read. You’ll read about everything from saving money by buying a smaller home (the “why” behind that was unexpected for me), to navigating the money minefield that is the wedding industry, to why you absolutely need to avoid payday loans at all costs.
Bottom line: If you’re nervous about money and hesitant to read books on personal finance, this is the one you want to pick up first.
Your turn. What is the best book on personal finance you’ve ever read? Why? Tell me about it in the comments!