Four of the Best Finance Books to Read for Financial Literacy Month
April is Financial Literacy Month, and I’m taking the concept very literally with some finance book recommendations. There are many books on finance out there, of course, but here are a few of the best books about personal finance, money management, and our financial system that I’ve read.
I Will Teach You to be Rich, by Ramit Sethi
The title sounds a little like the subject line of an email scam, but it’s a New York Times and Wall Street Journal bestseller for a reason. Author Ramit Sethi offers a ton of concrete, practical advice to help you gain control of your finances and lead a rich life. You can learn how to get fees waived, ask for a raise, approach large purchases, and more in his six-week program to become financially independent.
Two of his points in particular have stuck with me. Unlike a lot of financial advice, he doesn’t focus just on how you can cut back on your expenses. Skipping your $4 latte will help, but only so much; what are some “Big Wins” you can aim for, like earning extra money? Second, and one of the main reasons I appreciate I Will Teach You to be Rich and Sethi’s other writing, he thinks about “rich” less in terms of how much money you have, but how that money can help you lead the rich, fulfilling life you’ve always wanted to.
You can even get the first chapter for free on the I Will Teach You to be Rich website.
The Millionaire Next Door, by Thomas J. Stanley and William D. Danko
The Millionaire Next Door shares the “surprising secrets of America’s wealthy”: namely, that they don’t live as luxuriously or spend as freely as you might think. That is, in fact, how they became millionaires—by being frugal and accumulating wealth instead of showing it. Hence the title—you’d be hard-pressed to identify most millionaires, who could be living just one house over.
Stanley and Danko's study of America’s millionaires was one of the most extensive at the time and provides insight as to how they became wealthy. Spoiler: It wasn’t by inheriting money. Most subjects of the study were first-generation millionaires, so these are approaches that you can apply to your own wealth management.
There are definitely sections that you can skim, and some of the statistics and references are quite outdated. (At least they were in the original 1998 version that I read; the updated edition from 2010 might be more relevant.) Nonetheless, there are many helpful concepts that you can still put to use, from car buying to financial planning.
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Your Money or Your Life, by Vicki Robin and Joe Dominguez
Our society generally values and prioritizes earning money—the more, the better. But what are you trading in exchange for that money? The authors put it this way: you’d hand over your wallet if a robber asked, “Your money or your life?”, and yet we often give away our life—our time and energy—for money. Yes, we need to work to earn money. But how much time are you “spending” on money, and what is it for?
Your Money or Your Life is about changing your relationship to money so that it serves you, rather than the other way around. The book takes you through nine steps to help you understand what you actually earn for your time, how much is enough for you, how to make the most of your money and your life, and ultimately achieve financial independence.
Liar’s Poker, by Michael Lewis
We move from the world of personal finance to our broader financial system. If you haven’t read anything by Michael Lewis, this book is a good place to start. Liar’s Poker pulls back the curtain on Wall Street in the 1980s and reveals what really happened on the trading floor. From his three years working at the investment firm Salomon Brothers, Lewis shares stories of greed and selfishness that are simultaneously hilarious and horrifying.
The title comes from a gambling game common among traders that also serves as the opening scene for the book. Salomon CEO John Gutfreund challenges his top trader to a million-dollar bet on a game of “Liar’s Poker,” in which the players use percentages and bluffs to guess (or lie about) the serial numbers on dollar bills. The trader’s response? “No, John. I’d rather play for real money. Ten million dollars.”
Combine Liar’s Poker with The Big Short, Lewis’s pseudo-sequel (made into a feature film) on the housing bubble that caused the Great Recession of 2008, and you’ll come away with a new perspective on investment firms, day traders, and that entire aspect of our financial system.
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The views and opinions expressed in this blog are those of the authors and do not necessarily reflect those of VSECU.