Is you’re typical your parents probably didn’t teach you much about personal finances. And the odds are neither your middle school nor your high school had classes in personal finances. We’ve always thought it was strange that schools have classes with titles such as “Dreams of Flight” but none titled “Smart Money Management 101.”
Again, if you’re typical, you’ve probably sort of stumbled around and learned some things about personal finances through trial and error. But you may still be in the dark when it comes to terms like the time value of money or loan to value ratio. You may also be totally adrift when it comes to investing and how to grow your money and become financially independent. Fortunately, there are 10 books that could teach you everything you need to know to become a true wizard of money management. They are:
1. Total Money Makeover – Dave Ramsey
If you’ve ever heard Dave’s radio show, you know that he’s all about using common sense, avoiding purchasing anything on credit, paying cash for everything possible, getting yourself out of debt and building an emergency fund. This book is not full of lightweight promises and feel-good anecdotes but instead offers solid basic advice for every man and every woman. It includes information about using the snowball strategy for paying off debt, which Dave is credited for having invented. This has received some criticism but his methods work. In fact, if you’re having a problem with debt, there’s probably no better a `starting place than this book.
2. How To Get Out Of Debt, Stay Out Of That, And Live Prosperously – Jerrold Mundis
This book is built around the principles of Debtors Anonymous. If you’re not familiar with it, DA is a 12-step program that was created in 1971 to help those who were having a problem with compulsive debt. You won’t find purely theoretical information here from some Wall Street financial whiz kid. It contains real stories and real tips from real people. The book is 20 years old but the information it contains is timeless.
If you’re struggling with debt, here’s a video that offers several strategies for dealing with it.
3. Rich Dad, Poor Dad – Robert Kiyosaki
This book makes the point that a person who dropped out of the eighth grade but spends less than he earns is smarter than a college professor who is unable to make ends meet. Furthermore, the book goes on to say that working for a steady paycheck can get you started as a good money manager but your best investment of time and money is to buy a business or property.
4. The Millionaire Fast Lane – MJ Demarco
This author preaches that it’s a fool’s game to work hard, save 10% your income and retire at 65. He believes this because financial markets are just too volatile and you’d be using a walker by the time you actually had enough money to retire. He feels that a better policy is to utilize the unpredictability of the financial markets to make money quickly and enjoy it now.
5. Your Money Or Your Life – Vicki Robins
This book centers on the idea that if you live more frugally this will increase – rather than decrease – your quality of life. The author cites numerous examples of what you should not do such as the practice of working in a job that generates less income than what you pay for child care and “time-saving” trips to McDonald’s.
6. The Millionaire Next Door –Thomas J. Stanley and William D. Danko
These two authors did research into US households that had a net worth of $1 million or more. They identify most of us as “Under Accumulators of Wealth” (UAW) – or people who have a low net wealth compared to their income. The book also includes advice like taking skimpy vacations to help you achieve a higher net worth compared to your income.
7. The Money Book For The Young, Fabulous & Broke – Suze Orman
Instead of providing information for people who are about to retire, this book is designed to help younger people navigate the basics of the financial world such as coping with huge student loans and a job market that is nearly as dismal for young people as the Great Depression was for everyone.
This author believes that if you’re poor it’s because you think like a poor person. Conversely, if you’re rich it’s because you think rich. Eker also believes that people who are poor basically program their children to be poor by giving them a worldview that makes it impossible for them to accumulate wealth. However, don’t worry. According to this book if you start thinking like a tycoon you can be one, too.
9. Think And Grow Rich – Napoleon Hill
This book dates back to the 1930s when the author interviewed a number of millionaires and philanthropists, including the steel tycoon, Andrew Carnegie. As a result, this book is a perennial best seller of self-development that encourages the notion that “greed is good” – so long as you are willing to share your wealth.
10. The Richest Man In Babylon – George Clason
This book is built around psuedo biblical parables about attaining wealth. It has inspired investors since the early1920s. Like many of the personal finance books that followed this one, The Richest Man In Babylon stresses saving rather than spending. It also maintains that charitable giving is just as important as getting rich so long as you don’t permit the people you help to become dependent on you.