We all know the saying ‘you have to spend money to make money and this is true when it comes to your money making resources. However, you don’t have to spend a lot of money, just the cover price of a paperback, for insightful and relevant information which can teach you about money and finances.
1 – I Will Teach You To Be Rich, Ramit Sethi
Ramit Sethi has a personal finance blog by the same name, and he has been able to take the information from the best of his hundreds of posts, to create a guide to getting your finances on track. Sethi’s book is aimed at 20 to 35 year olds, in both the information and the style of writing because he has taken the loud and aggressively effective style he uses in his blog which is chock full of real life, easy to understand examples, and targeted it to his audience.
While the book just scratches the surface of the information Sethi has posted on his blog, the information is clear and easy to understand, with heavy hitting content, for example, the chapter on banking covers off exactly how banks make money from account holders, which could appear to be too simple for most people passionate about learning more about their finances, but the writing goes much deeper as he goes on to cover overdraft fees and how to talk your way out of them.
Over the six week program proposed in ‘I Will Teach You To Be Rich’ you will learn how to automate your savings and jump start your investments. Plus, not only are you told how to get your financial life in order, you’re told why it is so important, because when it comes down to it, most 20-somethings need motivation to save for the future.
Sethi also sets his book apart by looking at entrepreneurship which is unique amongst personal finance resources. Instead, Sethi is able to gently remind you that if you are serious about achieving financial independence, then you can’t go on relying on an employer for your income. Rather than focussing on frugality in the way many personal finance bloggers do, Sethi focuses on making money, whether you ask for a raise, invest or start your own business.
2 – The Intelligent Investor, Benjamin Graham
If you are considering investing in shares directly or through a mutual fund then you will want to make sure you read this book first. Some of the world’s most successful investors learned from the author Benjamin Graham, and now he is sharing that financial wisdom with you too. Warren Buffet also recommends the book, as well as writing an appendix.
‘The Intelligent Investor’ is easy to understand, even if you are not a seasoned investor just yet. The book begins by explaining the difference between intelligent investing and speculation, using the history of the stock market as real life examples, showing how an intelligent investor can stay ahead of the market. Graham also shows you principles to becoming a defensive investor, as well as how to be more enterprising by identifying under priced stocks.
3 – The 9 Steps to Financial Freedom, Suze Orman
Suze Orman sets out to help you conquer your fears about financial success, by realising that the factors which are limiting your success are really barriers you have built up in your own mind. Orman helps you knock down those walls in nine steps, helping you find the root of your fears in order to get them out of your life. As a result, ‘The 9 Steps to Financial Freedom’ isn’t heavily focussed on the mechanics of personal finance, but does help you learn how to form positive new personal finance habits.
Orman also uses a lot of strong anecdotes to demonstrate the points she is making in her book, which are:
1. Seeing how your past holds the key to your financial future
2. Facing your fears and creating new truths
3. Being honest with yourself
4. Being responsible to those you love
5. Being respectful of yourself and your money
6. Trusting yourself more than you trust others
7. Being open to receive all that you are meant to have
8. Understanding the ebb and flow of the money cycle
9. Recognizing true wealth
Many people get to the end of the month – or in some cases the middle of the month – and wonder where all the money went, and if that sounds like you, then you should make sure that some of your money goes towards this book. Orman will help you find a solid starting place for regaining control of your finances, and helping you build the right framework to remain in control.
4 – Mental Accounting: Why Smart People Make Big Money Mistakes, Gary Belsky and Thomas Gilovich
If you are interested in the motivations behind financial decisions and why you spend and save in the way you do, ‘Why Smart People Make Big Money Mistakes’ can be a useful book for you. The book looks at issues like, why do we spend more when we’re buying with a credit card than with cash and is still incredibly relevant post-GFC even having been written in 1999.
Belsky and Gilovoch explain how mental accounting works, and how it is controlling your financial behavioural decisions. For example, do you feel like you don’t spend a lot of money, but can’t reach savings goals, or do you have money in the bank but you also have credit card debts? This is because we value money differently depending on where it has come from, which is why most of us will spend our tax refund on something for ourselves, rather than saving it, because it is ‘found’ money.
Mental accounting also focuses on the relative cost, for example, spending an extra $500 on a $10,000 car to pay for paint protection and floor mats is easy, but if you were going to buy a $500 washing machine and found out at the store that the machine is now $1,000 you’re not going to buy it. ‘Mental Accounting’ is therefore a book which can help you understand and overcome these financial behaviours which are actually costing you money.
5 – The Complete Tightwad Gazette, Amy Dacyczyn
‘The Complete Tightwad Gazette’ is an entertaining read in how to save money. Many of the ideas you will recognise as things your parents did, and many more will be clever and simple ways you can save in your own life. The book is actually a compilation of a six year newsletter called The Tightwad Gazette which was written from 1991 to 1996 about frugal living, but it is still very relevant, not to mention entertaining, today.
If you’re looking for ways to cut back on your spending or save money in your monthly budget then you can find some very worthwhile information in this book, and it is up to you how far you take the frugality.
Alban is a regular personal finance contributor to various international personal finance blogs. Alban also writes regular article on Home Loan Finder on how to compare and choose a home loan
books, money, planning