The purpose of books on personal finance is twofold; to educate and, more importantly, to motivate. A great book in this genre will discuss tools and concepts that will assist you in reaching your goals plus inspire the reader to follow through on their plans. We all want to improve our lives in multiple facets as evidenced by New Year’s resolutions that most of us break within a week. If you are reading a book on personal finance, you obviously have the desire to make changes to your money habits. The following are the selections I would recommend that will give you straightforward insight into how to go about improving your finances but will also discuss how to do so as a process than continues over time rather than being left behind with your treadmill by mid-January.
The Best Books on Personal Finance
The Wealthy Barber by David Chilton
The Wealthy Barber is by far my favorite book on this topic as it provides valuable information in a fun way. This book is written entailing fictional characters at a stage in their life where they’re trying to take control of their personal finances. Son goes to father for advice and is directed to the local barber who apparently is a financial guru. Chapters are broken down into differing aspects of personal finance from mortgages to insurance. Everything is explained in simple terms that are understandable and actionable. By actionable, I mean there are steps available that you can take now. Many personal finance books and magazines discuss how you should invest chunks of capital. The problem for many people is they lack the tools to accumulate the necessary money. The Wealthy Barber will help you begin taking steps to enjoy a fruitful and comfortable financial life.
The Total Money Makeover by Dave Ramsey
Dave Ramsey requires very little hyperbole from anyone; he has one of the most, if not the most, recognizable name in personal finance. He host his own radio show and has written several books including Financial Peace and The Total Money Makeover. What I find appealing about Ramsey is his experience; he admits to having had poor money habits and having to use his own techniques in order to achieve stability. He preaches discipline and logic in his books starting with saving $1,000 so that you have funds available if something comes up that won’t derail your plans. Ramsey is most notable for advocating the “Snowball method” of paying off debt which encompasses paying off the smallest debt (in terms of balance) first using all available funds then as individual debts are extinguished using those newly available funds in full on the next debt and so on until no debt remains. I believe most individuals find Ramsey’s advice worthy is that, like The Wealthy Barber, he provides a starting point and an action plan to follow. The Total Money Makeover is easily the best selling personal finance book in today’s market.
The Money Book for the Young, Fabulous & Broke by Suze Orman
While I have quite a few philosophical differences with Suze Orman on specific financial strategies I believe she is important to the genre because she provides a different perspective in a woman’s voice. Truthfully, many women will find it easier to take advice from Suze Orman than from Dave Ramsey. Aside from gender, Orman also approaches personal finance from a different point of view. For example, she doesn’t preach specific actions or target goals but instead focuses on making good, practical financial decisions that, in of themselves, will allow individuals to grow. As an accountant, I would prefer more objective measures such as saving $1,000 or paying off your credit card, however since individuals think differently having an alternate voice is a positive.
Other terrific books on personal finance include:
- The Millionaire Next Door by Thomas Stanley
- Living Large in Lean Times by Clark Howard
- Money Rules by Jean Chatzky
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Please send any questions or comments to Jeremy R Woods.