I’m a huge fan of reading. I believe that reading, both fiction and non-fiction, is a great way to learn new things and be exposed to more than you typically see in your daily life. If you want to learn something new, like personal finance, you can’t beat a good book. You can go at your own pace and learn on your own time, unlike in a classroom where you’re on a schedule and must go at the teacher’s pace. If something confuses you while you’re reading, you can stop, look it up or ask questions and come back to it later. Most books point you toward additional resources in the Appendix, leading you to learn more new things. And the best part is, you can get more books than you’ll ever read through your library system all for free.
With that in mind, I’ve put together my list of the best books for every level of financial knowledge. None of these are too obscure or old, so your local or college library is likely to have them or be able to get them through interlibrary loan. Failing that, you can probably find some of them at used bookstores. They’re also all available through Amazon.com, and some used copies are available from other sellers.
If you’re just starting to learn about personal finance, here are some titles to get you started.
The Total Money Makeover: A Proven Plan for Financial Fitness, by Dave Ramsey. I don’t always agree 100% with what Dave teaches, but there’s no denying that he is a great motivator and this book will get you fired up about getting out of debt and establishing a financial plan.
You’re Broke Because You Want to Be: How to Stop Getting By and Start Getting Ahead, by Larry Winget. Larry is very no nonsense and a master of tough love. This book is a basic introduction to getting out of debt, but it will tear down every excuse you can think of and show you that it’s your choices that are making you broke. Warning: He is harsh (but funny), so if you get upset about that, maybe you should pass on this one.
Personal Finance for Dummies, by Eric Tyson. Tackles the basics of finance including investing, taxes and insurance. If you know little or nothing about finance, this book is a good crash course.
The Road to Wealth: A Comprehensive Guide to Your Money — Everything You Need to Know in Good and Bad Times, by Suze Orman. Like Dave Ramsey, Suze Orman teaches basic finance to the masses. This book is one of her most comprehensive, covering stocks, retirement planning, insurance, home ownership and wills and trusts. Another good resource if you want to know a little about a lot of topics.
The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich, by David Bach. Another “star” of personal finance, Bach advocates automating as much of your personal finance tasks like saving, investing and bill paying as you can to keep you on track. If it’s out of sight out of mind, you’re more likely to be successful, he argues.
Standard & Poor’s Guide to Understanding Personal Finance, by Virginia B. Morris. This is another good overview of a lot of financial topics. It’s short and sweet and it’s small size makes it easy to carry.
Maxed Out: Hard Times in the Age of Easy Credit by James D. Scurlock. This is the companion book to the DVD of the same name. While not “instructional” in a step by step sense of the word, this book does present some cautionary tales about what happens when finances and the lending industry go awry.
Financial Guru in the Making
Okay, so you know how to save money, make a budget and get out of debt. Now it’s time to move on to weightier topics. What do you read next?
What’s Your Number? 6 Steps to a Secure Retirement, by Kathryn Alexander. This book goes beyond simply telling you how to save for retirement to get you to calculate exactly how much you’ll need based on how you want to live in retirement, your current assets, and your anticipated expenses. More helpful than the standard “save for retirement” speeches you find in other books.
Wall Street Journal Guide to Understanding Money and Investing, by Kenneth M. Morris. When you’re ready to learn about investing, how to read the financial pages and what a lot of the financial terms you see on TV mean, this book is a quick and simple reference to get you started.
Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence, by Joe Dominguez and Vicki Robin. This classic teaches you how to live on far less than you make and invest wisely with an eye to achieving financial independence long before traditional retirement age.
The Motley Fool Investment Guide: How The Fool Beats Wall Streets Wise Men And How You Can Too, by David Gardner and Tom Gardner. The Fools run a great website and their advice is easy to understand, but is really geared to those who already have a basic understanding of finance and investing. This books takes you deeper into investing and gets you ready to start making some of your own investment decisions.
The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and William D. Danko. This book reveals the qualities shared by many members of the “millionaires club” and discusses how, by exhibiting these qualities yourself, you can join the club. You might be surprised at what the average millionaire is like.
Ernst & Young’s Personal Financial Planning Guide. Covering just about every life stage and eventuality in your financial life, this book provides a solid overview of topics such as elder care, funeral costs, college planning, estate planning and insurance.
Jim Cramer’s Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer), by James J. Cramer. If you like his television show and his loud, over the top style, you’ll like this book which shows you how to deal with personal finance at every stage of your life.
You know a lot about finance and are looking to tweak your strategies for maximum gain, or you’re looking to take on some more obscure topics. Here are some books that go well beyond the basics.
The Essays of Warren Buffett: Lessons for Corporate America, Second Edition,
by Warren E. Buffett and Lawrence A. Cunningham. This book can be dense, but if you’re going to learn you might as well learn from the best. Rather than discussing specific stocks, Buffet instead focuses on his overall investment philosophy.
Bogle on Mutual Funds: New Perspectives for the Intelligent Investor, by John Bogle. The founder of Vanguard tells you about the different kinds of mutual funds as well as how to select good mutual funds.
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition, by Burton G. Malkiel. This book evaluates all kinds of investment strategies and vehicles including stocks, bonds, commodities, and real estate.
The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities, by Bernard Baumohl. If you want to know how to read economic indicators and integrate them into your investment strategy, this is a great place to start. It helps you to make more sense of the financial pages and CNBC when you know how to decode financial indicators.
Retirement Income Redesigned: Master Plans for Distribution: An Adviser’s Guide for Funding Boomers’ Best Years, by Harold Evensky and Deena B Katz. Many books tell you how to save for retirement, but few address how to actually distribute and use that money once you retire and need the money. Particularly recommended for those nearing retirement.
The Misbehavior of Markets: A Fractal View of Risk, Ruin & Reward, by Benoit Mandelbrot. This book is not about investing in the how-to sense. Rather, it’s a look at market behavior. Not for the faint of heart as some of his conclusions are a bit scary and the higher math involved can be intimidating.
Mastering the Art of Asset Allocation, by David M. Darst. When your fund advisor says, “asset allocation,” do your eyes glaze over? If you want to know more about how investors and fund managers choose assets and create portfolios that work in a variety of economic conditions, then this is the book for you.
Obviously there are many more great books than these. I encourage you to spend some time trawling your local library or bookstore and simply see what appeals to you. Even if you think a book is too basic or advanced for you, you might be surprised to learn something new anyway. Happy reading!
Image courtesy of The Department