Throughout my life, I have sought insight from as many sources as I can get my hands on and that is an approach that I think everybody should take regardless of what it is they're trying to learn. And one of the easiest and quickest ways to get your feet wet in that arena is to read books. So today I'm going to very briefly go over 5 books that I feel everyone interested in increasing their own Financial intelligence and getting a better handle on their money should check out if they haven't already. For each book listed herein, I will discuss who I think the book will be particularly ideal for and why using key insights that can be gained from the book is vital.
The Millionaire next door
With that out of the way, let us get started. The Millionaire next door was written by Thomas J Stanley in 1996 paints the portrait of the typical millionaire thusly: 57 years old married with 3 children. About one-in-five are retired and two-thirds of those who are working are self-employed. This gives us an insight into how important having a side hustle is seeing as how only about 20% of the workers in America at the time of the writing of the book were self-employed but they account for nearly two-thirds of the millionaires. About half of the millionaires according to this book had wives who did not work outside the home and those that did were usually teachers. The average household net worth was about 3.7 million however some had accumulated net-worths of well over 10 million which skews the average data upward. The median net worth was 1.6 million.
And here's the crux: most live well below their means.according to the book on average the total annual realized income is less than 7% of the millionaires; wealth or in other words they live on less than 7% of their wealth. And about 80% of them are first-generation rich, they didn't receive any inheritance they did it all themselves. This book is one of my personal favorites. so I think it is a great read for anyone really but particularly those who are just getting started on their own Financial journeys. Because it really does help paint the picture that yes anyone can achieve this million dollar net worth goal so long as they have their priorities in order and learn the fundamental skills of budgeting, living below their means and investing consistently over time.
Rich Dad Poor Dad
Rich Dad Poor Dad is a book written by Robert Kiyosaki in 1997 this part of a series that teaches people about the basics of financial intelligence.in this book among other things, Kiyosaki goes over the four pillars of financial intelligence which are accounting, investing, understanding markets, and the law. He also goes through six different lessons that were talked to him by his Rich Dad which are that the rich don't work for the money they have money work for them, reasons to teach financial literacy, to begin with, tips for how to mind your own business, the history of taxes and the power of personal corporations, how the rich invest money, and the importance of working to learn instead of working to earn.
This book may be a little bit lighter on the here is a step-by-step guide on how to do specifically this then some other books out there but it is very good at getting you to think a little more like the rich which I think is very important. But if you prefer books that are more step-by-step based this probably isn't the best one for you.
Seven Steps To Save Your Financial Life Now
Seven steps to save your financial life now by Daniel Solon is maybe a little bit less well-known of the book than many of the other ones on this list but it is a very quick and easy read that gives a lot of good points. As the title suggests that goes over seven things that you can focus on and do that can help improve your financial life such as making sure you're getting reliable data when you're researching finances, ignoring those who are claiming to have the ability to predict the future of the market because nobody can do that, comparing active and passive investing, not trying to time the market and avoiding broker if at all possible. As I said it's a very quick read, only 48 pages in fact compared to the usual two, three, or four hundred that you get in these finance books normally. So it’s an ideal book to check out if you are short on time and don’t have more than a couple of hours free some weekend down the road.
The Behavior Gap
This book is written by Carl Richards in 2012 and it goes over the phenomenon that explains the difference between the return of an investment and the actual return a hypothetical typical investor gets from said investment. The difference between the two is what Richard calls the “Behavior Gap” and it exists because the typical investor often tends to buy high and sell low simply because most people, especially when they are first starting to invest, tend to invest emotionally as much if not more so than rationally. We saw this pretty recently with Bitcoin. To quote Richards, “It's not that we're dumb. We're wired to avoid pain and pursue pleasure and security. It feels right to sell when everyone around us is scared and buy when everyone feels great. It may feel right but it's not rational.”So obviously this book also deals with the passive vs active investing debate but more from a behavioral standpoint than other books on this list. It also gives some handy tips to help investors (and their managers) control their emotions when it comes to investing. I think this book would be ideal for the beginning investor because it is vitally important to know when going in, how our emotions can affect our investing behavior so that when a crisis inevitably happens (as it will to all of us eventually) we can better manage it. However, at 178 pages with lots of sharpie diagrams throughout it is a breeze of a read and could be a good reminder to anyone who regularly invests their money, especially with all the investment fear that has been present in the markets recently.
The Index Card:
Why Personal Finance Doesn’t Have to be Complicated
This is a book written by Helaine Olen and Harold Pollack in 2016 and is a phenomenally simple guidebook for anyone in charge of managing their own finances, which is basically everybody. It is based on Pollack’s premise that pretty much everyone the typical individual would ever need to know about money could fit on a single index card. As a matter of fact, that’s how this book came about, after an interview between the authors, many people were asking Pollack on his blog for an index cards with financial advice on it, so Pollack jotted down nine simple rules on an index card, took a picture of it, and posted it online. The image went viral and was covered on many internet news sites and later the book was written, going more in-depth to each of the rules as well as adding a few that they felt were left off the original card. Now the reception for this book was mixed, which I actually find quite interesting. Publishers Weekly even said that while the book had an admirable mission, the rulesit goes over; they are too old and readily available in any listicle to be worth building a workaround. It called the book "unsatisfying to all but the most unaware consumers";. I find this interesting, or maybe confusing is a better word because the advice in the book wasn’t wrong (even if you certainly can take some of the concepts further than what the authors did in the book. If you need an example just look at the financially independent; retired early community who have taken the idea of savings rates way further than the 10% or 20% mentioned in this and many other books.), it was just simple advice. But if it works, then what exactly is wrong with that? Do we really want financial success to be complicated and/or overly difficult to achieve? I don’t think so. I certainly don’t want it to be that way anyway. So who is this book ideal for? Those who want a simple, easy to implement step to help get their finances on track. It’s not going to teach you anything too complex, I mean just look at the title of the book, that was never the point. It’s just meant to help get people started. And I have to imagine that there are still quite a few people who need that first, before digging into the more complex side of finances. If that weren’t the case, there probably wouldn’t be people living paycheck to paycheck at least not as many as there currently are.
So if any of those topics sound interesting to you or if you want to learn how to better handle your money and have more financial freedom be sure to subscribe to this blog in order to get notified every time I publish a new article.
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Labels: BOOKS, BUSINESS, FINANCE
