My top 5 favourite personal finance books
There are now hundreds and thousands of personal finance books and ebooks currently on the market.
Having read a good few of them, I thought I would highlight my favourite five, with a brief description of what each one is all about and the message which has stuck with me in the long-term.
Personally, I find reading these books essential in broadening my education, in ensuring my solid understanding of the fundamentals of personal finance and, above all, for inspiration.
So, in no particular order…
Rich Dad, Poor Dad – Robert Kiyosaki
Robert introduces the book by discussing his childhood whereby he found two “father” figures. Firstly, he speaks of his “poor” Dad – his genetic father who was a high-earning lecturer, but didn’t manage his money too well.
Then, he focuses on his “rich” Dad – his best friend’s father who took him under his wing from the age of 9 and taught him all about money and how to manage it well.
This introduction is really interesting and raises some really powerful points around “the rat race” and what makes the rich richer. He also begins to discuss assets and liabilities. He explains them not using their dictionary definitions, but rather describing what they mean to the money in your pocket.
A must read for beginners to learn these ideas, and equally essential for those well-versed in personal finance to remind them of the fundamentals.
Biggest impact: The difference in fundamental thinking between “Rich Dad” and “Poor Dad”.
The Richest Man in Babylon – George S. Clason
This book is old, but has truly stood the test of time.
First published as a book in 1927, The Richest Man in Babylon is made up of several short stories, more akin to parables. The themes of the stories are all ageless themes of personal finance – spend wisely, save what you can, invest carefully and wisely.
The difference in this book is the context in which these ideas are set. Each story seems more grand and, for me, had a greater impact due to their setting in ancient Babylon.
There are some short dull sections in the book, but these are more than compensated for by the lessons learned from the more penetrating sections.
Biggest impact: “The seven cures for a lean purse” – summarized here
Secrets of a millionaire mind – T. Harv Eker
Secrets of a millionaire mind focuses on the difference in the thought processes between the rich and the poor and how to replicate the thinking of the “millionaire mind”.
These are presented as 17 maxims for wealth and each is presented very succinctly: poor people think/do/act X, rich people think/do/act Y.
On the negative side, there are some really cheesy sections. After each learning point, the author asks you to take the repeat “a declaration” and then touch your head and say “I’ve got a millionaire mind.” I didn’t enjoy this particular suggestion, but the learning points behind each declaration are consistently pertinent and should be committed to memory somehow (although perhaps without the head patting!!).
Biggest impact: Your financial blueprint. There is a brilliant passage in the book discussing how we subconsciously view money and the impact this has on our financial future.
Real Estate Riches – Rolf De Roos
Here, I’ve picked a book about a specific topic, rather than general personal finance. This is due to the immediate impact this book had on me.
As the title suggests, this book is related to real estate and property. It outlines, in very clear terms, a number of benefits of investing in real estate.
Whilst the book is highly focused on property investment, it does also consider a wide range of topics which are useful more generally in investing.
For example, it highlights the benefits of property investment through discussing the fundamentals of returns and leveraging, which are useful for all forms of investment.
The only downside is that you have to read through a little which is essentially a sales pitch for the “Rich Dad” community including himself and Robert Kiyosaki.
Biggest impact: His 100:10:3:1 Rule: “…if you look at 100 properties, put offers in on 10, and try to arrange financing for 3, you may end up buying 1.”
Think and Grow Rich – Napoleon Hill
Another classic. First published in 1937, and often referred to as “The Granddaddy of all motivational literature”.
The book has one overriding lesson. You should know what you want, and you should have an overpowering desire to achieve it whatever gets in the way. I think that this is a lesson that is superbly applied to paying off one’s debt if you find yourself in such a situation.
Think and grow rich is aimed at personal development and increasing one’s wealth. However, it doesn’t stop there. The book more generally discusses an “envisioned desired outcome” for ourselves each day or for each activity instead of passively going through life. This is true for finance, but also for so much more in life.
There are also some great and inspirational examples, drawing from the stories of Carnegie, Edison & Ford, among other millionaires from his generation to show how his theories matched the real life situation. And, from what I can see, all these theories and ideas hold true to the current generation of famous millionaires and billionaires.
Biggest impact: The quote… “The starting point of all achievement is DESIRE. Keep this constantly in mind. Weak desire brings weak results, just as a small fire makes a small amount of heat.”
Becoming Rich: one step at a time – Graham P. Clark
Number six, I know, but I had to include it. 🙂 This is my own personal finance book, which is currently available at the amazon kindle store. I’ve included it on the list as, honestly, writing it had as big an impact on me as reading any of the books above. I hope that doesn’t sound egotistical, but researching and carefully considering the real life examples included really cemented some ideas for me and helped me further appreciate existing thoughts. I hope that it can be of help to your in your journey on the road to financial freedom.
I shouldn’t really review it myself (I wouldn’t be totally unbiased), so I’ve included some amazon reviews below:
“This is an excellent guide to personal financial management. It clearly explains in laymen’s terms financial terminology and provides great advice on how to get your own financial situation under control. It has really made a difference in how I approach managing my own money!”
“The book puts across well some simple but powerful points on how to manage your finances, and not drown in debt. It’s particularly useful to young professionals who are new to the world of managing finances, or to people who simply want to head in the right direction into their 30/40s. The book gives the basics of accounting as a foundation to step into a world where controlling your finances makes sense, and consequently, making it easier. It then continues to give relatable examples to the reader on how easy it is to go from negative wealth to positive wealth.”
“This book puts complex concepts into simple terms. There are many great examples which makes applying the rules easy to do. I’d highly recommend this book for those wanting to have better financial discipline or work towards a financial goal. Excellent read! A good asset for any kindle.”
Beyond the Bricks – Rob Dix
A new update to the list!
Rob Dix, part of the “Rob & Rob” team who make the hugely popular Property Podcast, has released a new book. I picked up a copy and I loved it. As a budding property investor (due to the long term gains available), I loved the style of this book.
Beyond the bricks gives the story of 9 individual investors and their journeys from when they started investing in property to their position today. Each story is different and shows what a wide range of paths are available in property investment and how people are successful in each.
Whilst this is not (and is clearly not designed to be) an instructional, or how-to, guide to property investment, it provides two key benefits:
1) Inspiration. There are some great stories in here and after reading each one I immediately wrote down a couple of ideas that the story had generated for me as a property investor.
2) Lessons. Whilst not a guide, there are undoubtedly lessons to be learned from this book. I love this as I personally learn best through experience and real-life examples. For instance, the majority of the stories have some sort of focus on the recent UK housing market decline in the late 00s. They range from “what a disaster” to “this is amazing”. Jonathan’s approach (one of the 9 investors) and how he used the market decline to his advantage certainly provides some concrete learning points.
Overall, this is a great book for anyone hoping to gain inspiration by understanding the process that other people have taken. It is light-hearted and informal, but equally raises some interesting points. The “examples” provided at the end of each story will also appeal to those who tend to learn from such things.
Great work, and certainly an inspiration to get myself included in “Beyond the Bricks: Part V”…