My 5 Favourite Books On Personal Finance

Written on August 5, 2007 by Tezza

It is my fervent belief that truth stands the test of time. That cannot be said about the plethora of titles to be found on the topic of wealth, riches and personal finances. Many titles I’ve found popping up over the years would have been better served as coffee coasters or door stops. To help you save time and money buying books that over deliver on false promises here are my 5 favourite books on personal finance. Many of these titles have been around for some time and I am a firm believer that old classics are timeless.

1. Rich Dad Poor Dad by Robert T. Kiyosaki
“Most people are poor because when it comes to investing, the world is filled with Chicken Littles running around yelling, ‘The sky is falling. The sky is falling.” – Robert Kiyosaki

I’ve put this title in first position not because it is the most profound book on the topic of personal finance. It is not. Rather it was the first book that I ever picked up on anything related to personal finance or personal development. It was integral in inspiring my financial journey.

Rich Dad Poor Dad is a story of how Kiyosaki grew up learning from his real dad (the poor dad), and his friend Michael’s dad (the rich dad). Poor dad was well educated and had a good job, but retired poor as he did not learn how to effectively grow his wealth. Rich dad was not well educated academically, but learned how to use money to build a great fortune through owning businesses and investing. Using the two dads, Kiyosaki espouses his lessons on investing and money through anecdotal stories.

The book does a great job motivating and inspiring it’s readers to think more about money. It’s light hearted and entertaining nature helps make investing and money seem interesting. The fact that it is a little light on useful instructional content is not a reason to be critical but rather think of this book as a starting point to your financial education. You won’t find any step by step instructional guide to wealth and riches here, so if you are well on the path to financial independence then another book might be better served. If, however, you are struggling to make ends meet, have bills you can’t pay on time and don’t have any savings then this is a great place to start.

2. The Richest Man in Babylon by George S. Clason
“Gold cometh gladly and in increasing quantities to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.” George S. Clason

This is one of my favourite books on personal finance because it is a no nonsense approach to money. First published in 1926 it has gone on to sell more than two million copies. I don’t know about you but this makes it a timeless classic. Don’t be fooled by it’s small size, or it’s simplicity in it’s advice. This is a powerful book full of age old wisdom on saving and dealing with money that if you but only heed its advice you will surely benefit greatly from it. It is practical and it’s a wonder we don’t teach this to the younger generations today who’ve embraced the consumer credit mentality.

Clason uses well written parables to instruct us on the ways to acquire money, keep it, save it and grow it. The book is thin so you can read it in a sitting. When I first came across this book I read a testimonial in Amazon that one of the fan’s of the book reads it cover to cover once a year and still finds gems to implement that year.

3. Think and Grow Rich by Napoleon Hill
Every person who wins in any undertaking must be willing to cut all sources of retreat. Only by doing so can one be sure of maintaining that state of mind known as a burning desire to win - essential to success. – Napolean Hill

This is one book that should be in anyone’s personal library that has an earnest interest in achieving wealth and prosperity. Napoleon Hill under the commission of one of the wealthiest men of his time Andrew Carnegie invested over 20 years of his life to create this condensed book packed with his observations and lessons from some of the most successful men of their period. Hill interviewed 504 people, including the likes of Ford, Wrigley, Wanamaker, Eastman, Rockefeller, Edison, Woolworth, Darrow, Burbank, Morgan, Firestone, and three United States Presidents.

First published in 1937, Think and Grow Rich teaches the 13 steps to riches. It gives you clear guidelines in how to set goals and reach them. You are shown how you can realise your highest potential, and succeed in anything you set your mind to. If you enjoy Think and Grow Rich you might want to read his more comprehensive book called “The Law of Success”.

4. The Millionaire Next Door by Thomas J. Stanley and William D. Danko
“If you’re not yet wealthy, but want to be some day, never purchase a home that requires a mortgage more than twice your annual income.” – Stanley and Danko

I detest fluff and hype, so books like The Millionaire Next Door is right up my alley. Stanley and Danko dispel the myth of what it takes to be a millionaire which is supported by their extensive study of US millionaires. They present their findings with statistical soundness and a level headedness that is a refreshing change.

A common thread that runs through the book is that people that are destined to become extremely wealthy are very careful about using credit and tend to save for things before they buy them. Doesn’t that conflict with most people’s current philosophy on money.

The millionaires researched in the book believe that financial independence is more important than displaying high social status. In fact most people who displayed the trappings of wealth were generally found to have a low net worth and high debt levels. Millionaires were generally conservative people not fond of taking huge risks, and valued security above all else. So if you are sick and tired of the media and self proclaimed experts trying to sell you the millionaire lifestyle that keeps you in the bondage of debt go ahead, but if you want to live a truly wealthy life then this is a book worth reading.

5. The One Minute Millionaire by Mark Victor Hansen and Robert Allen
“You control your future, your destiny. What you think about comes about. By recording your dreams and goals on paper, you set in motion the process of becoming the person you most want to be. Put your future in good hands - your own.” - Mark Victor Hansen

I know the title sounds a little cheesy but the book is actually very inspiring. Before you think this is a get rich quick book, it isn’t. It doesn’t tell you that you can make a million dollars in one minute. Rather these two international best selling authors are on a mission according to their book to help inspire and create a million millionaires. The book is therefore rich with both advice and story telling.

The book is split in two; the right-side pages tell the (fictional) story of a woman who loses everything and has to earn $1 million in 90 days. While fictional the story is intense and dramatic. The left-side pages contain the practical information used to teach the lessons presented by the fictional story.

At the end of the day you can read all the financial books but if you are going to change your circumstances you are going to need to put in the effort. The book will give you the inspiration but you’ll have to put the perspiration in.

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Posted in Must Have Books, Personal Finance