5 Personal Finance Books That You Should Read
These books serve five different, but overlapping, financial needs
They serve five different, but overlapping, financial needs. All are available in paper or ebook form, so if you’re under 30, you can buy the ebook and pretend you’re reading a really long blog post. (Kidding! I totally read books in my 20s. That is, until blogs were invented.)
For people starting out.
I Will Teach You to Be Rich, by Ramit Sethi.
Yes, that title comes on strong, and so does Sethi himself. Like a low-carb diet crusader, the guy refuses to sugarcoat anything.
But he’s funny and his advice is superb: automate your accounts, save well and spend the rest without guilt, and invest using low-cost index funds.
This book makes a great gift for a college grad (or yourself).
Disclaimer: I read this book three years ago and I’m still not rich. Hmpf.
For families, or anyone who doesn’t want to go broke.
All Your Worth, by Elizabeth Warren and Amelia Warren Tyagi.
Yes, one of the authors of this book is now better known for holding a different job. Regardless of your political orientation, however, this book explains better than any other how to stay out of financial trouble.
All Your Worth has been hugely influential among financial writers, so even if you haven’t read it, you’ve probably heard a version of its key idea, the “Balanced Money Formula.”
It goes like this: of your take-home pay, 50% should go to to needs, 30% to wants, and 20% to savings.
When people who seem to have plenty of money get into serious money trouble (and I bet you know more than one person who fits this description), we blame it on luxury shopping sprees, but the problem nearly always arises from out-of-control spending on needs—especially housing and cars.
Fixing that kind of problem requires making serious tradeoffs, of course, but this book can help you figure out how to get on a sustainable course.
For parents who want their kids to go to college.
Debt-Free U, by Zac Bissonnette.
This is not another book about navigating the financial aid formula or applying for obscure scholarships. It’s a warning: Choosing an unaffordable college can ruin a student’s financial future—and drag his parents’ finances down with it.
Here’s Bissonnette’s argument in a nutshell (I wrote about it at length in this column): Rich families can afford any college; poor families will qualify for lots of financial aid at most colleges.
For everyone else, there are only two types of colleges worth considering: in-state public universities (subsidized by the state) and elite, highly selective colleges and universities (which are very generous with financial aid).
For a middle-class family, sending your kid to a mid-tier liberal arts college or out-of-state public university because they fell in love with the campus is as financially responsible as buying them a Ferrari because the seats are comfortable.
Bissonette’s book tells the whole story. Read it.