“Books are the quietest and most constant of friends; they are the most accessible and wisest of counselors, and the most patient of teachers.”–Charles W. Eliot.
As the holiday buying season gets underway, I thought I’d share those personal finance and investing books that have been my best “friends,” “counselors,” and “teachers.” If followed, these books have the power to change your financial life and the financial life of somebody you know.
For the young or new investor, I cannot recommend a better book. The Bogleheads’ Guide to Investing explains in an easy to understand way investing, mutual funds, bond funds, asset allocation, taxes and more. I bought this book for my sister earlier this year. With no investing experience, she said the book was very easy to read. She’s also now regularly investing in her 401(k)! If you or somebody you know is at all intimidated about investing, this book is a must read.
If you or somebody you know are raising children, this book is a must. I struggle to find the best approach to teaching my children about money. Do you pay an allowance, or not? Do you tie allowance to chores? How do you teach your children to be responsible with money? Raising Money Smart Kids (Kiplinger’s Personal Finance) answers these and other questions. The book is easy to read and provides a lot of great ideas. With two teenagers, I can’t stress the importance of teaching children at a young age the right attitudes about money, and this book can help.
Whether you’re just starting you out or are dissatisfied with your career, What Color Is Your Parachute? (2011) can help you determine what line of work you’d most enjoy. What Color Is Your Parachute Workbook: How to Create a Picture of Your Ideal Job or Next Career is a companion workbook that is worth considering, too. Both books can also help you if you’ve lost a job or our thinking of a career change.
For the not so new investor, The Intelligent Asset Allocator is a great book to learn some of the more advanced concepts of asset allocation. If you’ve read this book, two good alternatives are The Four Pillars of Investing and All About Asset Allocation. So once you’ve read The Bogleheads’ Guide to Investing and are looking for more advanced materials, these books are the best of the best.
Your Money or Your Life does a great job of describing how our lives and money should interact. This book will definitely give you a new perspective on money and work. A note of caution, however. The book includes chapters on inflation and investing that are truly misguided. But the rest of the book is worth reading, particularly if you or somebody you know struggle to control your spending.
This book can be a real paradigm shift if you envision most millionaires as driving expensive cars and living in mansions. The Millionaire Next Door describes how most self-made millionaires actually live. I’ll give you a hint–they live modestly. I do think some of the millionaires described in this book go to an extreme that most of us would find unacceptable. But there are some important lessons to be learned here that can help us achieve financial independence.
Written by Kimberly Palmer of U.S. News & World Report fame, Generation Earn is a recently published book that is ideal for young adults. I’m working on a full review of the book know, but one great aspect of this book include real life examples of how young adults have managed their financial lives. It’s helpful to hear about the mistakes and successes that others have experienced. The book also takes some controversial approaches to certain aspects of money, particularly debt. Rather than just falling in line with traditional finance books, Generation Earn takes a fresh approach to money issues that have plagued people for generations.
If you have read other great personal finance or investing books, please share them in the comments below.
Published or updated November 12, 2010.