“You can’t expect to have any savings in the first two years you start earning.”
This is something I lived by, and the exact piece of advice I gave to my college junior when she asked me for personal finance advice. No wonder my early twenties were spent living from paycheck to paycheck.
Looking back, I realize this wasn’t the best advice. Far from it.
I now know being money-smart has four elements:
- Spending money to make your family happy,
- having enough savings for retirement,
- traveling the world, and
- establishing multiple sources of income.
If you want to do all these, educating yourself about taxes and finance is the first step.
It took me several years of experiments to figure out my personal finance goals and plans. But reading a few books would have saved me a few thousand dollars. To make sure you don’t make the same mistakes as I did, I’ve compiled the five best books I’ve read on personal finance in this article. Read on to become money-smart and a master investor.
1. A Random Walk Down Wall Street by Burton G. Malkiel
The stock market is highly volatile and can make people go from rags to riches if you understand the system. Coming from a master investor himself, A Random Walk Down Wall Street is a complete guide to starting your personal finance journey. It discusses tax management, Bitcoin, factor investing, risk parity, and much more.
A Random Walk Down Wall Street gives insights into real estate, home ownership, and how to handle assets like gold. You’ll feel confident and ready to jump into investing after you read this book.
Financial knowledge is the key to build wealth and escape the matrix of poverty. A Random Walk Down Wall Street by Burton G. Malkiel acted as a guidebook for me when I started investing. It helped me understand why investing early and saving regularly is important to build wealth. I’d highly recommend this book if you’re planning an early retirement.
My favorite quotes from A Random Walk Down Wall Street by Burton G. Malkiel
“Never buy anything from someone who is out of breath.”
“It is not hard to make money in the market. What is hard to avoid is the alluring temptation to throw your money away on short, get-rich-quick speculative binges. It is an obvious lesson, but one frequently ignored.”
“Put time on your side. Start saving early and save regularly. Live modestly and don’t touch the money that’s been set aside.”
2. The Snowball by Alice Schroeder
The best way to learn about investing and finances is to read about the real heroes in the finance market. Warren Buffett’s life story, The Snowball by Alice Schroeder, inspired me to learn about finances.
The book discusses in detail the business icon’s values, honesty, struggles, and unparalleled wisdom about life. His life story shows how amazing a human he was, along with a competent businessman. He had multifaceted roles as a CEO, board member, essayist, investor, and a wonderful speaker. This book is a gem to know about Buffett’s investing style, philosophy, personal life, and childhood.
The Snowball is close to my heart and I reread it many times to understand the principles of the greatest businessman of all times. Buffet’s story taught me that the biggest wealth you can create is by making a positive change in people’s lives. I live by that principle and it has always inspired me to dream big. I recommend everyone to read this book at least once to understand what goes on in the mind of a great investor.
My favorite quotes from The Snowball by Alice Schroeder
“Time is the friend of the wonderful business, the enemy of the mediocre.”
“Intensity is the price of excellence.”
3. The Barefoot Investor by Scott Pape
The Barefoot Investor by Scott Pape is a guide to
- excelling in personal finances,
- managing debt,
- making an excellent retirement plan, and
- living your life happily by enjoying the present.
This book has the wisdom of a trusted Australian personal finance expert and his inspiring story of becoming wealthy. It suggests various methods to take control of your finances in three phases: planting, growing, and harvesting your money.
My key takeaway from this book was that money is fluid. You should understand how to move it rather than keeping it stagnant in a bank account. This book has easy-to-implement advice that had a massive impact on my personal finance journey. Definitely give it a read if you want to boost your financial knowledge.
My favorite quotes from The Barefoot Investor by Scott Pape
“Success isn’t found in the eyes of others: buying things you don’t need, with money you don’t have, to impress people you won’t know in 20 years’ time.”
“Baumeister says that people who succeed don’t have more willpower than you: they just develop better daily routines and habits, which after a while become automatic and require less thoughtless conscious energy.”
4. The Intelligent Investor by Benjamin Graham
Do you know what the most common mistake investors make, especially beginners? They run after crazy profits for the short term and end up losing more.
So, before starting to invest your money, it’s better to educate yourself on how to make a long-term profit. The Intelligent Investor is one of my favorite books on finance that helps you understand the fundamentals of investing.
An intelligent investor will always abide by the three principles of investing, which are:
- analysis for long-term profits,
- protection from heavy losses, and
- not running after crazy profits in the short term.
The market will always misguide you if you look for short-term profits.
After reading The Intelligent Investor by Benjamin Graham, I understand why this book was widely praised by Warren Buffett himself. It says that if you value investing, then you’ll learn the strategies that can save you from making financial blunders.
My favorite quotes from The Intelligent Investor by Benjamin Graham
“The intelligent investor is a realist who sells to optimists and buys from pessimists.”
“Those who do not remember the past are condemned to repeat it.”
“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”
5. I Will Teach You To Be Rich by Ramit Sethi
After listening to Ramit Sethi’s podcast on building wealth, I was eager to read this book. It turned out to be the best decision ever.
We all want to have a rich lifestyle and earn well but don’t know how to grow money on autopilot. I Will Teach You To Be Rich by Ramit Sethi teaches how to find the right companies for investing and managing debt in the fastest way possible.
You’ll learn about creating an automated wealth-growing system so your money goes to the right places. The book shares meaningful insights about saving money and buying assets. You’ll learn about the tools that can help you create a simple and effective investment strategy.
I Will Teach You To Be Rich by Ramit Sethi helped me understand that money management doesn’t mean starving yourself of simple buys that make you happy. Instead, look for more ways to earn. Financial problems come only when you don’t know how to direct your hard-earned money. This is an amazing book with a down-to-earth approach to saving money, so definitely give it a read.
My favorite quotes from I Will Teach You To Be Rich by Ramit Sethi
“Conscious spending isn’t about cutting your spending on everything. That approach wouldn’t last two days. It is, quite simply, about choosing the things you love enough to spend extravagantly on — and then cutting costs mercilessly on the things you don’t love.”
“Managing your finances well is a lot like developing a strong personal productivity system: You keep track of everything without making it your full-time job; you set goals; you break them down into small bite-size tasks; you save yourself time by automating manual work; and you spend your time and brainpower focusing on the big picture. That’s what I try to do with my time and money.”
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