If you’re anything like I used to be, the thought of reading a book on finance will make you want to run and hide. A lot of people think they’ll be dry and boring and not very easy to understand unless you have a degree in mathematics. But let me tell you – that’s not the case at all.
I was very pleasantly surprised when I picked up my first finance book and I learned a huge amount. Don’t get me wrong – there are some really awful ones out there but I have read my fair share and am able to share with you my personal favourites.
We were able to pay off a whopping £21k of debt in just 8 months through very careful budgeting and working our socks off. But educating myself further in personal finance and investing is what has kept us debt-free and able to build a decent amount of savings.
Can I teach myself personal finance?
Absolutely! My husband and I educated ourselves by reading book after book on personal finance and we were able to totally transform our financial situation.
Learning basic finance should start at school. We should be taught how to manage money and debt early on in life. We should be taught how important it is to live within our means and how to invest. All of this should be taught at school, but it isn’t. But that doesn’t mean that we should never learn it.
Often, we learn personal finance from our parents. The problem is that if our parents get it wrong, we get it wrong too.
I often look back and wish that my parents had instilled into me how important it was to save and invest regularly or that overpaying on my mortgage would save me thousands upon thousands of pounds. But they learned their bad habits from their parents and didn’t know any better.
It’s a vicious cycle that needs to be broken. And you can break the cycle by educating yourself and passing your knowledge down to your children.
How will reading books on persoanl finance help me?
You will improve your financial literacy and this will help to improve your financial situation. Once you gain an understanding of personal finance, you will be keen to implement changes into your life as you know how important it is. For example, you will realise that there is a way to escape the paycheck-to-paycheck lifestyle and you will know exactly what you need to do to escape!
You will improve your relationship with money. You will be able to master control over your money instead of your money (or lack of it) controlling you. This will make more a happier, stress-free life.
Aren’t all books on personal finance the same?
Well, yes and no. All will contain the basics, such as how to create a budget, how to tackle debt, how to cut back, etc. But each author will have their own philosophy and will put their own spin on things.
For example, finance guru, Dave Ramsey offers very practical ways to tackle your financial issues. In fact, he sets it all out in 7 steps and you work your way through those steps. He insists that all debt, aside from your mortgage, should be paid off before you even think about investing. In contrast, Robert Kiyosaki, author of Rich Dad Poor Dad advocates the importance of building wealth through investing in assets.
You should aim to read a wide range of books. This will increase your financial knowledge as well as allowing you to get a feel for which ‘way’ is right for you.
The best books for beginners
There are thousands upon thousands of finance books out there. But don’t despair! I have done all of the trawling through them and have read hundreds of finance books and have listed my personal favourites. These books have 100% helped me and my family to pay off huge amounts of debt and build healthy savings.
1. Your Money or your Life
The basis of Your Money or Your Life is basically that you can choose making money or living your life.
In this book, Vicki Robin shows you how to gain control of your money and finally begin to make a life, rather than just make a living.
My biggest takeaway from this book was that every single thing I buy costs me time. By calculating purchases in what it costs us in time and not in money it makes me
2. The Total Money Makeover by Dave Ramsey
In his book, Total Money Makeover, Dave Ramsey lays out a plan for freeing yourself from the clutches of debt and money worries by changing your behaviour: following a monthly budget, only buying what you can afford, snowballing your debt repayments, and investing. He intended this book to be used by everyone from those on minimum wage to those earning hundreds of thousands of pounds each year.
3. The Millionaire Next Door
The authors of this book researched the difference between millionaires and non-millionaires in America. From this research, they identified seven common traits that came up again and again among those who had accumulated wealth. They also found that millionaires aren’t typically living in mansions and driving around in flash cars. They are, in fact, likely to be living next door and driving around in a modest car!
This book is a complete eye-opener and highlights just how misguided we can be when it comes to identifying what makes a millionaire.
4. I Will Teach you to be Rich
This book teaches you that being rich isn’t about never spending your money. It’s not about tracking every last penny. Instead, spend extravagently on the things you love and invest the rest in the right places. In this book, Ramit Sethi shows you how to get your fianances into ship-shape condition. Everything from crushing debt to negotiating a pay rise. He teaches you how to choose long-term investments and the best bank accounts. In short, this book will teach you how to set up an automatic payment system so that you can get on with your life.
5. Rich Dad Poor Dad
Rich Dad Poor Dad is one of the most popular personal finance books of all time. Robert. T. Kiyosaki has changed the way that millions of people around the world think about money. Instead of taking the conventional route of leaving school, getting a job, saving, buying a house etc, Kiyosaki believes our focus should be on shedding our liabilities (things that cost us money) in favour of gaining assets (things that make us money, such as buy-to-let properties). In essence, he says that instead of working for money, your money should work for you. He goes on to explain why schools will never teach our children what they really need to know about personal finance and how we need to step up and show them how to utilise money so that it works for us.
6. The Simple Path to Wealth
In his book, The Simple Path to Wealth, Collins talks a lot about financial freedom and the importance of having ‘F- you money’, and how we should all be striving towards this. The book focuses on how to have a simple investment strategy and looks at how this strategy changes at different points in our lives. For example, it is wise to reduce risk as we get older and adjust our investments accordingly.
A great read for those just starting out on their investing journey and also for those who have been in the game a little longer.
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