How I Choose Personal Finance Books
For years, as I struggled with debt and reckless spending, the only personal finance books that appealed to me were those promising quick riches. A few Christmases ago, after listening to my financial woes, a friend mailed me a copy of Your Money or Your Life. I flipped through it half-heartedly, and then put it on the shelf. It sat there for two years before my debt burden became so overwhelming that I pulled it down and read it. I was impressed. Another friend then recommended Dave Ramsey's The Total Money Makeover. I put Ramsey's “debt snowball” method to work, and suddenly saw progress in debt elimination where I'd never been able to succeed before.
Because of these positive experiences, I made a trip to the public library where I borrowed a stack of personal finance books at random. I read a dozen or so. (This initial burst of reading inspired me to write the original get rich slowly article that led to this web site.) I now read a couple dozen personal finance books each year. I've learned to find new ones by several methods:
- Friends continue to recommend books to me, as do the readers of this site.
- When I read a good personal finance book, I check its bibliography. Miserly Moms, for example, lists dozens of titles to explore.
- I watch for reviews and recommendations in traditional media, especially magazines. (And not just personal finance magazines.)
- I note recommendations on other personal finance web sites.
- I also use Amazon — I'll browse through a series of personal finance books and then look to see what the algorithms recommend. I love to read through the Amazon comments to see what other people are saying.
I don't like every personal finance book I read. My favorites are geared at the average person. I like plain-spoken advice that deals with the everyday, not esoteric economic theory, or books that rely on gimmicks. Gimmicks smack of get rich quick schemes, even if they're based on perfectly sound advice.
I also like books that give concrete suggestions. I don't like the very popular Rich Dad, Poor Dad because it's long on sermonizing and short on actionable ideas. Contrast this with a book like The Wealthy Barber, which admits that there are varied approaches to personal finance, and recommends specific, sensible courses of action for many of them.
Many books — especially the good ones — give similar advice: pay yourself first, establish an emergency fund, don't spend more than you earn, diversify, etc. Sound personal finance is basic stuff. It's like losing weight. You can't lose twenty pounds overnight. You have to burn more calories than you consume over months or years. You can't get rich overnight, either. You have to spend less than you earn over many years. You get rich slowly.
Sorting “bad” personal finance books from “good” personal finance books is largely subjective, though. When you read any book or article, you have to take from it whatever works for you. For example, everyone says it's important to max out your IRA every year, but for some people, there are other considerations. So, while I may not like Rich Dad, Poor Dad, and while I may think The Millionaire Maker sometimes strays near “get rich quick” territory, others might find these exciting and inspirational and the true path to success.
A good personal finance book is one that gives the reader useful ideas that he or she can apply in real-life situations for long-term personal growth.