After posting my final rankings of all of the books I’ve read in the past year, several readers wrote to me saying that several of the books looked interesting, but they weren’t sure which one was right for them. I offered a few ideas, but then I realized that one final concluding post that summarized the best picks for people in different financial situations might be worthwhile.
I tried to define several common financial situations that I see my readers in, and then tried to define the best personal finance book for that situation. Not only might this be useful for you to find a book to read, but it might be useful for you when picking out a book for someone else to read, either as a gift or as a book suggestion. Hopefully, it might point you or someone you care about down a financially healthy road for the future.
If you’re drowning in debt…
The Total Money Makeover by Dave Ramsey
The advice offered in this book isn’t particularly unique – in fact, you’ll often find something like it in many personal finance books. What makes The Total Money Makeover really stand out from the crowd, particularly for people in a deep debt situation, is the passion and fire that Ramsey brings to the table.
Ramsey doesn’t just bring a financial plan to the table and expect you to follow it. He breaks it down to the point where anyone can take that first step, and with the fire of a preacher at a Pentecostal revival, he demands that you get up out of that chair and take that first step. His tone is fervent and strong and urgent, just the right mix needed for a book aimed at people who have dug themselves into a deep financial pit.
If your finances are in order and you’re just beginning to invest…
The Bogleheads’ Guide to Investing by Taylor Larimore, Mel Lindauer, Michael LeBoeuf, and John C. Bogle
There are a mountain of investing books out there, but very few present an organized, in-depth, well-explained philosophy of conservative investing, and none that I have read do it better than The Bogleheads’ Guide to Investing. It presents a cohesive philosophy of investing that spreads from the very basics of how to manage your finances and your life to the intricacies of how exactly to invest in stocks, bonds, and other commodities.
Very few books period lay out such a complete vision as this one, and almost none are written to be accessible to the beginning investor. This book does not throw you into the deep end of the swimming pool, nor does it present a risky philosophy in any way. It’s basically the perfect way for someone to get their feet wet in investing, figuring out their risk tolerance and learning along the way. Nor does it require a lot of research – most of the answers you need will come from this book and the suggested online resources. In short, this is the strongest book for beginning investors I’ve yet read.
If you’re dissatisfied with your job or looking at a career change…
What Color Is Your Parachute? by Richard Nelson Bolles
There are a lot of job hunting books out there, but most of them just focus on how to package yourself to get a job and how to find a job you want. While that information is useful, it doesn’t really address deeper questions, like what exactly should you be doing with your professional life.
What Color Is Your Parachute? starts off as one of those ordinary job hunting books, but it goes that extra step. Through a series of really insightful self-analysis techniques, the book guides you to where you really should be with your professional life, indicating the professional choices that really fulfill you by maximizing your talents and your passion. It’s incredibly readable and the exercises are quite slick – in fact, reading it again recently and trying the exercises pointed me in the direction of being a writer.
If you’re incredibly busy and don’t have time to worry about personal finance…
Smart and Simple Financial Strategies for Busy People by Jane Bryant Quinn
There are a lot of young professionals out there who are quite cavalier with their money. They work hard and they play hard, not worrying too much about getting their financial houses straight. Most of the time, these people are bright enough to figure out that they’re making mistakes if life slaps them hard, but for the most part they don’t really have time to obsess over money management.
That description just about perfectly matches me two or three years ago. Fortunately, life did slap me pretty hard on the face and woke me up, but for others, a sound dollop of financial advice that can be applied very quickly and efficiently to ensure a good financial future might be in order. Those are exactly the people that Quinn is speaking to here, and the advice is really spot-on: automate everything you can, give yourself a cushion, and plan for your future.
If you don’t know how to talk to your significant other or your parents about money…
It Pays to Talk by Carrie Schwab-Pomerantz and Charles Schwab
A good number of personal finance books touch on issues of how to talk about finances with the people closest to you, but it’s really not an easy thing to do, especially for someone like me who is a bit of an introvert and has a hard time just sitting down and opening up with people. It Pays to Talk is the one book that really changed that.
Instead of treating this challenge as just a small sidebar to personal finance, this book puts it front and center, providing tons of techniques for opening the doors of discussion about money with the people you care about the most. It was the advice in this book that finally convinced me to close my eyes, take a deep breath, and open up some doors of conversation that were a bit uncomfortable, but really needed to be opened.
If you’re an expectant parent or the parent of an infant or toddler-aged child…
Born to Buy by Juliet Schor
When we first discovered that my wife was pregnant with our first child, I threw myself into reading books of all kinds on parenting and other such topics. After the entire pregnancy, only two really stood out from the pack – Born to Buy and The Read-Aloud Handbook – and Born to Buy was the one that opened my eyes the most.
We live in a consumer culture, and to believe that such culture doesn’t begin targeting kids even in their infant stages is flat-out wrong. Schor’s book is extremely well researched and incredibly thorough, laying out the countless ways that marketing can affect our children almost as soon as they’re born. Even more importantly, the book offers a lot of suggestions on how to minimize the impact of all of this marketing on our children – and I’ve started applying almost all of it with my own children.
If you’re the parent of an older child (grade school age)…
The First National Bank of Dad by David Owen
As my son has grown older, though, he has begun to interact with money, saving pocket change up so he can buy new toy cars at the store. This opens up a whole new can of worms: should we give him an allowance? Should that allowance be tied to chores around the house? How do I teach him to save some of his money, or to give some of that money to charity? How should we handle birthday money?
The First National Bank of Dad handles these questions in a frank and incredibly readable way and draws some interesting conclusions as well. The whole “bank of dad” concept is that he functions as a bank for his children, offering them very nice interest rates on the money they choose to save so that they can quickly learn about the benefits of saving, but the book goes much further than that, examining many specific issues that come up throughout childhood. I read this book twice and it’s about to become a permanent fixture on my bookshelf.
If you’re about to graduate college or have recently graduated…
Automatic Wealth for Grads by Michael Masterson
This is actually a very good book for a very, very specific target audience. It’s utterly perfect for a recent college graduate just entering the workforce, as it covers workplace issues and basic personal finance for a person receiving a decent salary for the first time. In some ways, that’s the problem – it hits the target audience so well that most others that read it won’t get too much out of it.
This creates an interesting situation, where I strongly recommend the book to anyone who is within a few years of their college graduation but strongly do not recommend it to anyone else because the ideas will be somewhat confusing. In fact, this has pretty much become my default “college graduation” gift for college graduates that I know (often slipping a bit of cash inside the front cover). Why? The advice in here is really stuff that they’ll find useful and that they need to know to take those first steps into real adult life from the college background that has hopefully set them up for success.
If you are a teenager or early twentysomething completely lost when it comes to finances…
The Money Book for the Young, Fabulous, and Broke by Suze Orman
It is rather challenging to reach people under twenty five with personal finance issues because, frankly, a lot of them could care less. They’re far more interested in spending money, enjoying college, and doing all of the typical stuff that a college-age person does. Orman, for all of the criticism levied at her, does a very good job here of understanding the reality of this situation and instead of writing another rather dry personal finance book, she pretty much directly targets people in this stage of their lives.
What sets it apart? First, it doesn’t demand major changes of the reader. Orman knows, quite sensibly, that most people in that age range are inundated with marketing and choices and a very busy social lifestyle, and thus doesn’t demand that the person starts making huge financial changes when the reality is that most of them won’t. Second, Orman packs away any condescension in her tone for this book, realizing quite correctly that it’s largely a waste of time for an older adult to be condescending to a young adult about financial issues unless you’re begging for rejection. Third, most of the book is in a question-and-answer format that’s very easy to pick up and read bits and pieces of. This adds up to something that’s actually readable and palatable for a person just beginning to get glimpses of the financial realities of adulthood. I have a fifteen year old niece who has a pretty lucrative babysitting business, a level head, and a penchant for clothes – this is pretty much the only personal finance book I would suggest for her.
If you’re trying to stretch a family’s budget…
America’s Cheapest Family Gets You Right on the Money by Steve and Annette Economides
One of the most interesting transformations that happens when you move from being single to being married, then to being a family, is the radical changes that happen to your financial situation. You find that you still spend hand over fist, but that the stuff you spend on tends to change drastically and quite often there are no training wheels, as I discovered when I had my first child. America’s Cheapest Family Gets You Right on the Money is the perfect book for that adjustment when you realize that your old habits are no longer cutting it.
This book is almost a beginner’s guide to frugality, walking through applying basic frugality techniques to many different avenues of life without abandoning a quality lifestyle. Because of that approach, the information in this book is both palatable and useful to any family situation, and it can be particularly helpful in those situations where the budget may be a bit on the tight side.
If you need to stretch a family budget even more…
The Complete Tightwad Gazette by Amy Daczyzyn
If you’ve mastered basic frugality but are still mining for additional ways to save money, The Complete Tightwad Gazette is the mother lode. It’s almost 1,000 pages full of short articles on specific frugality topics, ranging from the highly useful to the extreme.
What sets this book apart is the ability to pick up and go at any moment. You can literally flip it open to any page and start reading, because a new article starts on nearly every page. Because of that, it’s a great way to burn a few minutes learning about frugal issues. The fact that Amy Daczyzyn is a very good writer, with a very down-to-earth and breezy tone, makes this book even more of a treat. In fact, it’s good enough that I’ve witnessed this book as a bathroom reader in multiple houses – so take that for what you will.
If you have money and want easy recipes that work for exactly how to invest…
The Lazy Person’s Guide to Investing by Paul Farrelll
The Lazy Person’s Guide to Investing is basically just a collection of individual portfolios of mutual funds that different people have constructed, which sounds incredibly boring at first glance. Two things keep it from being boring, though: Farrell has a great tone as a writer, full of humor and self-deprecation, and the explanations of the portfolios are interesting and make a great deal of sense.
If you have some money to invest and just want a recipe for how to invest it and then just sit back and not worry about it, this is the book to read. You’ll come to find very quickly that building an investment portfolio that you don’t have to think about is actually quite easy and isn’t laden with fees as it would be if you headed down to your local brokerage. Farrell largely sticks to low-cost index funds for his investments, making choices to ensure that your money is in diverse places.
Hopefully, these options will point you towards a personal finance book appropriate for you to curl up with this winter!