Increasing inflation has left a large percentage of people with financial problems. Everyone wants to learn new strategies for managing personal finances. Having a side hustle undoubtedly affects your financial growth, but knowing how to cope with financial problems can help you better. Books on personal finance are great ways to learn about and manage personal finance problems.
It is not comfortable to have less savings in your bank account. You may need money if you are undergoing surgery, an accident, or another emergency. Personal finance books are the best way to gain practical knowledge and expert views about managing financial problems.
In the USA, people have run out of savings. According to research in 2022, 56% of Americans had only $1000 or less in their accounts as savings. This amount is becoming less with time. To overcome this situation, personal finance courses are now mandatory in high schools in the USA. Students have to pass these courses to graduate.
Personal finance books are also one of the best ways to cope with inflation. But there are multiple books that contain knowledge for a specific class of people. You need to know which book suits your situation to get valuable information. Here, we have discussed five personal finance books that can help you.
Think and Grow Rich
This book was written by Napoleon Hill in 1937. This book about Napoleon moves around some millionaires of his generation, including Thomas Edison, Andrew Carnegie, Henry Ford, and others. He described the principles of those millionaires—the principles that help them grow rich.
Later, the updated version of this book was published by Arthur R. Pell, Ph.D., a famous and nationally well-known author, consultant in human resources management, and lecturer.
By keeping in mind the thoughts of Hills, Arthur cleverly interweaves the stories of previous millionaires with the current ones, including Bill Gates, Dave Thomas, and Sir John Templeton, and describes their ways to achieve their wealth. By doing so, he made this book more helpful and engaging for the new generation.
Think and Grow Rich is famous as the “Granddaddy of All Motivational Literature.” This book has also distinguished itself from others as it contains a unique question, “What makes a winner?”. Hills, as the person who asked this question and answered it from the thoughts of many millionaires, is now one of the top-ranked world winners.
The most important part of this book is that it includes the “Law of Success,” which is actually the foundation of this book, and very well-crafted summaries to educate readers.
Key Points
The important points of this book include:
- Thoughts are Very Powerful
This book explains that your thoughts determine your actions. Train your mind to think positively. Your thoughts can change your life. If you are positive, your mind will attract positive opportunities.
- Belief in Yourself
Have faith in your abilities. Be confident about your success. Confidence helps you to face and overcome problems.
- Persistence and Desire
Once you have decided to achieve a goal, now be persistent. Never give up, no matter what happens. If you work continuously, you will achieve your goals.
- Set Goals
Set clear goals and be specific for them. Having a strong focus on clear goals can help you achieve your target.
- Take Actions
Only thinking and dreaming are not enough to make your dream successful. You have to take action, perform efficiently, and do hard work to fulfill your dreams.
- Surround Yourself with Motivated People
People around you affect your nature very much. Try to surround yourself with motivated people. They will inspire you and keep you motivated to achieve your dream.
- Overcome Your Fears
Overcoming your fear is important to making your success journey persistent. Fear can stop you from growing and becoming successful.
- Learn From Your Mistakes
Your mistakes are your best teachers. Making mistakes is completely okay, and learning from them is a positive approach that can help you achieve something big.
- Help Others
Success is not about you. If you are successful, you should help others and make the world helpful for other people.
The Millionaire Next Door: The Surprising Secrets of America’s Wealthy
The Millionaire Next Door: The Surprising Secrets of America’s Wealthy is a book written by two authors, Thomas J. Stanley and William D. Danko, in 1996. This book represents a comparison of research between “UAWs” (under accumulators of wealth) and “Paws” (prodigious accumulators of wealth).
Their findings are really surprising to them and other people. Because American millionaires are more concentrated among blue-collar middle-class people as compared to white-collar communities, they came to the conclusion that white-collar communities usually waste their majority of wealth on luxuries, while middle-class families usually do savings and multiple investments.
Key Points
- Never Spend More Than Your Income
If you want to increase your net worth, keep your earnings within the limits of your income. Never spend more than your income. Otherwise, you will fail to enhance your net worth.
- Avoid a Status-Based Lifestyle
Buying expensive branded cars and other items is not a way to increase your net worth. Becoming a brand consumer is a never-ending cycle. Living in a luxurious neighborhood where everyone is living a UAW life, your net income will suffer badly.
Furthermore, writers pointed out that people who keep branded products like cars are more vulnerable to inflation.
- Only Take a Financial Risk If It is Trustworthy
According to the book, PAWs are not misers who are considered to keep their money under mattresses. Despite this, they invest money for good reasons. Even if there is a way to get a good reward in return, they invest in riskier businesses. They invest money in multiple businesses, including private businesses and the stock market.
- Generational Wealth
Generational wealth is another interesting topic that has been discussed by the writers in this book. They mentioned that children of UAWs get an impression of a luxurious life from their parents. They do not care for money waste and start living a luxurious life from their childhood.
The generational wealth factor is written in a very valuable and interesting way. The first generation that arrived in America worked hard and started a small business. The business is handed over to the second generation, who were brought up by hard-working parents. So they work consistently to grow their business.
After that, business is given to the generation that has enjoyed wealth since childhood and is lazy. They cannot keep their ancestral businesses at the peak at which they have received them. The next generation will sell the business because they have become lazy enough to handle all this. This is called generational wealth destruction.
The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness
Just like the title of the book, the entire book is very interesting. This book was written by Morgan Housel in 2020. Morgan has discussed the relationship of a human with money in a beautiful and detailed manner.
He teaches his readers to make smart financial decisions. Instead of treating the character of a human being as an ROI-optimizing machine, he talked about human psychology and how this can work in favor of a human being and against him.
Key Points
- Real-Life Experience vs. Theoretical Knowledge
“The challenge for us is that no amount of Studying or being open-minded can genuinely recreate the power of fear and uncertainty.“
Morgan Housel
The writer shared his thoughts in this book that we can learn from reading theories and past experiences of people and the changes that happen with time. But that cannot beat the importance of experience. Reading something in a book is very different from experiencing it in reality.
Therefore, be careful. You may believe that you can ride out a 30% market correction because you understand that only fools sell their stocks when the market is at its lowest, but you won’t know what to do until you go through a dip of that magnitude.
- Risks and Luck
Most of the time, people believe that their financial outcomes are completely the consequences of their decisions. But this is not true in all cases. Sometimes you make the best decision but end up being a failure. Similarly, a poor decision can also result in good outcomes. You have to accept the role of luck and risks.
Do not judge that people who are successful are due to their good decisions, and an unsuccessful person is facing his past bad decisions.
He also mentions that you should forgive yourself for making a mistake. Be kind to yourself, as the world is a very uncertain place. This is not always your fault if something goes bad.
“But more important is that as much as we recognize the role of luck in success, the role of risk means we should forgive ourselves and leave room for understanding when judging failures.”
- Earning Money vs. Keeping Money
Earning money and keeping that money are two different skills. If you want to make money, you need to take risks, work harder, and think optimistically. Once you get money, it also takes effort to keep it. Now, do not take risks and avoid being greedy to earn more money.
Always keep in mind that whatever you have can be taken from you at any moment. Your past success is not only the result of your hard work. The factor of your luck was also involved. And it is not necessary that your luck will support you all the time.
- Respect for a Branded Car is not Your Respect
People want to be admired and respected. So, they buy expensive branded products. But the reality is, that people don’t admire them but admire the object. Buying expensive products to elevate your status and standards also leads you towards more expensive products to maintain that status.
This is completely a fool’s perspective to buy such products for respect and admiration because these emotions cannot be bought. These can only be earned.
- The Difference Between Being Rich and Being Wealthy
Being rich and being wealthy are two very different things. Being rich means you have a high current income. But being wealthy means how much money you have that is not spent. Richness is a temporary thing that is difficult to maintain. But being wealthy is something that ensures your freedom in the future.
I Will Teach You to be Rich
This book was written by Ramit Sethi in 2009. He told young people to save their money. He has given actionable and practical steps for the reader to follow. In this book, the writer talks about multiple things, including saving, spending wisely, investing, and negotiating.
According to Ramit Sethi, you don’t need to be an expert to become rich. Financial management rules are very simple. If you know investment strategies, sensible banking, and conscious spending, it will be very easy for you to save money.
Furthermore, Ramit Sethi has introduced a plan of six weeks to learn to control your money. This plan is completely practical and will lead you toward your financial goals and then make you able to achieve financial independence.
Key Points
- Wise Use of Your Credits
Debts and credits can be very beneficial if used wisely. By using these money sources, you can buy those items that are out of your reach if you want to buy them in cash. If the rates on your property increase with time, then this will be a very beneficial act.
But if you spend more than you earn and fail to pay your bank installments on time, this will be a big failure because the interest rate will increase with time. If you are one who can pay maximum of money in less time, then this will be the best deal for you. So use your card wisely and increase your current net income.
- Adopt Conscious Spending
Make a conscious plan to spend on your monthly expenses and spend according to that plan. Allocate your money to spending and investment on a regular basis. Here is a plan made in the book by Ramit Sethi.
- Spend 50–65% on fixed expenses at home, including rent, bills, insurance, and payments.
- Invest 10% for long-term plans.
- Save 5–10% for long-term or short-term goals.
- Keep 20–35% for guilt-free discretionary spending.
- Two Ways to Earn
According to Ramit, there are two ways to earn. One is to earn, and the second is to control expenses. If you love something, you should invest your money in it, but it is not important. Never waste your money on that thing. But Ramit loves the more earnest way.
- Automate Your Bank Accounts
Automation of bank accounts helps you pay all your fixed expenses without wasting time on long calculations. You need only a few hours to view the expenses.
Furthermore, he also mentions that taking actions is more suggested than talking about actions. If you have opened an account for payments and you are not transferring amounts to that account, then there is no use for such impractical plans. Instead, you automate your payments to avoid jargon.
Rich Dad Poor Dad
Rich Dad, Poor Dad is one of the most-read finance books. This book was written in 1997 by Robert T. Kiyosaki. This book has impacted the world with its revolutionary ideas. Despite having multiple controversies, this book will teach multiple financial facts to its reader.
In this book, the writer shares his childhood story, in which he makes a comparison between two fathers. One is his own father, who is highly educated and doing a job. His choice is to work hard, get a high education, and then secure a good job in a company with a competitive salary.
The other one is a rich father who is actually the father of his friend. He is an entrepreneur and loves to work independently. He is not in favor of getting a high education; instead, he wants the younger generation to learn business management skills.
Key Points
- Your Focus Must be on Assets, Not Liabilities
This book explains very well the importance of assets and avoiding liabilities. Most people consider both terms to be the same. He explains the difference between both terms as follows:
- Assets are the products or things that bring money, such as stocks, real estate, and businesses.
- In contrast, liabilities are the things that drain money from your account. Liabilities include car loans, home loans, credit card debts, and more.
He further explains it, as many people think a house is an asset, but it is not. Assets are only those things that increase your money. As the house is only draining your money instead of increasing it, it’s a liability, not an asset. Commercial real estate, on which you can get rental money, will be an asset.
- Financial Education is Important
The writer has discussed in great detail in this book. According to him, financial education is very important for managing your money. It helps you decide about investment, taking risks, and money management. But school education fails to educate students about their finances and how to manage them.
He gave an example from both his dads. A highly educated dad is not financially stable and is dependent on his salary. While his other dad, who is a busniess man and financially stable, is less educated but knows more ways to manage his money effectively,.
- Jobe Can’t Make You Rich; Business Can
According to the writer’s experience, a job cannot make you rich. Because of your salary, you can only fulfill your daily needs. While in business, your purpose is to make more assets and make money.
Earing passive money is the best way to become rich, instead of relying on a single salary. Don’t work hard for others’s dreams. Work harder to make your own dreams come true.
- Invest Wisely and Learn to Invest
This is the point where the writer gives a more controversial lesson. He rejected the philosophy that getting a salary can make you wealthy. Only business is the way to become rich. Businessmen invest money to buy assets that earn money for them. He insisted on investing in businesses that do not need supervision, like rental properties.
- Work to Learn, not Earn
If you are working hard to earn a paycheck, you can never open new opportunities for yourself. But if you are working to learn, in a short period of time you will learn a skill, and there will be a lot of new opportunities in your future that can make you rich.
- Take Risks
In the world of business, risks are crucial to making something new. If you are following in the footsteps of others, you will be part of the crowd. But if you do something different, that might be risky but will open multiple new ways for you, and you will explore many new things.
He emphasizes taking calculated risks instead of taking risks without thinking. Risks can only be beneficial when taken by thinking about realities. Otherwise, it will be a waste of money and time.
Final Words
We can conclude our discussion by saying that reading finance books is really beneficial if you want to learn money management and finance. Writers write with their experience. But implementing all that knowledge into real-life practical life is not easy. You must make wise decisions.
All the books mentioned in this blog were written by the best writers with great insights about finance. These are among the most famous books in this niche. If you want to start your own business or become financially independent, you can take help from the article to determine which book is best suited for your challenge.
