A Must Read Financial Books For You

Embarking on what some refer to as a personal finance makeover requires an improved understanding of the basic mathematics and psychology behind income generation, responsible savings, and long term investing. There are no easy quick fixes to some of life’s complex financial woes. Such pursuits of a better way of life require a self motivated determination to become more financially educated and experienced through the testimonies and learned mistakes of others.

Reading books is important because the way that information is consumed through a book is different from the way it is received online. Unlike book reading where consumption is complete and systematical, online consumption is keyword search driven, prone to interruptions, and deprived of full and proper attention. The idea that you can fully understand the nuances of the world, let alone personal finance and proper money management, in small bite size chunks without extended periods of thought is foolish.

Let us start our journey with these books:

The Millionaire Next Door by Thomas Stanley & William Danko –
If you are a shopaholic or one who is obsessed with acquiring material possessions, the core message of this book will fly at you like a punch in the face (in a good way of course). The book is quite fascinating as it profiles and surveys the characteristics of very ordinary millionaires (you won’t find hip hop stars or athletes in this book). In their research of the lives and habits of everyday millionaires, the authors of Millionaire Next Door discovered that true millionaires don’t act, eat or even dress like millionaires, as most of them blend quite well into ordinary society due to the surprisingly frugal and cost effective lives that they live. Much of their wealth was developed by simple practices of living below their means and by making smart decisions with their money.

Other than the advice that it’s important to find the right high income producing job, you won’t find any information here on how to make money or increase your cash flow. The book is extremely pro-frugality and cites saving money and delayed gratification as the pinnacle keys to accumulating wealth. The book focuses a bit too strongly on the importance of frugality in my opinion, but the testimonies and stories on the need to vigilantly resist materialistic peer pressure and fight the urge to earn and spend are eye openers for anyone who’s ever wanted to become wealthy, financially free, and possibly even become a millionaire one day.

Rich Dad Poor Dad by Robert Kiyosaki
Almost everyone and their uncle who has ever been interested in personal finance or money has either read or heard about Rich Dad Poor Dad by motivational guru Robert Kiyosaki. In all of its controversial glory, it’s become quite a lightening rod for fans and critics alike. The book uses the story (the truth of this testimony is still up for debate) of two fathers, the author’s own dad, and his best friend’s father, each who dealt with money differently – to highlight the need for a new approach to achieve financial freedom and success in today’s climate.

Personally, after having read it a few times over the years, I continue to have mixed feelings about the book. It’s an admittedly motivational and rather fascinating read, but there are very few truly practical or actionable lessons in the book to take away. There is a call to action in the book, an urge to seek out higher income producing assets, but the author is rather light on specifics and makes such efforts sound too simplistic. One thing that readers must keep in mind is that the book was written during the whole real estate bubble and housing hype era. Much of the cash flow and passive income messages in the book center around Kiyosaki’s own successes in real estate purchases and sales during the booming era. Frankly, I have reservations whether those same sentiments are still entirely relevant in today’s depressed housing market. But despite its flaws, the book remains inspirational and a rather reluctant must read. Go read it and you’ll know what I mean.

What do you think about these book reviews?