Episode #17: My Top 5 Personal Finance Books For Making and Managing Money

Most of us don’t learn anything about personal finance in school these days, we’re not taught much about it by our parents and even many of them were never taught the basics of good personal finance, and a lot of us get questionable financial advice from our peers who might not be the best source of personal financial advice either.  So where does that leave us?  Sorting through questionable articles on the internet?  Diving deeper and deeper into a wiki hole just trying to understand? Subscribing to finance podcasts with a variety of disparate episodes?  

The choices often aren’t that great, and a lot of people end up getting bad advice or developing financial misconceptions that set them back in the long run, because we don’t really have a centralized way to learn about personal finance yet.   Years ago, I turned to books.  I was handed my first personal finance book, when I was a teenager, and have since read a whole variety of them, with many different schools of thought and ideas.  

So, for today’s episode I wanted to highlight 5 of my favourite beginner personal finance books for Canadians, that I felt gave me a good starting point as a beginner, weren’t too intimidating, and provided actual actionable advice and activities rather than just theory and vague lessons.  The goal of this episode is to save you time by recommending some of the best beginner books, give you a jumping off point to start your own financial education on your own time, and to give you a quick description of each book, in the order I think you’re probably best to read them in, so that you can pick and choose what topics you need to work on, or maybe you just read all five in the order I go through here.  

1. The Wealthy Barber

You’ve probably heard me talk about this before, but I really think that one of the best beginner finance books for anyone to get started with is The Wealthy Barber by David Chiltern.  This was the very first personal finance book I ever read, I was given it as a teenager, and while some of the topics it touches on like life insurance were beyond my age at the time, it was a really good foundation to start thinking about how it’s important to actively manage and learn about your finances as young and as early as you can.  

If you’re looking for the best place to start your financial education, this is a great book because it’s not overwhelming.  It’s short, it’s told in a storytelling style, which is admittedly a bit cheesy, but it makes it really accessible and a good jumping off point if you’re not feeling very confident about this topic quite yet.  It’s pretty much free of confusing financial jargon that makes many other finance books absolutely illegible for beginners, and has a great way of distilling big finance concepts down into small, actionable, and un-intimidating tips that anyone can take and implement into their life right away.  It does a really good job of bringing home the idea of paying yourself first when it comes to retirement savings, and structuring your life finances around taking care of future you.  

A word of warning though, this book is fairly old and it does come across as dated.  Women in my audience, prepare to be slightly offended sometimes, it could use a modern day rewrite BUT the important part is that the financial advice inside is not dated.  It’s just as sound as the day it was written, and provides you with a great formula to follow to get started managing your personal finances like a real life, successful adult.  Whoah.  

2. The Millionaire Next Door

The second personal finance book I recommend picking up is called The Millionaire Next Door by Thomas Stanley.  This book is the next great stepping stone in your financial education because it will really help pull you out of the instagram fuelled consumer mindset that we all get pulled into, and show you how wealth vs perceived wealth actually look different.  It drives home the point that perceived wealth looks like expensive brand names, fancy cars, and way more square footage per person than you can possibly use, while real wealth often looks like well used vehicles, simple wardrobes, modest homes, and big bank accounts with high savings amounts just existing quietly behind the scenes.  This is a really important finance lesson for everybody to grasp while they’re young, before falling into the consumer trap that keeps many of us feeling eternally broke while sitting amidst our piles and piles of stuff.  It draws on studies of america’s most wealthy families over time, and highlights that while we think of wealth as being like kardashian ostentaius, it really revolves around habits like living below your means, and prioritizing building financial independence over displaying wealthy status symbols.  This book will absolutely set you on the right track concerning how you should think about your personal finances, and will teach you to question your purchases and financial outputs in a healthy way. 

3. You Are A Badass At Making Money

The third book I recommend picking up takes a bit of a different thread than the first two.  If you’re planning on reading all five in order this is like your ‘break’ book in the middle that will give you a rest from the more technical financial content.  I love anything that Jen Sincero touches, and I was SO excited when she came out with her book, You Are A Badass At Making Money.  And, while I don’t easily prescribe to a lot of this ‘visualization’ sort of training around money, I feel like it often misses all the hard work, and discipline, and building good habits work that goes into setting yourself up well financially, this book is a bit more ‘woo woo’ about money, but I freaking love it.  Going through each chapter, and doing the activities at the end of each chapter will help you start to look at your current financial habits honestly, identify areas where maybe you need some work, and then start creating a set of future financial goals that you can start to work towards.  It’s a nice balance to the more technical nature of these other books, and helps you step back from the nitty gritty details so you can see past the trees to the forest, to butcher a saying.  All the technical financial know-how in the world isn’t really any good without having set yourself clear goals and markets that you want to achieve, and knowing your why behind it, while at the same time, all the financial visualization exercises in the world won’t help you in the long run if you don’t know know the technical side of how to do it.  So really, this book ‘ You are a badass at making money’ should go hand in hand with any or all of these other books I’m talking about here today.

4. Smart Women Finish Rich

Now, on to the fourth book which is maybe my favourite of the bunch and that’s Smart Women Finish Rich by David Bach.  Now david bach has written a tonne of financial books, and I’m a big fan of this one because there’s a canadian specific version, which a lot of financial books are written for an american audience, and for those of us in Canada who use RRSP’s instead of 401k’s and things like that, it can get really confusing.  So, this one has a canadian edition, make sure you pick up that version if like me you’re in Canada, and there are some really good chapters written specifically for women and the situation we find ourselves in financially.  Now, it is a book written by a man, for women, and I definitely want to start chewing through some more finance books authored by women, but I actually liked his approach here.  I my experience a lot of finance books actually don’t prescribe good advice for women, for example you’ll commonly find financial advice about life insurance for women saying that if your job is a full time stay at home mom, you probably don’t need life insurance, and I read that and I’m like of course you still need freaking life insurance.  Even if you’re not drawing a salary at that point in your life, you’re still providing valuable time and contributions in childcare and homecare which your partner will have to pay a lot for if you’re not there anymore.  So, things like that, overall I find David Bach draws on his years of experience and offers pretty solid advice for women overall, and takes into consideration things like the fact that overall women live longer than men, are paid less than men, take time off to raise children and don’t get as much CPP in our retirement as men, and other factors like that that are specific to women and important to take into account when walking through our financial planning.   Also I really love this book, and I actually keep it around as a reference because he walks you through step by step instructions to complete some of the financial housekeeping tasks that he gets all his advising clients to do.  It’s really broken down in actionable steps, and makes it easy to tackle useful tasks like doing your own net worth audit and other easy to complete financial chores that will help you start to feel more confident about your grasp on your own personal financial situation.  He has a bunch of other books as well, I recommend starting with this one, even if you’re not a woman, it’s so useful.  It can feel a bit long at times, but it’s organized and broken down really well, so it’s easy to treat it as a reference book and just pick and choose topics you want to learn about as you go.

5. The Simple Path To Wealth

And finally the fifth and final book I recommend reading that will give you a really sound financial building block to stand on is called The Simple Path To Wealth by JL Collins.  Now, I’ve saved this book for number 5, and if you decide to work through this list you should save this one for last, because it goes into a bit more detail on topics like investing.  It’s by no means a complicated book, and is definitely a suitable book for anyone just getting the lay of the land, but you’ll get the most out of it if you already feel confident with concepts like paying yourself first, making a plan to save for your future and things like that. He also goes into depth on important financial concepts like, my favourite, building an F*** you fund, so if you don’t have an emergency savings fund fully set up yet, this book will continue to sell you on the concept, which as you know, I think is super important.  So, even if you just want to learn more about that, I think you’ll like getting a copy of this book!

Now there are SO many different financial books out there.  I’ve read a lot of them over the years, and I’m going to continue reading more and more.  From books like ‘think and grow rich’ which is touted as a financial classic but personally I just disliked the author so much I would never tell anyone else to read it, to detailed books about investing topics like stock picking, theres no shortage of reading material out there.  If you’re just getting started learning about personal finance though I don’t recommend just starting anywhere because it’s easy to get overwhelmed and give up when it comes to learning and processing financial information.  Remember how frustrating it was to learn long division in grade 4, but then it quickly gets better?  If you’ve never received any sort of correct financial education, it can feel a bit like that starting to learn this stuff as an adult.  But it’s actually not that big, it’s not that scary, you just have to stay away from books and teachers who use a lot of complicated financial jargon.  So, if you’re starting from zero, got nothing to lose, I personally recommend starting here, with these 5 financial books, preferably in this order if you can swing it.  

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