As I was arranging the numerous personal finance books I've accumulated over the years, I could not help but wonder how I can put everything together in such a tiny little space. Then I asked myself, if I had a very small book shelf that can accomodate only 10 of these books, which books would I choose? I had to think really hard because I love reading books and I've learned a great deal about life and money through ALL of them. These 10 books are special in that they have completely altered the way I view money and life! They have inspired me to learn more about money and pursuit financial freedom! May these same books help you achieve your financial dreams!
Here are Rich Money Habits' top 10 best personal finance books of all time!
# 10. 8 Secrets of the Truly Rich by Bo Sanchez
This one is special because it's written by a preacher – and a famous Filipino preacher at that! Bo Sanchez is a best-selling author of inspirational books in the Philippines. This is his first book that openly talks about money, business and investing.
What I particularly like about this book, is that it tackles one of the most critical obstacles in making money – that is, how to reconcile money and religion. Living in the only predominately Catholic country in Asia, it is very important for me to align what I believe in when it's on religion or money. Otherwise, I'll just be confused and end up going now.
The book is full of stories on how daily money habits make you rich or poor. It describes the most common perceptions we have about money. We were taught that money is the root of all evil. When we watch our favorite TV shows, rich people are often portrayed as greedy. They only got rich through "drug" dealing or some other "illegal" means. Due to this stereotyping, some us unconsciously do not want to be rich! Who would want to have the "bad" guy in our own soap opera called life ?! 🙂
As a result, there is conflict inside of us. Some of our internal dialogs are
"I want to be rich … BUT not so rich that my friends would hate me and I would no longer have friends." err … who wants to be loner ?! 🙂
Or the most common,
"I want to be rich … and I'm so desperate the only way for me to get rich is by winning a million dollars through lottery."
The great tragedy is never realizing that you do not have to be a crook, or be greedy, or become unfriendly, or win a lotto ticket to be rich – you only need to build rich money habits!
# 9. Multiple Streams of Income by Robert G. Allen
This is one of the books I bought when I was in the US. Since I love reading personal finance books, I ordered a bunch of them online. I was able to get them cheaper because I looked under the "used" books section. Surprisingly, most of them are in reliably good condition and look almost new!
The book was my first exposure to having multiple streams of income. For someone who worked as an employee most of his life, I thought I could only earn from one stream of income – my job! I realized having only one stream of income is not a very good idea because there's also only one way money can come to me – through my paycheck!
Having multiple streams of income is not necessarily having a second job, or even a third! Multiple streams of income building systems so that money can flow through your life. It means, investing both your time and money to learn how to build those systems.
One way could be through real estate investments where you get a "stream" of income from the monthly rental of your tenants. Another "stream" could be getting portfolio income like "dividends" or "interests" from your stocks or bonds investments. And yet another "stream" could be from royalties you receive from publishing a book or a music recording if you're a singer. Having a LOT of "streams" where money can come to you is certainly better than justing on your "job" to make money. The challenge is how to utilize what you have like time, skills, and money to setup these streams of income.
# 8. Secrets of the Millionaire Mind by T. Harv Eker
The great thing about the book is it makes you realize what money habits you have developed since the day you were born. It brings out those subconscious thoughts that are hindering you from achieving financial success. Some of the internal dialogs with yourself could be.
"I am not good enough. I'll never be amount to anything financially."
Or you might say
"I'm poor because my parents are poor … and my grandmother is poor … and my great grandmother is poor … so I will always be poor …"
You might not be saying it out loud. You might only be thinking about it. Worse, you might not even be aware of it. And you wonder why you'll not get anywhere. As T. Harv Eker aptly put it
"… if your subconscious 'financial blueprint' is not 'set' for success, nothing you learn, nothing you know and nothing you do will make much of a difference."
# 7. The 4-Hour Workweek by Timothy Ferriss
The book speaks about the "New Rich", a group of people who have the time, money and mobility to spend only 4 hours a week to generate money and live the life they want. The rest of their time is spent on things that love to do like dancing in Buenos Aires, scuba diving in Panama or basking in the Hawaiian sun.
Who would not want to spend only 4 hours of his time working instead of the usual 40 hours a week? Who would not want to have the luxury of time to do the things you really love? Who would not want to take a very long vacation in the beaches of Hawaii while your business is taken care of and money is still coming in?
For employees, it offers practical tips on how to negotiate with your boss for a work-at-home arrangement. It also provides ideas on how to plan your own "mini" retirements so the money is still coming in, without you around. It even discusses how you can "outsource" your life!
The 4-hour workweek is easy to read. The ideas are presented in a simple and uncomplicated manner that you think you're reading a comic book. The book is conversational and funny. Reading it is like speaking with the author face to face. You might even find yourself occasionally laughing at his jokes. (I know I have) 🙂
# 6. Rule # 1 by Phil Town
I picked up this book out on a whim when I was at a bookstore in Malaysia. The book explains investing in a very simple and understandable manner. It is not intimidating in any way. After reading this book, it made me realize that I did not need to be afraid of investing. I just need to learn how to do it right.
Rule # 1 is "Do not lose money."
Whether the market is going up or going down, do not lose money. Whether it is a bear market or a recession, do not lose money. Whether you have billions or just a couple of hundred dollars in investment, do not lose money.
The book discusses some of the basic myths about investing and provides simple strategies for successful investing while spending only 15 minutes a week. It tells about the five key numbers that really count when determining the value of a stock or business. It even mentions valuable internet tools and the advantages of managing your own investments to achieve your investment goals.
I know there may be other books on investing out there, but so far, this is the only one I've come across that made me understand the world of investing a little bit better.
# 5. The Richest Man in Babylon by George S. Clason
I came across the Richest Man in Babylon from reading Rich Dad, Poor Dad by Robert Kiyosaki. It tells about the ancient secrets of money. The book coined the phrase "pay yourself first". In ordinary terms, it means – SAVING. But it is more than that. The book tells that in any trade you're in, you CAN still "pay yourself first". Once you have "money" in savings, you can then have that "money" work for you.
But how can you save when your little money is not even enough to survive on? How can you set aside 10% of your income when you're living on 110% of it? How do you "pay yourself first" when the creditors are coming after you?
Paying yourself first is certainly not easy. It takes tremendous discipline. That's one of the reasons why it is not popular. But once you get the rich money habit of controlling your money instead of it controlling you, your confidence builds up, you'll think that if you can do this then you can do anything. And as with anything related to money, it touches everything. Your health improves. You become successful in what you do. People will wonder why you're always brimming with confidence. You become the richest man in every sense of the word.
Is not it better to walk into a store knowing you can buy anything you want because you have the money (saved)? Does not it give you peace of mind knowing that if some emergency occurs, you can readily rely on your saved "emergency fund"? Would it be nice to be able to help your family or those closest to you "financially" for a change? That's the dream. And it starts with paying yourself first.
# 4. The Millionaire Next Door by Thomas J. Stanley Ph.D. and William D. Danko Ph.D.
The book is based on a comprehensive research on the money habits of millionsaires. The results are surprising in the sense that majority of those millionaires are not what we commonly expect them to be. As aptly described in the book,
"These people can not be millionaires! They do not look like millionaires, they do not dress like millionaires, they do not eat like millionaires, they do not act like millionaires – they do not even have millionaire names. the millionaires who look like millionaires? "
Many of the "next door" millionaires are first-generation. They did not inherit their licenses, they built them. Few of them do not spend more than $ 100 for a watch. Others do not even wear a suit to work! They engage in types of businesses which could be classified as dull-normal. Some are welding contractors. Some are rice farmers. Some are pest controllers. Others are coin and stamp dealers.
What separates the "next door" millionaires from the rest is their money habits. They are frugal in nature. They value money. They invest at least 20% of their income. They even have a "go-to-hell fund" which can provide for their expenses for at least 10 years without working at all.
I think the most important lesson from the book is not that we know who the actual millionaires are, but the realization that it could be YOU! If they can do it, so can you! It's time to build your own rich money habit and be the "millionaire next door"!
# 3. Your Money or Your Life by Vicki Robin and Joe Dominguez
I bought this book out on a whim. I was actually looking for the book "Outliers" by Malcolm Gladwell when I saw this book at 20% off.
The book tells about managing not only your money but looking at it in totally different way. Your money is only part and parcel of what your life is. There is also time. There is also your dream! What do you enjoy most? How do you spend your money? What do you do with your time? Would you still do what you do even if you have all the money in the world?
The book emphasizes managing the resources that you have like money and time. It offers very specific tips like monitoring your spending and whether each of those is contributing to your goals or not. It also has some ideas on how to identify exactly what you like to do and manage both your money and time so you can do more of what you love to do and less of what you do not like to do. It even has some charts to help you picture out and plot where you are and when your freedom day will be.
I think the main message of the book is not to choose money over your life or the other way around – it is to have BOTH.
# 2. Rich Dad, Poor Dad by Robert T. Kiyosaki
As mentioned in my personal finance story, this is one of the books that made me realize I really need to develop rich money habits to achieve financial freedom. The book is a story of growing up learning about money from two different dads: one is rich and the other one is poor. The story unfolds to describe the different money habits of the rich dad and the poor dad, each one producing a different financial result.
The book makes the very complex world of money and business seemingly simple. It is so simple that the ideas can be explained to a child using only sketchy drawings. The drawings illustrate how cash flows from your pocket to the bank when you pay your bills, and how it flows from your company to you when you get your paycheck.
What you do with the money after your receive it determines whether you become rich or poor. Do you use the money to buy assets like real estate investments or setup businesses? Or do you use it to buy liabilities like a brand new LCD TV in 12-easy-monthly-payments-with-zero-interest!
The reason I liked the book is because it inspired me to become better and to view business and money in a totally different way. It expanded my understanding of how money really works! Most of all, it save me the confidence to dream again!
# 1. Think and Grow Rich by Napoleon Hill
Think and Grow Rich is one of the first books I've read about money. The main message of the book is that you have to "think" about money first before it becomes real. It is a direct translation to the phrase "what your mind can conceive, your body can achieve". When you really think about money and you have this "burning desire" to make it real, all the universe conspires to build the means to bring it to you.
Money is, first and foremost, only an idea. It is not real. The money you hold when you buy a bag of grocery is only as real as the "mutual" agreement you have with other people that the paper you're holding is worth something of value equal to that you're buying.
The book does not say "Work Hard and Grow Rich". Working hard means different things to different people. For an employee who does not like what he's doing and only get paid very little, everything is "hard work". For someone who loves what he does, "working hard" is not in his vocabulary.
As Henry Ford said,
"Thinking is the hardest work there is, which is probably the reason why so few engage in it."
There you have it! Rich Money Habits' top 10 best personal finance books of all time!
PS How about you? What are the best personal finance books you've read?
Rich Money Habits