I don’t like to read. Well, at least I didn’t. In hindsight, this is probably a good reason why I struggled in high school (along with that not doing homework thing). The Great Gatsby?! Ugh, spare me. That was all until I discovered a subject matter I could get into: finance & money. I really started digging into the genre in college and started devouring it book after book. I read quite a bit, but eventually there was only so much I could put into practice as a starving student on little-to-no income.
It’s now years later. I’m in the thick of salaries, babies, mortgages, budgets, loans, savings, etc. Of all the books I’ve read, only three really stick out in my mind. They are the ones that affect my daily financial decisions. Here they are and what I took from them:
- The Millionaire Next Door – The majority of American millionaires are not what or who you think they are. They aren’t keeping up with the Joneses; they’re frugal, they save, they work hard, and they stay dedicated to their financial goals. They likely aren’t driving the latest model cars. These are normal people with normal jobs that have managed to become wealthy by small, smart decisions with their money.They are consistently hitting singles and doubles rather than swinging for the fences and maybe getting a home run here or there. Overall, it can be done.
- Rich Dad, Poor Dad – Cash-flow. That’s it! This book touches on so many things, but what it’s made me think about constantly is cash-flow. Not just can my paycheck cover this month. Instead, I want to get to a point where my recurring expenses are covered by passive income. Am I there yet? No. In fact, I don’t have any passive income. But I think about it all the time. It motivates me to keep those regular expenses as low as I can, so someday if/when I do have some passive income, it’ll need to cover less. For this reason, I generally loathe recurring payments of any kind. Some are unavoidable, but others just take a little effort and planning to avoid. I’d rather take a hit and pay for something upfront instead of dragging it out with monthly payments. If I can’t pay for it upfront, then I tell myself I can’t afford it and try to do without because otherwise it would increase the cash-flow I need to survive.
- A Random Walk Down Wall St. – Forget expensive mutual funds and fancy money managers when it comes to investing; stick with Index Funds. History has shown that when you take into account the fees paid out to these fund managers, odds are your money won’t have done any better than the rest of the market over the long term. I invest in Index Funds where I can and consider it a set it and forget it investment.
**I purposefully didn’t go back and read or skim these books before sharing my thoughts. This is just what my tiny brain remembers from reading them many moons ago.**
If you’ve read any of these, you’ll notice that none of them offer step-by-step advice in any one area (at least I don’t remember if they do). Instead what I’ve taken away are certain financial principles. They are critical pieces of my financial mindset that I’ve ingrained into my thinking, lifestyle, and goals.
Have you read any of these books? Did you take something else away from them? Do you have other books that have helped shape your financial philosophies?