January 02, 2019

Top 10 Personal Finance Books to Really Understand Money and Life

A friend recently asked me to offer a list of my five favorite personal finance book—and I failed. I couldn't condense the list to any fewer than 10 without feeling it was incomplete.

My following reading recommendations aren't so much ranked in order as they are ordered in the way that made the most sense.

1. The Rent Collector by Camron Wright

Another friend gave me some of the best advice I received this year—to “begin in gratitude”—so that’s where we’ll begin today.

The Rent Collector is a fictional story based on very real people living in a very real place, the largest city dump in Cambodia, Stung Meanchey. Camron Wright’s exceptional writing draws us into the sights and smells, as well as the heartache, loss and, ultimately, redemption, found in one of the most unlikely and undesirable places one could call home.

Want and envy, the enemies of gratitude, lead us to poor financial decisions, and worse yet, they strip us of the joy we’re offered through attaining sufficiency. Therefore, the recognition of—and ideally, the interaction with—those who have far less than we do tends to fill us with a healthy gratitude for our many blessings, material and otherwise. Approach your personal finances by beginning in gratitude.

2. The Only Guide To A Winning Investment Strategy You’ll Ever Need by Larry Swedroe

The Rent Collector was one of several book recommendations I’ve been fortunate to receive from investing author Larry Swedroe, my friend and colleague. Although the title decries his prolific writing career since, it may not be an understatement to say that Larry’s first book, The Only Guide To A Winning Investment Strategy You’ll Ever Need, started a movement away from active stock-picking toward an academically rooted, evidence-based approach to investing.

3. Reducing the Risk of Black Swans (2018 Edition) by Larry Swedroe and Kevin Grogan

But I couldn’t stop there, because while many investment books entice us to pick them up by suggesting how we can make more money by taking more risk, one of Larry’s newest books, Reducing the Risk of Black Swans (2018 Edition), co-authored with Kevin Grogan, answers a fascinating question:

How little risk can you take and still meet your goals?

It’s a question I encourage you to ask, and a book I encourage you to read.

4. The Undoing Project by Michael Lewis

The next trio of books I recommend comes from a field of study—behavioral economics—that has turned centuries of older, more traditional economic theory on its head. If you’re new to this fresh take on the dismal science, I recommend you start with Michael Lewis’ The Undoing Project.

You’re likely familiar with Lewis’ ability to transform complex subjects into an inviting narrative from his bestsellers, The Big Short, Moneyball and Liar’s Poker. In The Undoing Project, he succeeds again, introducing us to the real-life characters and pioneers of behavioral economics, Daniel Kahneman and Amos Tversky.

5. Misbehaving by Richard Thaler

This 200-level course content comes from the newly minted Nobel laureate who coined the term behavioral economics (and co-authored another great book, Nudge), Dr. Richard Thaler. Misbehaving, itself surprisingly readable, is a narrative history of this relatively new field that is beginning to change the way we work, save and spend.

6. Thinking, Fast and Slow by Daniel Kahneman

If you still have any capacity left, you can go straight to the original source via Daniel Kahneman’s magnum opus, Thinking, Fast and Slow. Kahneman summarizes the disruptive work that he and his late research partner, Amos Tversky, did in a book around which the field of behavioral economics seems to revolve.

7. The Seven Stages of Money Maturity by George Kinder

What happens when a Harvard-trained economist and CPA studying gravitational physics and Zen Buddhism applies his karmic and creative brain power to the field of financial planning? Meet the “Father of Life Planning,” George Kinder, and his seminal work, The Seven Stages of Money Maturity.

For over 30 years, Kinder has been practicing the art and science of financial life planning while training a now-global following of financial advisors to do the same. Learn the fundamentals of his philosophy in this fine book.

8. Give and Take by Adam Grant

The next duo of books isn’t explicitly related to personal finance, but they will nonetheless change the way you look at and interact with it. Give and Take is about how we live—and especially how we work. It presents a scientifically backed case proving the ancient wisdom that we gain more out of maintaining a posture of giving than one of taking.

Indeed, I have found this to be especially true in money dealings, and perhaps best summarized by a mentor of mine: Those who hold tightly to what they have may well hold onto it, but those who open their hands and free themselves to give also tend to find themselves freely receiving.

9. The Power of Moments by Chip and Dan Heath

This book offers proof for what I think you already know—that the best stuff in life isn’t actually stuff! The Power of Moments not only offers evidence but a method (or methods) for creating “elevated moments” that will leave lasting memories, compounding the investment of our time and, when necessary, our money.

10. When Breath Becomes Air by Paul Kalanithi

I’ll warn you in advance that you’ll likely need a box of tissues handy to finish my last book recommendation because this one is a beautifully written autobiographical account of a brain surgeon processing the reality of his own terminal cancer diagnosis.

It’s not easy, but I assure you that it is good. By the time you consume the epilogue, written by Kalanithi’s wife, Lucy, you’ll likely have questioned everything you believe about the value of that which is tangible yet fleeting versus the value of that which is intangible but eternal.

This commentary originally appeared December 22 on Forbes.com

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