My Top 10 Wealth Books

Here are my top 10 Wealth book summaries for DIYers.  Some are a bit older, but I believe all of them have valuable lessons.  There are so many golden nuggets to help you develop your own philosophy on wealth and investing. None of this is considered investment advice and is simply meant for educational purposes. 

The Richest Man in Babylon by George S. Clason 

This is the first book I read on finance as a teenager, and it had a profound impact on me!  Even though it was written a century ago, the core concepts still apply to us now.  This book teaches financial wisdom through parables set in ancient Babylon. The stories are engaging and teach timeless principles of wealth accumulation.

Key Takeaways:

• Pay Yourself First: Before spending on anything else, save at least a tenth of your earnings. This principle teaches the importance of saving as a priority.
• Live Below Your Means: Control your spending. The book emphasizes living within your means to allow for savings and investments.
• Invest Wisely: Money should be put to work, not merely saved. Investment in opportunities that grow your wealth is crucial.
• Avoid Debt: It warns against the dangers of debt and how it can destroy wealth.
• Seek Good Counsel: Learn from those who have proven to be successful. The book suggests surrounding yourself with wise and experienced people for guidance in financial matters.
• Increase Your Ability to Earn: Continuous learning and skill improvement can lead to higher income and capacity to save and invest more.  

The Psychology of Money by Morgan Housel

In this book, the author argues that financial freedom doesn’t come from knowledge and money but that it comes from your relationship with money.  It explores the behavioral aspects of handling money, and delves into how our personal experiences, emotions, and psychology influence our financial decisions. It’s fascinating!

Key Takeaways: 

• Money and Happiness: More money can make you happier, but only up to a point. Freedom and control over one's time are significant contributors to happiness.
• Luck and Risk: Success in finance often involves elements of luck, which can be forgotten during good times. Acknowledging this can lead to more humility and better decision-making.
• Time is the Friend of the Wonderful Business: Compounding is the magic of investing; patience over long periods can turn modest investments into significant wealth.
• Wealth is What You Don't See: True wealth is often invisible, consisting more of savings, investments, and unspent income rather than visible signs of affluence.
• The Seduction of Pessimism: Pessimistic views get more attention, but optimism and resilience are more conducive to long-term success in finance.
• Enough: Knowing when you have enough is crucial. Pursuing money without understanding your personal definition of "enough" can lead to dissatisfaction.
• Behavior Over Knowledge: Behavioral traits like patience, frugality, and long-term thinking are often more important than financial knowledge.
• The Power of Simplicity: Complex strategies aren't necessary for financial success; simple, consistent habits like saving and investing in broad market indices can be very effective.
• Adaptability: Being adaptable in the face of changing economic landscapes is vital. Flexibility in financial planning, including having a safety net, is emphasized.
• Stories We Tell Ourselves: Our personal narratives about money, shaped by our experiences, significantly affect our financial decisions. Understanding these stories can help in better managing our finances.
    

Your Money or Your Life by Vicki Robin and Joe Dominguez 

This book offers a transformative approach to personal finance, focusing on achieving financial independence by rethinking the relationship between money, time, and life energy.  It outlines a nine-step program to help individuals manage their money in alignment with their values, reduce unnecessary spending, and ultimately gain control over their financial lives and have more fulfillment.

Key Takeaways: 

• Make Peace with the Past: Begin by calculating your net worth, which includes all your assets minus your liabilities. This step involves acknowledging your current financial situation without judgment.
• Track Your Life Energy: Start tracking every cent that comes in and goes out. This means recording all expenditures to understand where your money (or life energy) is going.
• Three Questions for Every Expense: For each category of spending, ask:
• Did I receive fulfillment, satisfaction, and value in proportion to life energy spent?
• Is this expenditure of life energy in alignment with my values and life purpose?
• How might this expenditure change if I didn't have to work for money?
• Make Your Money: Evaluate your job and income sources. Understand your true hourly wage by factoring in all work-related costs and time, including commute, stress, and recovery time.
• Value Your Life Energy - Minimizing Spending: Now that you understand the real cost in life energy terms, minimize spending on things that don't provide fulfillment or align with your values.
• Value Your Life Energy - Maximizing Income: Look for ways to increase your income in alignment with your values, which might include changing jobs, starting a business, or finding new income sources that are more fulfilling.
• Capital and the Crossover Point: Invest your savings in safe, income-producing assets. The "crossover point" is when your passive income from investments exceeds your expenses, marking true financial independence.
• Managing Your Finances: Once you've reached or are moving towards financial independence, manage your money in a way that supports your life goals, values, and the well-being of the planet. This step involves living sustainably, giving back, and using your time and resources in meaningful ways.

The Total Money Makeover by Dave Ramsey

While I don’t agree with everything that Dave Ramsey teaches, this book offers a straightforward, step-by-step plan for starting your financial journey. It's based on his "Baby Steps" approach to personal finance, focusing on debt elimination, saving, and investing which can help with the psychological aspects. 

Key Takeaways:

• Baby Steps: 
• Save $1,000 for a starter emergency fund.
• Pay off all debt using the "Debt Snowball" method, where you pay off debts from smallest to largest, regardless of interest rate.
• Save 3-6 months of expenses for a fully funded emergency fund.
• Invest 15% of household income into retirement.
• Save for your children's college fund.
• Pay off your home early.
• Build wealth and give generously.
• Live on Less Than You Make: Ramsey stresses the importance of budgeting and living frugally to free up money for debt repayment and savings.
• Debt Snowball Method: Paying off debt starting with the smallest balance to gain momentum, even if it's not the highest interest rate, can provide psychological wins.
• Avoid New Debt: Ramsey is vehemently against taking on new debt, including mortgages or car loans, advocating for a cash-only lifestyle for significant purchases.
• Behavioral Change: The book isn't just about numbers; it's about changing behaviors, attitudes, and habits around money.
• Emergency Fund: Having an emergency fund prevents the need to go into debt when unexpected expenses arise.
• Retirement and Wealth Building: Once debt is managed, the focus shifts to long-term investing, particularly in retirement accounts like 401(k)s or IRAs.
• Generosity: The final step in Ramsey's plan includes giving, suggesting that true financial peace comes with the ability to be generous.
• Mindset Over Money: Ramsey teaches that overcoming debt and building wealth is largely a mental game; discipline, hard work, and perseverance are key.
• Avoid the Credit Trap: He criticizes credit culture, and advocates for cash transactions and a life free from credit card debt.
   

The Little Book of Common Sense Investing by John C. Bogle 

This book by the founder of Vanguard Group, John C. Bogle, is a straightforward argument for index fund investing as the most effective method for individual investors.  Bogle makes a compelling case for why investors should opt for low-cost index funds to capture the market's return rather than trying to beat it through active management. He emphasizes the power of compounding, low costs, and maintaining a long-term perspective.

Key Takeaways: 

• Index Fund Advantage: Index funds offer broad market exposure at a fraction of the cost of actively managed funds, allowing investors to keep more of the market's return.
• Costs Matter: Investment costs, including management fees, taxes, and trading costs, significantly impact long-term investment returns. Lower costs lead to higher net gains.
• Market Returns: Over time, it's nearly impossible for most active managers to consistently outperform the market after accounting for fees. In short, capturing the market return is a winning strategy.
• The Miracle of Compounding: Bogle stresses the importance of compound interest, where reinvested earnings grow over time, significantly increasing wealth in the long run.
• Simplicity is Key: Investing doesn't need to be complex; a simple, well-diversified index fund can outperform many sophisticated investment strategies.
• Avoid Market Timing: Trying to predict market movements is often counterproductive. Staying invested through market cycles is more effective.
• Long-Term Perspective: Wealth is built over decades, not days. Bogle encourages investors to think long-term, which reduces the impact of short-term market volatility.
• Investor Behavior: One of the biggest risks to investment success is the investor's own behavior, such as selling during downturns or chasing performance. Discipline here is crucial.
• Reinvest Dividends: Reinvesting dividends automatically can greatly enhance long-term returns due to the compounding effect.
• Rational Expectations: Bogle advises setting realistic expectations about investment returns, warning against the allure of high returns promised by some investment products.

Think and Grow Rich by Napoleon Hill

This book could also go on the Mindset list. It is timeless and is one of the most influential self-help books ever written.  It focuses on the psychological aspects of achieving success and wealth.  Based on interviews with over 500 successful individuals, Hill distills their success into 13 principles. He argues that wealth is not just about money but about the mindset and determination to achieve one's goals.

Key Takeaways: 

• Desire: The starting point of all achievement is a burning desire for something specific. Success begins with a clear, passionate goal.
• Faith: Belief in oneself and one's ability to achieve that desire. Faith translates into persistence and action.
• Auto-Suggestion: The subconscious mind can be influenced to aid in achieving your goals through repeated positive affirmations.
• Specialized Knowledge: Success often requires deep, specific knowledge in your field. Acquiring and using this knowledge effectively is crucial.
• Imagination: Creative visualization of your success can pave the way for actual achievement. Imagination is the workshop of the mind.
• Organized Planning: Success requires a well-thought-out plan, including a mastermind group where individuals come together to support each other's goals.
• Decision: Successful people make decisions promptly and change them slowly, if at all. Procrastination is the enemy of success.
• Persistence: The sustained effort necessary to induce faith is essential. No matter how many times one fails, persistence leads to eventual success.
• The Master Mind: Collaboration with others can amplify your own abilities. Hill emphasizes the power of collective brainpower.
• The Subconscious Mind: Feeding your subconscious with positive thoughts and desires can work in the background to achieve your goals.
• The Brain: Hill suggests that through intense focus, one can "tune in" to ideas and solutions from a broader collective consciousness or "infinite intelligence."
• The Sixth Sense: With experience and the application of the other principles, one develops an intuitive sense that guides decision-making.
• Overcoming Fear: Fear is the primary obstacle to success. Hill discusses six basic fears (poverty, criticism, ill health, loss of love, old age, and death) and how to overcome them.

I Will Teach You to Be Rich by Ramit Sethi 

I’ve been following Ramit for a while now, and he offers so many great resources!  He has quite a few DIY courses you can purchase that reinforce what’s in this book. It’s aimed at young adults and gives practical and actionable advice on personal finance, covering everything from banking to investing.  He also promotes a lifestyle of "spending extravagantly on the things you love, as long as you cut costs mercilessly on the things you don't."

Key Takeaways: 

• Automate Your Finances: Set up automatic savings, bill payments, and investments to ensure you're consistently managing your money without constant oversight.
• Credit Cards Can Be Your Friend: Use credit cards wisely to build credit, earn rewards, and manage expenses, but always pay off the balance to avoid interest.
• Focus on Big Wins: Instead of penny-pinching, focus on major financial decisions like negotiating salary, managing debt, and investing, which have a more significant impact on wealth.
• Invest Early and Often: Sethi advocates for investing in low-cost index funds as a way to grow wealth over time, emphasizing the power of compound interest.
• Spend Consciously: Allow yourself to splurge on what truly matters to you while being frugal on things that don't. This method aligns spending with personal values.
• Negotiate: Whether it's your salary or service fees, learn to negotiate to save or earn more money, which can be more effective than cutting back on small expenses.
• Debt Management: Understand the difference between good and bad debt; manage or eliminate high-interest debt while considering strategic use of low-interest debt.
• 401(k) and IRA: Utilize tax-advantaged retirement accounts to maximize savings, even if it's with small, regular contributions.
• Financial Mindset: Change your relationship with money by adopting a mindset that sees personal finance as empowering rather than restrictive.
• Personal Finance is Personal: Tailor financial advice to your life, interests, and goals rather than following generic advice.
• Education and Action: Continuously educate yourself on financial matters but don't let learning delay action. Implement what you learn. 

Broke Millennial by Erin Lowry 

Tailored for millennials, this book offers practical advice on navigating personal finance, from dealing with student loans to saving for retirement, in a relatable, conversational style.  Erin guides readers through the basics of financial management, focusing on common issues faced by young adults like managing debt, understanding credit, and building a financial foundation. The book is both educational and entertaining, and it uses real-life stories to illustrate financial concepts.

Key Takeaways: 

• Understand Your Money Relationship: Lowry starts with examining the psychological aspects of one's relationship with money, urging readers to understand their financial behaviors.
• Credit Card Management: Learn to use credit cards to your advantage for building credit, not debt. She explains how to choose the right card and manage it responsibly.
• Student Loans: A significant portion is dedicated to strategies for managing student loan debt, including repayment options, refinancing, and prioritization.
• Emergency Fund: The importance of having an emergency fund to cover unexpected expenses is emphasized, with guidance on how much to save.
• Budgeting: Lowry introduces various budgeting methods, encouraging finding one that fits your lifestyle, and discusses the importance of tracking expenses.
• Savings Accounts: Advise on where to keep your savings for maximum interest while maintaining liquidity.
• Investing: Even if you're in debt, Lowry suggests starting to invest early, particularly in retirement accounts like a 401(k) or IRA to benefit from compound interest.
• Negotiating: From salary to service bills, learn to negotiate to improve your financial situation.
• Financial Independence: Conversations about money with partners, family, or friends are crucial for setting boundaries and working towards financial goals together.
• Debt vs. Investing: Strategies for balancing debt repayment with investment, advocating for not letting debt completely halt investment plans.
• Retirement: Start saving for retirement early, even if it's small amounts, to take advantage of time and compounding.
• Financial Adulting: Lowry demystifies many financial terms and practices, making them accessible and less intimidating for young adults just starting out.

The Automatic Millionaire by David Bach

This book simplifies the path to wealth accumulation by advocating for the automation of financial decisions. It's designed for people who want to become wealthy without having to think about money management constantly.  David Bach introduces the concept of "paying yourself first" by automating savings and investments, ensuring that wealth builds effortlessly over time. He illustrates this with the story of an ordinary couple who become millionaires by following simple, automatic financial habits.

Key Takeaways: 

• Pay Yourself First: Before any other expenses, automatically allocate a portion of your income towards savings and investments. Bach suggests at least 10% should go into retirement accounts.
• Automate Everything: Set up automatic transfers for savings, investments, and bill payments to ensure you're consistently building wealth without manual intervention.
• The Latte Factor: Small, daily expenses (like buying coffee) can add up. By automating savings, you can counteract these small leaks in your finances.
• Home Ownership: Buying a home can be a form of "forced savings" as it builds equity over time. Bach recommends making your home a priority in your financial plan.
• Retirement Accounts: Maximize contributions to retirement accounts like 401(k)s or IRAs, especially if there's an employer match, which is essentially "free money."
• Live Below Your Means: Even with automation, living within or below your means is crucial so that automatic savings don't become burdensome.
• Debt Management: Avoid high-interest debt. If you have debt, automate payments to pay it down faster, but do not let it delay your savings plan.
• Financial Simplicity: Bach advocates for simplicity in financial planning; complex strategies are not necessary when consistent, automatic actions can lead to wealth.
• The Magic of Compound Interest: By starting early and letting your money grow automatically, you harness the power of compound interest to your advantage.
• Make Money Work for You: The book's core message is that wealth doesn't require - constant attention if you set up systems where money automatically works for you.
• Increase Retirement Savings: As your salary grows, automatically increase the percentage you save for retirement to keep pace with your income.

Die with Zero by Bill Perkins

Bill Perkins challenges traditional saving and spending philosophies by promoting a life where you experience all you can while still alive, rather than leaving wealth unspent.  He encourages people to think about their "net fulfillment" – the balance between what you spend and the experiences you gain, aiming to die with zero regrets rather than a bank balance. 

Key Takeaways: 

• Time-Bucket Your Life: Perkins suggests dividing your life into time buckets (e.g., decades) and planning experiences for each to ensure you live fully without over-saving for later years you might not enjoy.
• Optimize Your Life Experiences: Instead of hoarding money, spend on experiences that enrich your life, particularly when you're young and healthy enough to enjoy them.
• Give While Living: He argues for giving money and gifts during your lifetime, when they can be most appreciated, rather than after death.
• Rethink Retirement: Perkins critiques the traditional retirement model, proposing that one should aim to maintain a fulfilling life at all ages, not just in retirement.
• Use Money as a Tool: Money should be seen as a means to an end – enhancing life's experiences – not the end itself.
• Health over Wealth: He emphasizes investing in health to ensure you can enjoy your wealth. Good health enables the enjoyment of life's experiences.
• Avoid Over-Saving: He warns against the common trap of saving too much, which can lead to a life of deprivation and not utilizing one's resources for life's enjoyment.
• Legacy vs. Living: Perkins challenges the notion of legacy through wealth accumulation, suggesting that living a full life is the true legacy.
• Balance Financial Security with Life Enjoyment: While not advocating for reckless spending, he encourages finding a balance where financial security doesn't overshadow living life.
• Plan for the Inevitable: Perkins advises being realistic about one's lifespan and planning accordingly, ensuring you don't save too much for a future you might not see.