“You either learn to manage money, or the lack of that skill will manage you for the rest of your life.” –Dave Ramsey
At the start of a new year and after the holiday spending, money is a topic on many people’s minds.
And according to Yahoo finance (July 2024), America is in a “Financial Illiteracy Epidemic” with more than half of Americans unable to score 50% on a basic test.
Over the years, I’ve come to be fascinated by the topic of money and consider basic financial education an essential part of human knowledge.
As a psychologist, I find human behavior with money extremely interesting because it touches so many important aspects of life: relationships, marriage, parenting, coping with stress, happiness, power, status, control, instant or delayed gratification, addiction, denial, the unconscious, intentional living, forethought and planning, generosity, and contentment.
It should be clear from this list that our behavior with money can have an enormous effect on the course of our lives.
Did you know that ancient texts like the Bible mention the subject of money more than 2,300 times, making it the second most discussed topic other than God.
The Buddha also had wonderful basic teachings on money such as balance, hard work, sharing, enjoyment, budgeting, planning for emergencies, integrity, and an overall reduced reliance on materialism. So simple, so good!
Clearly this is something people have been wrestling with for a long time.
But basic financial knowledge is more simple than you might think, and more widely available than ever before.
A while ago, a mentor of mine recommended I read at least one book on finances per year, and I have found that to be great advice.
For that reason, I wanted to recommend a few books that I have found enormously helpful on this topic.
I have no financial interest in any of the resources I am suggesting.
One other disclaimer—none of these books contain advice on how to trade stocks or accumulate wealth quickly. They all share the same general guidance about spending less than you make, working hard for a long time, and staying focused on the most important things in life.
All of the authors found that what most people need is not complex financial strategies. Instead, they all recommend that people become very familiar with basic good financial practices and keep doing them consistently.
Here they are, in no particular order:
- The Simple Path to Wealth by J.L. Collins. The author apparently started his financial blog as a way to pass along lessons to his teenage daughter. I love that. He never intended his blog to turn into a best-selling book. I liked this book as a stand alone resource because the beginning of the book tells readers that if they don’t want to read the book the can do three things to be successful with money. 1) Spend less than you make 2) Stay out of debt and 3) invest extra money in basic index funds. A very easy and fun read.
- The Total Money Makeover by Dave Ramsey. This book is the story of how Dave Ramsey became a millionaire real estate investor at the age of 26, then lost everything and ended up bankrupt, and nearly lost his family in the process. The book is his story about all the things he learned, and the principles he used, to crawl out of that hole and help millions of other people get out of debt and build wealth. There is also a class based on the 7 steps he developed called Financial Peace University, which is now offered online for only $99 bucks. The model provides 7 clear steps that people can take if they don’t know where to start. A more updated version is Dave Ramseys Complete Guide to Money with more instruction and less stories.
- The Millionaire Next Door by Tom Stanley PhD and William Danko PhD. This book represents decades of studies on the habits of American millionaires, which you may find surprising. This book is densely packed with research and statistics and requires a commitment to read, but well worth it if you can hang in there. If you value research and data-driven decisions, you may like this one.
- The Psychology of Money by Morgan Housel. This book is interesting because it points to people’s habits with money being heavily influenced by their generation, childhood experiences, and biases. An excellent read and the author was recently interviewed on the Huberman Lab podcast if you want to check that out. The book is helpful in many ways for understanding behaviors around money and Housel also emphasizes the paradox that many people want to get more money with the ultimate goal of getting more control of their time, and in the process may give up lots of valuable time. He emphasizes that everyone’s financial situation is different, and that time is the most valuable resource.
- The More of Less by Joshua Becker. Josh Becker founded his blog, BecomingMinimalist.com, in 2008 and it has grown to more than 1 million readers per month. His book summarizes his principles on how minimalism can help people live happier and more meaningful lives. Although its not exactly a financial book, most people (myself included) desperately need to slow down spending and consumption in order to build contentment and improve financial stability in the long run. He challenges and encourages his readers to experiment with less and notice the result.
Take action now
If any of these books interest you, I’ll give you the same challenge my mentor did: Read one financial book per year and consider starting with these.
There is no shame if you have never been taught good financial habits. But if you recognize that you could use some work in this area, its time to do something about it. Don’t let another year slip by, the consequences are too important.
A huge part of good leadership involves good habits with money whether you lead a company or your family.
Your leadership decisions with money have an enormous impact on your employees, your spouse, or your children.
I hope that these books may serve as a catalyst or support on your journey toward overall wellness, and increased stability for your teams and families.
Have a great weekend!
Parker
Want more resources?
- Retire Inspired by Chris Hogan
- Stop Acting Rich by Tom Stanley
- God and Money: How we discovered true riches at Harvard Business School by John Cortines and Greg Baumer
- The Little Book of Common Sense Investing by Jack Bogle
