Rather than give away more fish this holiday season, why not teach them how to fish with a gift of financial education? After all, New Year’s is coming up and better money management is one of the most common resolutions. (A gift about losing weight may not go over so well.) While unfortunately you can’t exactly buy our services as a gift for someone, here are 7 personal finance books that I’ve found to be particularly insightful:
The Automatic Millionaire by David Bach
This book is about true stories of real people with average salaries who are able to slowly build large sums of wealth over time by automatically setting aside an increasing amount of savings each year. Most people find this much easier than budgeting. For example, if you’re currently saving 10% in your 401(k), it may seem impossible to save 20%, but how about just an extra 1%? You probably won’t even miss it in your paycheck. Increase your 401(k) contribution by 1% each year and you’ll be saving that 20% in ten years. This is a very effective way for people to save a lot more towards their financial goals in a relatively painless way.
Early Retirement Extreme – A philosophical and practical guide to financial independence by Jacob Lund Fisker
For someone who wants to really accelerate their wealth building, this book gives lots of specific tips on how to save as much as 75% of your income to retire in 5 years. It also discusses the philosophy behind why financial freedom is more valuable than having more material possessions. As the title suggests, the tips and the lifestyle are extreme, but it has worked for the author and many others.
The 4-Hour Workweek by Timothy Ferriss
Rather than work and save now to retire later, this book advocates working less now and take “mini-retirements” throughout your life. Even if you aren’t quite ready to work 4 hours a week, it has tons of interesting ideas on how you can earn additional income and save time by doing things more efficiently.
Stop Acting Rich and Start Living Like a Real Millionaire by Thomas Stanley
If those two books are too extreme for you, this book may be more your cup of tea. It’s written by the author of The Millionaire Next Door and goes into more detail about how the wealthy really live.
Value Investing with the Masters: Revealing Interviews with 20 Market-Beating Managers Who Have Stood the Test of Time by Kirk Kazanjian
This book profiles some of the top money managers who have used a “value” style of investing (similar to that used by Warren Buffett) to outperform the market. I discovered my favorite (now former) fund manager, Jean-Marie Eveillard of the First Eagle funds, in this book. If you’re going to entrust someone with your life savings, shouldn’t you learn a little about them?
Fail-Safe Investing: Lifelong Financial Security in 30 Minutes by Harry Browne
For those who don’t trust anyone with their life savings, this book advocates a simple investment strategy with a remarkable track record of results (especially if you’re conservative) since it was published about 10 years ago. It’s based on a similar strategy that the author wrote about in 1987 in a previous book called Why the Best-Laid Investment Plans Usually Go Wrong.
Any of those books could be a good stocking stuffer. If they actually read and follow the advice, you could literally change someone’s life. How’s that for a gift that keeps on giving?