Really useful money books
January is a time when we think about money, along with New Year resolutions and financial hangovers from holiday overspending. I know from my own and my clients’ experiences that personal pain and family struggle often goes with money, so I have collected here the best financial books and resources to help you get through the dark days of winter and into an enlightened New Year.
Money! Whether you consider it to be a pain in the butt that you wished would go away or the key to your freedom, you have to deal with it on a daily basis – and on at least three different levels.
- The psychologist in you needs to understand your relationship with money.
- The accountant in you is interested in what’s coming in and what’s going out.
- The technician in you seeks to understand bank and loan accounts, interest rates, investments, pensions etc.
Money is like another member of the family and your relationship with it affects your relationship with the rest of the family, your employer, those you buy from, your friends, your bank – in fact, your life. Most of this post is devoted to books written about your relationship to money and the psychology of personal finance. There are additional resources at the end to help you with your day-to-day accounting and financial literacy.
Your relationship with money
I did a little bit of research in the Bloomsbury branch of Waterstones the other day. There were over a dozen stacks of books devoted to how to invest and make money, just one stack on financial planning and matters of personal finance and in that stack probably no more than half a dozen books on our relationship with money and the psychology of money. I found that quite depressing because, in my view, this is where the energy of money really resides. Its is a shame so few people have written about it, but those that have have generally written extremely well on the subject. The following books (in publication date order) are about the sum total, and certainly recommend reading them at this time of year (click the titles for links to Amazon).
Charles Mackay (1841)
Mackay’s book is not essential reading, and the old English makes it a trifle difficult to read anyway. I include it because he addresses the psychology of economic bubbles, citing the South Sea Bubble, The Mississippi Bubble and the Dutch Tulip Mania to illustrate our passion for following the crowd – in these instances to financial self-destruction.
Had Mackay been writing today, he would have had more than enough contemporary examples of the same phenomenon, such as the dotcom and real estate bubbles at the end of the last century. Its worth browsing through this book just to become aware of (and hopefully avoid) getting sucked in to the next bubble.
Favourite quote: ‘His tulip was quite delicious with his red herring.’ (The bulb in question was worth 3,000 florins and eaten by a sailor who mistook it for an onion.)
George Clason (1926)
I class this as required reading (especially for the younger generation). Clason tells stories about money using fictional figures from ancient Mesopotamia. His thesis is simply that the route to wealth is through saving. However, he turns the normal mantras around to describe savings as the piece of our income that is our own to keep, the rest being forfeit to others so we can live. Clason sets out seven ‘cures’ for a lean purse and tells other parables that illustrate how to be wise with money.
Favourite quote: ‘A part of all you earn is yours to keep.’
Jacob Needleman (1991)
Needleman is a philosophy professor. The book is the first contemporary work that deals with money from a philosophical perspective and to explore the concept of a relationship with money. Needleman writes about how the power of money to do good or evil lies in ourselves, not in the money itself. He argues that money cannot buy happiness or automatically lead to a fulfilled life. He considers the relationship between work and wealth and considers why money raises deep feelings of greed and envy in us. Still very relevant 25 years on (particularly as we contemplate the distribution of wealth and boardroom pay) and recommended reading (unfortunately out of print though a few copies are available on Amazon).
Favourite quote: ‘We are born for meaning, not pleasure, unless it is pleasure that is steeped in meaning.’
Vicki Robin & Joe Dominguez (1992)
Robin and Dominguez also study our relationship with money and propose a ’New Road Map’ for the relationship. They describe the old way as a financial dead end leading to spending more than you earn, stuck in an unloved job, needing two pay checks and delegating money decisions out of ignorance.
Instead, they propose a nine step roadmap based instead on 3FIs – Financial Intelligence, Financial Integrity and Financial Independence. Importantly, they bring up the concept of ‘enough’ (later repositioned by Lynn Twist as ‘I haven’t enough…’). They look at money as ‘life energy’ and provide guidance on things to consider before you spend money. Vicki Robin is a champion of sustainability and simplicity in our dealings with money.
Favourite quote: ‘If you live for having it all, what you have is never enough.’
Robert Kiyosaki (1997)
The ‘Two Dads’ of the title refer to his well educated but poor biological father and a poorly educated family friend and millionaire. Kiyosaki’s priority is to become wealthy and financially independent through entrepreneurship, investing (especially in property) and financial education. He redefines the concepts of assets and liabilities, income and expenditure. There is much to agree with in the book, even if it feels a little brash to an English audience. Unsurprisingly, I agree with his comments about the need to become financially well educated.
When I read the bit about assets and liabilities I can’t help thinking about a client of mine who owned two racehorses. He put them in the ‘Asset’ column of his financial statements; I moved them to ‘Liabilities’.
Favourite quote: ‘The rich invest their money and spend what is left. The poor spend their money and invest what is left.’
George Kinder (1999)
I declare an interest here. I have known Kinder for many years and trained under him in the US to become the UK’s first Kinder Institute Registered Financial Planner. Seven Stages is all about life and our relationship with money. For Kinder, our emotions are at the heart of our relationship with money and his seven stages take us from emotional and financial immaturity to a place where we are utterly at ease with our money and life. The book is illustrated with three developing case studies that introduce each chapter and numerous stories from the author’s life and elsewhere within the chapters. Kinder is extremely well read and has explored ancient and contemporary philosophers and their teachings, which provide the foundations for his thesis. A bit heavy going in places, it is nonetheless a valuable and highly insightful book, well worth reading (and following up with Kinder’s 2014 book Life Planning for You)
Favourite quote: ‘The bearing of suffering becomes noble when it prompts us to pursue freedom’
Suze Orman (2001)
Orman started life reading for a degree in social work before becoming a financial adviser and investment manager. She founded her own financial firm dedicated to both advice and education. Her social services background combined with her financial services experience led to her taking a more psychological approach to financial planning, out of which emerged her nine steps to financial freedom set out in this book. She describes them as practical and spiritual steps to help you stop worrying.
Not surprisingly she has received some criticism for her approach from the more traditional critics in financial services. In my opinion her emphasis on the human side of money and simplicity definitely warrants her inclusion here.
Favourite quote: ‘There is a simple and remarkably effective way to make yourself spend less. You invest more.”
Lynn Twist (2003)
IMHO this is the most powerful and authoritative book in the collection. Twist is a fundraiser and founder of the Hunger Project. Her journeys around the world enable her get to the heart of our relationship with money through her stories of meetings with the famous such as Mother Theresa (heartbreaking) and the Dali Lama, and the unknowns such as Chumpi Washikiat, a member of the Achuar group of indigenous Ecuadoreans who have lived for centuries without money. Twist has a wonderful ability to tell stories of her own experience, some of them against herself, in a way that contributes to the wisdom of the world without grandstanding.
At its heart, this book helps us to understand the deep difference between scarcity and sufficiency. Scarcity is a culture of ‘I haven’t enough’ which is ultimately destructive and disparaging of human values. Sufficiency is about letting go: ‘Instead of seeking more, they treasure and steward thoughtfully what is already there’. One of the sub-headings of the book is ‘Money and Soul: The Great Divide’. Twist does a magnificent job in bridging the divide
Favourite quote (difficult choice): ‘Eventually, we came to know ourselves not for what we had or owned, but for what we gave; not for what we accumulated, but for what we allocated.’
Lee Eisenberg (2006)
With its easy-to-remember title and snappy thesis, Eisenberg got a hit with this book which tries to answer the question of how much money we need to secure the rest of our life. Eisenberg sets out to answer the question by talking to anyone who might be able to provide him with an answer. He explores financial personality types, investment management and drawdown strategies, crashes and bubbles, credit, financial illiteracy, state benefits and the meaning of life.
This book, like others in this collection, deals with the ‘E’ word – enough. Indeed, one of Eisenberg’s sub-chapter headings is ‘When Two Million isn’t Enough’.
I always smile to myself when I get to the Appendix. Eisenberg is looking for a quick and dirty way of calculating your number. He calls financial advisers and investment managers looking for answers, and is unable to get any sense until he contacts the last man he would expect to give him the answer – our own life planning guru George Kinder.
Its a useful book with some good ideas, but the emphasis is very much on scarcity rather than sufficiency, to use Lyn Twist’s terminology.
Favourite quote: “Is the Number about money, or is it about meaning, fulfilment and life’s true calling?’
Oliver James (2007)
Affluenza is a stressful, rampant condition in affluent Western societies where the highest priorities are placed on money, possessions, appearances and fame. James is a British psychologist who explores in the book the correlation between increasing affluenza, material inequality and personal unhappiness. He later went on to link rising levels of mental disorders and addiction to the affluenza phenomenon.
James travelled the world exploring affluenza and its impact on societies. He tried to find out why more and more of us want what we haven’t got or want to be someone we are not, even though since the war we have become wealthier and freer. He was particularly interested in working out how we deal with the epidemic of mental ill-health and stress that he argues is a direct result of the affluenza epidemic.
His answer lies in reconnecting with what really matters, finding meaning in our lives and learning to respond to our needs and not our wants.
Favourite quote: ‘Why are you trying so hard to fit in, when you’re born to stand out?’
Dave Ramsey (2009)
Dave Ramsey is an American businessman specialising in financial education. He is the author of this and numerous other books, a radio and television host and speaker. His philosophy of money is based on his religious beliefs and his experience, including the time he was forced to file for bankruptcy when his overextended property business was hit by legislative changes in 1986.
Ramsey’s makeover comes in three phases. First, and unsurprisingly given his history, get out of debt by paying of the smallest loans first (this inspires you to keep at it and is in contrast to the normal advice to pay off the most expensive debt first). His second phase is to deal with our attitudes to money by getting realistic about common money myths (which includes a fulsome critique of the American Dream). The third phase of his makeover is to get liquid capital under your belt for retirement and emergencies.
Whilst his basic strategy of reducing liabilities, building assets is sound, the book is light on some of the detailed tactics of financial planning. It has been generally well received, especially by those with a debt problem and for that it warrants inclusion in this list.
Favourite quote: ‘Personal finance is about 80 percent behaviour. It is only about 20 percent head knowledge’.
Karen Pine & Simonne Gnessen (2009)
Simonne and I followed similar routes to where we are today. We were both independent financial advisers; we both became more attracted to the emotional and behavioural aspects of personal finance and we both established our own financial coaching firms. In Simonne’s case she set up Wise Monkey Financial Coaching in 2002 and, with her co-author Psychology Professor Karen Pine, specialise in helping women with their finances.
I have huge respect for Simonne for stepping up to the needs of her target clients and breaking the mould of conventional financial advice. She understood, long before me, that people need far more than advice about financial products. Women and men alike need guidance and support around a huge range of money issues, particularly their emotional relationship with money.
Gnessen and Pine describe Sheconomics as ‘a no-nonsense-easy-to-follow financial guide, written for women by women’. At its core are their seven laws of economics and money for women which range from taking emotional control through sharing financial intimacies to spending with power. The book is highly rated by readers and reviewers alike and highly recommended for women dealing with their own and their family’s finances.
Favourite quote: ‘We want you to be free-thinking, responsible and flexibly minded and that means no labels and not having a money personality.’
Jeremy Deedes (2015)
I’ve spent over thirty years during which I moved from product salesman to financial adviser to financial planner to financial life planner and ultimately to financial coach.
I have been assiduous in learning new stuff and being at the leading edge of personal financial services. I am passionate about absorbing new information and ideas and using them to help people change their lives for the better. I set down everything I know in my book which covers eight principles for living at ease with money and finishes with a chapter on making life and money flourish. This includes my fundamental tenets for life and money and my six step blueprint for living a wholehearted, fulfilled, authentic life.
My book includes much for the psychologist in us, something for the accountant and very little for the technician, so I feel fully justified in including it in this reading list. For those who like cherry-picking, the book is full of highlighted snippets on essential personal finance and action steps for the confused to find clear water.
Favourite quote: ‘I believe, however, that the true goal of personal financial life planning is to achieve personal growth.’
Andrew Priestley (2016)
The Money Chimp is aimed at 18-25 year olds. Priestley describes how he wrote the book because he knows many bright, aspiring young people in this age group and he wants to help them avoid stressing and struggling over money. He sees this already happening as young people enter their 30’s in a state of chronic debt. Priestley is adamant this age group must change their attitudes and habits around money and develop their personal financial skills.
Priestley sets out ten time-tested principles for managing money. These include five habits for managing money and five practical skills.
This book addresses both the accountant and the psychologist in us. Priestley argues that half the battle is about recognising your beliefs and behaviours, especially those limiting or false beliefs learnt in childhood or the more recent past, whilst much of the book deals with figures and case studies about practical money management. He also provides access to the online Money Chimp Test that provides a personalised twenty page report and recommendations to add depth to the book.
Favourite quote: ‘Changing your mindset starts with deciding to manage your money better.’
Claudia Hammond (2016)
Hammond is a presenter of BBC R4’s psychology programmes and an award winning author. However, I only picked up her most recent book earlier this week and have not had time to do more than skim through it yet. There seems to be much of interest including chapters on:
- money and death
- the way we shop
- loosing, spending and earning money (and burning it!)
- pricing psychology
- money motivation and reward psychology
- why enough is never enough (again)
- good and bad money
The blurb describes the book as ‘entertaining’ and Hammond has won awards for media in psychology and increasing the public’s understanding of psychology. I am sure there will be much of value in this book as I am sure Hammond understands that our attitude to, and relationship with, money is a serious subject deeply in need of appropriately serious research and commentary.
Favourite quote: To come
Accounting for your money
Its important to have an accurate picture of your personal or family financial flows. Without this its difficult to make informed decisions. Many are the times I’ve met clients for the first time and asked them to give me a rough idea of their expenditure, which on further exploration turns out to be highly inaccurate.
MoneyWizz and Moneydance are two useful apps that make things so much easier. They are cross platform, cross device and have multiple features, including budget settings. Yes, they take time to set up but once done recording income and outgoings becomes semi-automated and straightforward. Really worth investing in one of these.
MeetCleo is a new kid on the block, which can read, (but not write) your bank accounts. Cleo describes herself as the intelligent assistant for your money. You can ask her, by text, for any information about your spending. Each week she will tell you how much you have spent and where. In its early days at the moment, but has significant potential.
Money Dashboard is useful in that it feeds in transactions from all your accounts into one place on its website, giving you a consolidated picture of where you stand.
All are useful, but suffer from poorly defined default categories of spending; time needs to be spent customising these to make them truly worthwhile.
The technicalities of money
Financial legislation and products change so fast these days that any book will be out of date before it hits the shelves. Your source of information has to be the internet, but beware of the agenda of those who write about financial products. Go to regulatory bodies in the first instance. These often provide technical information in easy to read form.