After years of thinking, reading, and bitching about personal finance, Mrs. Pop and I have assembled this short list of personal finance books that we consider “must-read” for anybody who is serious about the state of their personal finance. Got a disagreement? Tell us about it at plantingourpennies _at_ gmail.com
First up is Your Money or Your Life; a classic that was originally published in 1992. An updated version was published in 2008, but some readers (i.e. Mrs. PoP) felt that the way it dealt with investments was slightly clunky. We’re still reccommending it because it is the modern basis for lots of FIRE ideas. Don’t read it for the investment advice, but expect to have your ideas about life, time, and money challenged, and probably re-arranged.
Early Retirement Extreme by Jacob Fisker is a unique take on the FIRE question. Jacob tackled big questions in a holistic manner; concentrating on showing the reader how to make the jump from personal consumption to personal production while condensing the timeline for retirement into as little as 5 years. The ERE method is at once exciting and frustrating; it is by far the easiest method to early retirement, but I think it will also be the path least traveled. There is no doubt that it is mathematically robust, but the majority of people will have major hurdles with the lifestyle shift necessary. Mr. PoP’s take away was that that path wasn’t for him, but that Jacob’s ability to create his own reality was something to aspire to.
Berkshire Hathaway Annual Letters, 1965-1012. What can you learn about Personal Finance from the most successful investor of this century? Mr. PoP thinks quite a bit. His explanations on the difference between value and price, the time value of money, leverage and goal setting touch on questions that we deal with every day in the personal finance sphere. If you don’t have a background in business or finance his letters allow you to dip a toe into these waters while being entertained by his writing style. The letters add up to more than the sum of their parts; they are the artifacts of his life’s work.
The Millionaire Next Door In the world of personal finance it is frustratingly difficult to figure out who is really worth any money; the beach bum with a pony tail that you see sitting at the back table of your favorite restaurant may own the restaurant (and part of the beach). The group of studies by Thomas J. Stanley lay out a number of habits and lifestyles shared by people of high net-worth. There are a number of criticisms leveled at Stanley over the years-selection bias of his sample seems to be the most often repeated, but this book is still the most accessible grouping of research on the habits of the wealthy that we know of. If you want to accumulate a large net worth, you could do much worse than study those people who are already wealthy.