Mint.com Facebook Fan Q&A: What are Your Top Personal Finance Books?

Mint.com user and Facebook fan Aaron writes:

It would be great to have a post that lists out some of the top books to read for personal finance.

I know there are different types of people using Mint (ranging from those whose goal is to get out of debt, to people who have the money and really want to learn how to invest wisely), so a personal finance book categorization based on the types of users you have would be really helpful.

Thanks for all you do as a company!

–Aaron

Thanks for the question, Aaron. Even though I read plenty of good (and bad) advice on personal finance blogs, the advice that sticks with me usually comes from a book. So here are my five all-time favorite personal finance books.

As you suggested, they serve five different, but overlapping, financial needs. All are available in paper or ebook form, so if you’re under 30, you can buy the ebook and pretend you’re reading a really long blog post. (Kidding! I totally read books in my 20s. That is, until blogs were invented.)

For people starting out

I Will Teach You to Be Rich, by Ramit Sethi.

Yes, that title comes on strong, and so does Sethi himself. Like a low-carb diet crusader, the guy refuses to sugarcoat anything.

But he’s funny and his advice is superb: automate your accounts, save well and spend the rest without guilt, and invest using low-cost index funds.

This book makes a great gift for a college grad (or yourself).

Disclaimer: I read this book three years ago and I’m still not rich. Hmpf. 

For families, or anyone who doesn’t want to go broke

All Your Worth, by Elizabeth Warren and Amelia Warren Tyagi.

Yes, one of the authors of this book is now better known for holding a different job. Regardless of your political orientation, however, this book explains better than any other how to stay out of financial trouble.

All Your Worth has been hugely influential among financial writers, so even if you haven’t read it, you’ve probably heard a version of its key idea, the “Balanced Money Formula.”

It goes like this: of your take-home pay, 50% should go to to needs, 30% to wants, and 20% to savings.

When people who seem to have plenty of money get into serious money trouble (and I bet you know more than one person who fits this description), we blame it on luxury shopping sprees, but the problem nearly always arises from out-of-control spending on needs—especially housing and cars.

Fixing that kind of problem requires making serious tradeoffs, of course, but this book can help you figure out how to get on a sustainable course.

For parents who want their kids to go to college

Debt-Free U, by Zac Bissonnette.

This is not another book about navigating the financial aid formula or applying for obscure scholarships. It’s a warning: Choosing an unaffordable college can ruin a student’s financial future—and drag his parents’ finances down with it.

Here’s Bissonnette’s argument in a nutshell (I wrote about it at length in this column): Rich families can afford any college; poor families will qualify for lots of financial aid at most colleges.

For everyone else, there are only two types of colleges worth considering: in-state public universities (subsidized by the state) and elite, highly selective colleges and universities (which are very generous with financial aid).

For a middle-class family, sending your kid to a mid-tier liberal arts college or out-of-state public university because they fell in love with the campus is as financially responsible as buying them a Ferrari because the seats are comfortable.

Bissonette’s book tells the whole story. Read it.

For investors

Elements of Investing, by Burton Malkiel and Charles Ellis.

By “investors,” I don’t mean day-trader hotshots who think they can pick stocks. I mean anybody saving for retirement in a 401(k), IRA, or plain old brokerage account.

Elements is short and devoid of jargon. It teaches you a way to invest that is easy, requires little of your time, and is overwhelmingly supported by academic evidence.

Investing is one of the only areas of life where people who work harder at it do worse. Unlike the other books on my list, this one basically tells you how to win by chilling out and not doing much.

By the way, I’ve mentioned this book in my column probably two dozen times by now. Its authors are two very successful investors. If they knew how much some guy in Seattle loved their book, do you think they might want to adopt him? Just saying.

For freelancers and the self-employed

The Money Book for Freelancers, Part-Timers, and the Self-Employed

The self-employed are a diverse group. Etsy craft mavens, app developers, plumbers, and this writer all have something in common: We have to do our own tax withholding and retirement saving, buy our own insurance, and generally get socked with all sorts of financial annoyances that W-2 employees don’t even know they’re missing out on.

No wonder so many freelancers, even well-paid ones, get into money trouble.

If you’re your own boss, The Money Book explains in plain language what to do and what not to do. It’s not about how to rustle up sales leads or do your job; it’s about how to manage your money properly so you can keep working for yourself and stay off the 9-to-5 train.

Among its most important lessons: Freelancers need a holy trinity of accounts to stay solvent and keep out of tax trouble.

There you go: five books that changed my financial life. Read them, live them, and let me know if you have any favorites that didn’t make my list.

Do you have a personal finance question for Matthew Amster-Burton? Head over to the Mint.com Facebook page and ask away!

Matthew Amster-Burton is a personal finance columnist at Mint.com. Find him on Twitter @Mint_Mamster.