In this post, we will look at the 10 best personal finance books, but first, our disclosure:
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Crash Test Report: The Best Personal Finance Books
TEST ID: #001
Subject: 10 Best Personal Finance Books
Risk Level: Low
Verdict: See individual verdicts below
Best Overall: The Psychology of Money
Meet The Test Subjects: The Best Personal Finance Books
We took 10 of the most famous personal finance books into the Crash Test Money lab to see which ones hold up under pressure. They cover a variety of topics, from the impact of behavior on your finances to investing, saving, and paying off debt. We spent hours reading and putting the ideas we read to the test. Read on to see the results!
Top Picks:
- Best for money mindset: The Psychology of Money
- Best for investing: The Little Book of Common Sense Investing
- Best for getting out of debt: The Total Money Makeover
- Best for Technical Depth: A Random Walk Down Wall Street
If you are short on time, then I highly recommend starting with “The Psychology of Money” and “The Little Book of Common Sense Investing.” These are two of my all-time favorite books. Both contain invaluable insights and are quick reads.
Test Subject #1: The Psychology of Money
WHERE TO GET IT:
“The Psychology of Money” by Morgan Housel sits at the top of my list of the best books on personal finance. I could not put this book down. It is an excellent resource for understanding how our experiences influence financial behavior. It doesn’t seek to embarrass or criticize you for your decisions. Instead, it helps you develop a better understanding of yourself and your relationship with money. This is one of the most insightful books on personal finance I have ever read. To make things even better, it is a quick read. I cannot recommend this book enough.
CRASH TEST RATING:
CRASH TEST MONEY VERDICT: STREET LEGAL
After reading The Psychology of Money, you will never look at your relationship with money the same way again.
Test Subject #2: The Little Book of Common Sense Investing
WHERE TO GET IT:
If you’re looking for a simple and effective way to invest in the stock market, “The Little Book of Common Sense Investing” is a must-read. It is one of the best personal finance books available. I can attest to the effectiveness of John C. Bogle’s investment strategy, having invested in actively managed mutual funds and passive index funds.
John C. Bogle founded The Vanguard Group and is credited with creating the first index fund. It provides an investment strategy that helps investors earn their “fair share” of stock market returns by investing in the broad market while keeping costs to a minimum.
CRASH TEST RATING:
CRASH TEST MONEY VERDICT: STREET LEGAL
In short, The Little Book of Common Sense Investing shows how a simple low-cost S&P 500 index fund or a total market index fund might be the smartest, most powerful, wealth-generating investment someone can make.
Test Subject #3: A Random Walk Down Wall Street
WHERE TO GET IT:
If you’re looking for an in-depth look at the stock market and investing, “A Random Walk Down Wall Street” is the book for you. It is one of the most comprehensive books on investing available and a go-to book for anyone interested in the subject.
In “A Random Walk Down Wall Street,” by Burton G. Malkiel, the Castle-In-The-Air theory proposed by John Maynard Keynes is discussed, along with how asset bubbles form. The book then covers a wide range of investment topics, including modern concepts of technical and fundamental analysis. It provides a comprehensive guide to behavioral finance, stocks, bonds, precious metals, insurance, real estate, and the best strategies for structuring your investment portfolio to achieve your retirement goals.
CRASH TEST RATING:
CRASH TEST MONEY VERDICT: STREET LEGAL
This book’s big takeaway is the importance of a buy-and-hold strategy centered on low-cost, low-turnover index funds.
Test Subject #4: The Little Book of Behavioral Investing
WHERE TO GET IT:
In my opinion, it is vital for individuals to understand how their behavior and biases impact their investment decisions. “The Little Book of Behavioral Investing” is a valuable resource that offers insights into this topic and should be included on any list of the best personal finance books.
As you read the book, you will encounter a range of topics, including lost aversion and the futility of forecasting. I guarantee you will acknowledge that you are prone to many of the biases discussed in the book, such as overconfidence and hindsight bias. I know I did!
CRASH TEST RATING:
CRASH TEST MONEY VERDICT: STREET LEGAL
The bottom line is that investors must be aware of these behavioral traps to improve their investment strategies, and The Little Book of Behavioral Investing does just that.
Test Subject #5: The Millionaire Next Door
WHERE TO GET IT:
Many people assume that millionaires live extravagantly with lavish homes, expensive cars, and fancy clothes. However, “The Millionaire Next Door” dispels this misconception, showing that most millionaires do not look like “millionaires.” Instead, they build their wealth slowly, live modest lifestyles, and drive older cars. Reading this book about ordinary people who could be your neighbors becoming millionaires is inspiring.
In “The Millionaire Next Door,” you will learn about the concepts of a “Prodigious Accumulator of Wealth (PAW),” an “Under Accumulator of Wealth (UAW),” and an “Average Accumulator of Wealth (AAW).” It will then provide you with a simple formula to determine which category you fall into.
“The Millionaire Next Door” was published in 1996, so its statistics are now outdated. The dollar figures it mentions are much lower than today due to inflation. Furthermore, some of the topics it discusses are no longer relevant, such as prestigious department-store credit cards and the makes of cars people drove almost 30 years ago. Additionally, today, many more women are the breadwinners in their families since this book was written.
CRASH TEST RATING:
CRASH TEST MONEY VERDICT: STREET LEGAL
All things considered, The Millionaire Next Door remains relevant, but the first few chapters are particularly valuable. If you only read those, you’ll be well off.
Test Subject #6: The Intelligent Investor
WHERE TO GET IT:
“The Intelligent Investor” by Benjamin Graham is one of the most famous books on investing, written by equally famous Benjamin Graham. Therefore, no list of the best personal finance books would be complete without it. The book teaches investors a value-based approach to investing that focuses on long-term investments and minimizing risk. This is the book that helped shape Warren Buffett’s investment strategy.
Before you run out and buy this book, know that it is not a light read. “The Intelligent Investor” clocks in at over 600 pages, which can be overwhelming. Therefore, if you never read the entire book, then I suggest reading the two chapters that Warren Buffett emphasizes. Those are the timeless Chapters 8 and 20. Chapter 8 covers how to be an intelligent investor during market fluctuations, and Chapter 20 covers the concept of a margin of safety.
CRASH TEST RATING:
CRASH TEST MONEY VERDICT: STREET LEGAL
One thing to note is that The Intelligent Investor was written in 1949, so some parts are outdated. However, its core lessons stand the test of time. Let’s face it. If this book is good enough for Warren Buffett, it is good enough for the rest of us!
Test Subject #7: The Automatic Millionaire
WHERE TO GET IT:
“The Automatic Millionaire” by David Bach is a good book for beginners and those struggling with saving and debt. It centers on the idea that you should always pay yourself first. To achieve this, “The Automatic Millionaire” emphasizes the importance of automating your savings and investing. To help you along the way, each chapter ends with a checklist of action items.
Having been released in 2003, some of its references are dated, but David Bach does a good job of addressing this in later editions by adding updated information at the end of each section. Regardless, the main point of “The Automatic Millionaire” is timeless: Always pay yourself first. Moreover, the book provides two helpful calculations to determine where you are in your wealth journey: The amount of time you work for yourself and a wealth calculation that compares your household income to your net worth.
If you’re a beginner looking for one of the best personal finance books, “The Automatic Millionaire” is an excellent choice, but beware of one particular drawback. The book includes lists of companies and websites to help you with your finances. However, it’s important to note that these lists do not differentiate between expensive and low-cost investment options.
CRASH TEST RATING:
CRASH TEST MONEY VERDICT: PROCEED WITH CAUTION
In general, The Automatic Millionaire offers good advice, but it does not adequately address the outsized impact of costs on investment returns.
Test Subject #8: The Total Money Makeover
WHERE TO GET IT:
“The Total Money Makeover” by Dave Ramsey is one of the most influential books on this list, which is why I consider it one of the best personal finance books. It provides a structured, 7-step approach to getting out and staying out of debt. “The Total Money Makeover” focuses on changing the behavior that leads people into debt, not the math behind it.
Dave Ramsey and his “Total Money Makeover” can be polarizing, but do not let that scare you away. You may not agree with everything, but Dave Ramsey gets a lot of things right in the “Total Money Makeover.” His baby-step plan has helped millions of people get out of debt and take control of their finances. It is difficult to argue with the results even if you do not agree with all aspects of his approach. Besides, it is always good to remember the negative impacts of debt, and “The Total Money Makeover” does a good job of hammering home that point.
Learn about the pros and cons of the “Total Money Makeover” with my in-depth guide to Dave Ramsey and his baby steps.
CRASH TEST RATING
CRASH TEST MONEY VERDICT: PROCEED WITH CAUTION
While The Total Money Makeover is well written and a quick read (hence the four-star rating), not everyone will agree with Dave Ramsey’s baby steps and his hardline approach to money.
Test Subject #9: The Simple Path to Wealth
WHERE TO GET IT:
“The Simple Path to Wealth” by JL Collins is unique because it is a self-published book. What makes it among the best personal finance books that will help you win with money is that it offers straightforward advice on money in an interesting and engaging way. This book reads like a conversation with a friend or neighbor, making it easy to read. It also gives you insight into the Financial Independence Retire Early (FIRE) movement, which sets it apart from other books on this list.
For instance, “The Simple Path to Wealth” will advocate saving 50% of your income, as is often recommended by the FIRE method. That is a tough sell, but don’t let that stop you from reading this book. In the end,
CRASH TEST RATING:
CRASH TEST MONEY VERDICT: STREET LEGAL
“The Simple Path to Wealth” is all about helping you limit debt and save as much as possible while keeping your investments simple. In short, the less you spend, the more you save, the faster you will reach financial freedom.
Test Subject #10: Investing All-in-One For Dummies
WHERE TO GET IT:
If you’re looking for a comprehensive reference guide to investing, this pick for one of the best personal finance books might surprise you – it’s a “For Dummies” book. Don’t let the title fool you, though. This book covers all the basics in a structured and straightforward format, making it an ideal starting point for those new to investing.
CRASH TEST RATING:
CRASH TEST MONEY VERDICT: STREET LEGAL
Regardless of where you are in your investing journey, we all have to start somewhere, and this book is an excellent resource for beginner investors. It is also a great refresher for more experienced investors.
Lab Summary: The Best Personal Finance Books
After spending over 100 hours reading all of these books, our top recommendation for the most immediate and impactful book is The Psychology of Money. It offers the best bang for your buck and is a quick, enjoyable read.
Regardless of your choice, what all of these recommendations for the best personal finance books have in common is that they prioritize sound money habits over chasing investment trends or quick fixes. With their practical advice, these books can help you improve your financial well-being, whether you are just starting off on your journey or well on your way.
Which strategy should we crash-test next? Drop a comment below.
