You probably know the cliché that if you give a person a fish they will eat for a day, but if you teach them how to fish they will never be hungry, right? The same can be said for the work we do as financial coaches providing advice to people to help them make financial decisions, which is different from advice where we will just tell them what to do. So instead of giving away more “fish” this holiday season, why not teach your friends and family how to fish with a financial education gift? After all, the New Year will be here soon, and better money management is one of the most common resolutions. (A gift for weight loss may not turn out so well.)
While you unfortunately cannot purchase our services as a gift for someone, a good personal finance book may be the best thing to do. Here are 5 that I found particularly insightful. They also cover a range of topics and financial literacy levels.
What your financial advisor isn’t telling you by Liz Davidson
This was written by our CEO (with input from Yours truly), so I’m a little biased here. However, it is really a good place to start that provides some insight into how to manage your money with prospects that you usually don’t find in other personal finance books. (Despite the title, it’s just as useful if you don’t have a financial advisor, so don’t be dissuaded from checking it out.)
The automatic millionaire by David Bach
This book discusses in more detail one of the strategies discussed in What your financial advisor doesn’t tell you. It features true stories of real people with average salaries who were able to slowly accumulate large sums of wealth and even become millionaires over time simply by automatically setting aside an increasing amount of savings each year. (Your employer’s pension plan may even have an “contribution rate indexation” or “automatic indexation” feature to make this happen automatically.)
Most people find it much easier than budgeting. For example, if you are currently saving 10% on your 401 (k), it might seem impossible to save 20%, but how about just an extra 1%? You probably won’t even miss it on your paycheck. Increase your 401 (k) contribution by 1% each year and you’ll save that 20% over ten years in a relatively painless way.
The 4 hour work week by Timothy Ferriss
Too impatient to wait for retirement? Rather than just saving now to retire later, this book also advocates taking “mini-retirement” throughout your life. Even if you’re not quite ready to work just 4 hours a week, it has plenty of great ideas on how to earn extra income and save time by doing things more efficiently.
Stop acting rich … and start living like a true millionaire by Thomas Stanley
If a 4 hour work week is just a little too extreme or unconventional for you, this book may be more of your cup of tea. It is written by the author of The millionaire next door and explains in more detail how the rich actually live. Tip: If you want to be a millionaire (and who doesn’t?), Don’t live the stereotype of the ‘millionaire lifestyle’ until you are one (and maybe not even then if you want to?). to stay).
Global asset allocation by Meb Faber
Want to know how to invest all that money you save? It has been said that 90% of your returns on investment are determined by your asset allocation, so which asset allocation strategy should you use? With so many conflicting opinions, it’s easy to get overwhelmed.
This book compares the model portfolios of some of the best investment experts and comes to a shocking conclusion. He finds that in the long run it doesn’t matter which one you choose. The key is to be reasonably diverse, minimize your costs, and then stick to your plan through thick and thin. This is simple advice but not necessarily easy to follow when the temptation to chase after past performance or when the market can be so strong.
Any of these books could be a great stocking stuffer for someone on your list. If they read it and “learn to fish” you could literally change someone’s life. How’s that for a gift?
Related: Best Personal Finance Podcasts From Financial Advisors