Menu #17: Unlock wealth with 5 must-read personal finance books

STATS STACK 🥞

$20,400 was the median 401(k) balance for account holders in their 30s as of the fourth quarter of 2023, which is a far cry from the $1.46 million the average American thinks they’ll need to save to retire comfortably (Source: Northwestern Mutual’s 2024 Planning and Progress study).

1.6 is the rate at which US economic growth slowed last quarter, falling below all forecasts, while inflation surged to uncomfortable levels. It makes the job for the Fed harder, as it’s tougher to cut rates to stimulate short-term demand when inflation is sticky hovering at 3-4%, above the 2% target. These developments have dimmed hopes for a soft landing, with gross domestic product increasing at a slower-than-expected rate and personal spending rising at a subdued pace (Source: MSN).

62 is the median actual retirement age for Americans, often earlier than anticipated, as revealed by the latest survey from the Employee Benefit Research Institute. Despite many workers expecting to retire at age 65, factors such as Social Security eligibility influence earlier retirement decisions. This underscores the challenge of accurately predicting the future, yet retirees generally find happiness and fulfillment in their lifestyles (Source: WSJ).

DEEP DISH 🍕

Unlock wealth with 5 must-read personal finance books

If you're eager to take control of your financial future, diving into the right books can be a game-changer. From strategies for eliminating debt to insights on smart investing, there's a wealth of knowledge out there designed to guide you toward financial independence.

Here's a roundup of the top five personal finance books that not only illuminate the path to financial well-being but also provide the practical tools needed to navigate it. Each book offers unique perspectives and actionable advice, helping you to not just manage your money, but to make it work for you.

1. The Total Money Makeover — Dave Ramsey: Dave Ramsey's The Total Money Makeover cuts straight to the chase with its straightforward approach to finance. It’s all about wiping out debt and building wealth step-by-step. The heart of the book is the "7 Baby Steps" plan, which helps develop solid financial habits, guiding you from debt to saving and then giving. Ramsey’s a big fan of old-school, cash-based budgeting and aggressive debt attack. His advice may lean conservative, but it’s also super practical, breaking down financial freedom into achievable steps.

Baby Step 1: Start with a $1,000 emergency fund.
Baby Step 2: Get rid of all debt (except your mortgage) using the debt snowball method.
Baby Step 3: Build a full emergency fund with 3-6 months of expenses.
Baby Step 4: Put 15% of your household income into retirement.
Baby Step 5: Start saving for your kids' college.
Baby Step 6: Pay off your home early.
Baby Step 7: Build wealth and give generously.

2. The Richest Man in Babylon — George S. Clason: George S. Clason’s The Richest Man in Babylon turns financial wisdom into captivating parables from ancient Babylon. It covers the essentials—save money, let your money work for you, and stay out of debt. Clason’s guidance is evergreen, promising prosperity to anyone who sticks to these simple, effective rules. It’s especially great for breaking down complex concepts into memorable lessons.

3. Rich Man Poor Bank — Mark J. Quann: In Rich Man Poor Bank, Mark J. Quann takes a hard look at the conventional banking system and how it affects our wallet. He exposes how banks make money from our deposits and loans at our expense and pushes us to take charge of our financial destiny by investing like banks do. It’s a compelling call to learn more about financial tools and seek alternatives to traditional banks.

4. I Will Teach You to Be Rich — Ramit Sethi: Ramit Sethi's I Will Teach You to Be Rich speaks directly to you, mixing personal stories with actionable advice. It’s all about enjoying life while growing your wealth. His six-week program tackles everything from optimizing your credit cards to smart investing. Ramit pushes for automation to simplify your finances and tailors his advice to fit your life and goals, making it a go-to for anyone starting their financial journey.

Here's a quick look at his 6-week program:

Week 1: Boost your credit with smart credit card use.
Week 2: Pick bank accounts that grow your money.
Week 3: Set a solid foundation before investing.
Week 4: Balance saving and spending wisely.
Week 5: Automate your finances to streamline your life.
Week 6: Learn smart investment strategies.

5. Will You Ever Be Rich? — Victor Lofinmakin: Victor Lofinmakin’s Will You Ever Be Rich? tackles the real issues average American families face, illustrated through the story of Oliver's journey from paycheck to paycheck to significant wealth. The book uses a narrative approach to make complex financial concepts approachable and engaging. It’s full of practical advice on wealth accumulation through various means like entrepreneurship, real estate, and smart tax strategies, motivating readers to seize control of their financial future.

Conclusion
Each of these books offers a distinct take on personal finance, from basic principles and getting out of debt to personalized investment strategies and critiques of the banking system. Together, they make up a complete library of financial wisdom, giving you the insights and tools you need to chase and achieve financial freedom. Whether you're looking to break free from debt, increase your wealth, or just deepen your understanding of personal finance, these reads are invaluable resources for your journey.

SWEET LINKS 🍰
Digital bites we think you’ll like

Homeownership through 401(k) — Some home buyers are using funds from their 401(k) for a home down payment and may not be aware that withdrawals before age 59½ incur a 10% penalty. However, exemptions include using a Roth 401(k) or taking a 401(k) loan, offering alternatives to avoid penalties.

Bonus book on personal finance — This free ebook is a comprehensive guide to learning key concepts, setting clear goals, and following practical steps to manage your money, reduce debt, and increase savings. With expert tips on investing, retirement accounts, and early retirement strategies, this eBook equips you to take control of your finances and realize your dreams.

Death & taxes — President Biden has proposed a capital gains tax increase, with a top rate of 44.6%, potentially exceeding 50% when combined with state taxes in some states. The proposal includes taxing capital gains at death, a measure previously attempted but ultimately repealed due to complexity and impracticality.