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I’VE BEEN SAVING almost my entire adult life. Early on, three books put me on the path to financial success, helping me to reevaluate how I was living.
The first was The Automatic Millionaire by David Bach. This introduced me to the concept that small, automated savings could lead to big results, thanks to compounding over long periods. Albert Einstein reportedly said, “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” While some people question whether Einstein said this, Bach’s book put the truth of this concept into focus for me.
Dave Ramsey’s The Total Money Makeover provided a step-by-step plan for achieving my long-term goals. His seven baby steps offered a path that almost anyone could follow. He emphasized living well beneath your means, while devoting savings to paying off all debt—except mortgage debt—before then turning to investing.
His principles were a roadmap to financial stability. Paraphrasing Ramsey, live like no one else now so you can live like no one else later. Following his seven baby steps, plus the small changes in daily spending advocated by Bach, would form the foundation of my financial success.
The Millionaire Next Door, by Thomas J. Stanley and William D. Danko, was the most influential of my three early reads. It presents research showing that most wealthy Americans live middle-class lives, preferring a Camry to a Porsche. As a scientist, the book offered data that were analyzed in a way that I could understand. The Millionaire Next Door was proof that, to be affluent, you don’t have to be seen by others as rich.
Instead, what matters is that you’re comfortable with your spending habits, regardless of how others perceive your financial status. The book’s key message: It’s not how much you earn but how much you save that matters most. As Benjamin Franklin reportedly said, “Money makes money. And the money that money makes, makes money.”
While I’m grateful to have read these three books when I first started my money journey, I’ll admit to having reservations about wholeheartedly accepting all their ideas as doctrine. The books were a solid starting point for me, a way to whet my appetite for financial knowledge and to formulate my own ideas on wealth management. They do have one deficiency, however.
Following their advice too closely during my early years limited my spending. As I near full retirement, I find myself asking whether my overzealous saving cost me experiences when I was younger.
I want my money to last as long as I do. There’s no expiration date stamped on my foot. Yet I wonder now if I saved too much at the expense of enjoying life. Only time will tell.
What’s the best financial book you’ve ever read? Share your thoughts in HumbleDollar’s Voices section.
Jeff – great choices on starter books. I would likely add Your Money or Your Life by Vicki Robin and Joe Dominguez as well as The Simple Path to Wealth by JL Collins to your list. I gift these often to recent college graduates of friends/family.
I suspect that Future Jeff will be very pleased that Past Jeff saved so diligently. Savings, when we’ll executed, is really just delayed consumption. Given that you cannot change the past, all that is left is for Present Jeff to spend some of this savings in a way that makes him most happy! 😁
Thanks for the comment!
I noticed there is a section under Voices, with community suggestions for those who continue to look for books to build knowledge. There are some starter books listed there as well.
https://humbledollar.com/voices/whats-the-best-financial-book-youve-ever-read/
I long for an updated version of The Millionaire Next Door given how dated are many of the financial examples. Yes, I understand the timeless advice but when I review my copy I’m left pining for scenarios in 2023 dollars.
That book was co-authored by Stanley and Danko in 1996. Stanley subsequently wrote a few new volumes on his own dealing with the topic. According to his daughter Sarah Stanley Fallaw, Ph.D., he intended to write an update as a 20 year followup of that first book, but was killed in a motor vehicle accident in 2015. She collected the work he had done up until then, completed it, and published “The Next Millionaire Next Door” by Stanley and Fallaw in 2019. I think those who enjoyed the first book will likewise enjoy this newer updated version.
I suspect you would know if you unfairly denied yourself while working in order to save. I bet you didn’t. And, I bet you will be glad as the years go by in retirement you did what you did saving.
There are no do overs in retirement and it can last as long as you worked. The problem more likely is letting go of the money to enjoy retirement – don’t mess that part up. 😃
Indeed! I’ve been practicing loosening the purse strings as I enter retirement, in ways that add enjoyment. It’s not as easy to do as I thought it would be!
Jean Chatzky’s Women with Money and David Bach’s Smart Couples Finish Rich are great reads as well!
Jamie. Agreed these are also great “starter” reads. I imagine the trick is to find a text with principles that resonate and then begin to put those ideas into practice!
Those are excellent books which were also among my earliest reads. Lately I have thought about the aggressiveness of my savings rate which seemed to be the logical path following the aggressiveness of my mortgage payoff sprint. I don’t feel like I have missed out on anything, but my wife has really pushed me hard to start traveling now while we are still working and young. I agree and enjoy our trips, but deep down my financial brain is looking at the opportunity cost of the expense of such traveling through the lens of lost compounding. I am working on that! 🤷🏻♂️
Kevin – the always present sprint vs marathon savings conundrum! I too had to balnce different levels of desired saving/spending rates between my spouse and myself. My point of view evolved to compromise on the side of my wife, and keep her happy!