Three Personal Finance Books Every Aussie Should Read
Trying to save for your first home? Credit card debt got you worried? Realising bank interest is actually daylight robbery? Don’t worry, I’ve got you covered.
My personal journey to becoming financial literate really began when I was given The Barefoot Investor as a Christmas present at age 14 (yes, I was (am?) a ‘special’ child). Since then I’ve literally spent 000’s of hours reading about money. From the classic 640-page tome The Intelligent Investor by Ben Graham (Warren Buffet’s mentor) to Financial Independence blogs like Mr Money Mustache. I have tried to leave no stone unturned when it comes to money — both my relationship with it and how to make more of it — in a way that aligns with my goals and philosophy (money is just a tool, after all).
I still have plenty to read and learn, however, there are three books I’ve read that I would recommend to almost everyone I know. In order of complexity, they are: Rich Dad Poor Dad by Robert Kiyosaki, The Barefoot Investor by Scott Pape and The Little Book of Common-Sense Investing by Jack Bogle.
Rich Dad Poor Dad
For a no-nonsense, simple and short read on the right way to think about money, I know of none better than Rich Dad, Poor Dad.
Kiyosaki is one of the world’s most well-known advocates for financial literacy and financial education. The story of Rich Dad Poor Dad is about him growing up with two separate dads — his real father and the father of his best friend Mike. By comparing the ways in which both men thought about and used money, Kiyosaki provides six compelling lessons that challenge the commonly accepted wisdom on money and begins the financial education process that our schooling system has failed to teach.
What it’s best for: Debunking misguided conventional financial wisdom. Provides a foundation of strong, simple financial principles to start with.
What it’s not for: Creating a detailed, step-by-step financial action plan. Learning the details of financial education or instruments, esp. not in Oz.
“It’s not about how much money you make, it’s about how much you keep.” — Robert Kiyosaki.
The Barefoot Investor
A step-by-step guide to debt, saving and investing specifically for Australians in language a 14 year-old can understand.
As my first exposure to financial education that didn’t come from my parents (well kind of, they did pay for it) and the book I have gifted the most for more than a decade, I have a special place in my heart for The Barefoot Investor.
It is a straight forward guide that helps us take a financial snapshot of where we are today, provides immediate next steps, and a basic framework to become wealthy. Having sold over 1 million copies, The Barefoot Investor has established Pape as the go-to name in Personal Finance within Australia.
What it’s best for: A step-by-step financial plan you can start today. Relevant, actionable and rich in detail. Written by an Australian, for Australians.
What it’s not for: More sophisticated budgeting or investing strategies.
Doesn’t really provide a ‘conceptual foundation’ of key financial principles.
“Compound interest — the eighth wonder of the world. ” — Scott Pape.
Note that the version I first owned (and have read 3 times over) is the 2007 second edition, whilst the 2018 version adds another 4 steps to the original 5-step process. I am currently reading the newest version and will update this article if necessary to reflect my opinion of the latest edition.
The Little Book of Common Sense Investing
A convincing explainer of why the best way to start and continue to invest in the sharemarket is through Index ETFs and/or Index Funds, and a set of simple rules to know which ones to choose.
The Little Book of Common Sense Investing is written by the inventor of Index Funds and Founder of Vanguard, Jack Bogle, who at 89 years of age provides insightful and eye-opening comparisons that highlight why the index approach is almost always the right one for retail investors. Importantly, it discusses how to choose between funds (hint: fees) and the differences between Index ETFs and Index Funds (hint: liquidity).
While concise, this is also a thorough account of the benefits of investing in Index ETFs/Funds and unfortunately, with detail comes jargon. I do recommend that you have a basic level of financial understanding (such as reading either of the two books above) before picking up this book. To re-emphasise, this is not worth reading until you are ready to invest, which implies you have no unsecured debt, saved an emergency fund, and achieved other basic financial milestones (again, see above, esp. The Barefoot Investor).
What it’s best for: Understanding why Index ETFs/Funds are a brilliant investment strategy. Learning to choose the best Index ETFs/Funds.
What it’s not for: Introductory financial education or key financial principles. Broad financial overhaul or a step-by-step fundamental-focused action plan.
“Before costs, beating the market is a zero-sum game. After costs, it is a loser’s game. ” — Jack Bogle.
I hope this helps you take your next steps towards taking control of your money and that you take away as much from each of these books as I did.
As you can probably tell, financial literacy is my jam. If you’d like to read more about my background and where my passion for financial literacy began, you can in this article.
Any questions, thoughts or comments please leave them below and I’ll get to them as soon as I can.
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Disclaimer: At pearler, we pride ourselves on the quality of the financial advice we give, however, this advice has not been tailored for you. You may have unique financial goals, circumstances or needs which make this advice inappropriate, and it is important that you know whether you do. If you’re unsure we urge you to speak to someone you trust who is competent with money and understands your individual needs, whether they be a trusted friend or professional.
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