You Only Need These Four Books To Change Your Relationship With Money

05 Jan 2025 #books

Money is one of the skills we have to learn by ourselves.

I didn’t have a class called “Money” in high school. And if you went to a regular high school like me, you didn’t either.

Like it or not, we live in a world run by money. And still, we don’t learn a thing about money.

What we know about money is what we absorb while watching our parents sitting at the dinner table discussing or arguing about money. And they learned about money by watching their parents too.

I felt the urgency to learn about money when I started to earn a high salary as a software engineer, higher than all my previous salaries.

The fear of letting money slip out of my hands led me to watch finance videos on YouTube. One video led to another one, and videos led to books.

If you want to start your money journey, start with these four books:

1. The Richest Man in Babylon by George Clason

If you want to only read one book from this list, read this one.

This book takes you to ancient Babylon and uses fables to teach you money lessons. It shows the power of stories. You will picture yourself in the middle of the desert, sitting in a caravan, listening to money lessons.

We don’t trade gold coins for food and live in cities enclosed by walls anymore. But you can easily translate the lessons in this book to our day and age.

If I could summarize this book in one sentence, it would be:

“Ask the jeweler for jewelry advice.”

Often we go to our friends and relatives with poor financial education to ask about money. That’s an expensive mistake!

Key Lesson: Pay yourself first and save 10% of your income.

2. Rich Dad Poor Dad by Robert Kiyosaki

This won’t be a complete list of money books if I don’t include this one.

It doesn’t matter if Robert Kiyosaki’s rich dad is real or not.

Again, the power of stories to share lessons. It tells what his best friend’s dad, the rich dad, taught the author and his best friend about money.

The rich dad taught them not to work for money but for experience and lessons. And the poor dad taught them to go to school, get good grades, and get a job.

“JOB is an acronym for ‘Just Over Broke’”

The lesson I remember the most from this book is the employee/employer dilemma. Employees do the minimum not to get fired and employers pay their employees the minimum so they don’t leave. They’re always in a conflict of interest.

Key Lesson: An asset puts money into your pockets and a liability takes money out of your pockets. To be truly rich, buy assets, not liabilities that look like assets.

Repeat out loud: if it doesn’t put money into my pockets, my car is not an asset.

3. Simple Path to Wealth by JL Collins

This book is a collection of letters and posts the author wrote to his daughter to teach her about money and the Stock Market.

The premise of this book is that some young people don’t care much about money, so they need a simple plan to build and preserve wealth.

This is the book that taught me about emergency funds. Well, the book called it “F*ck-you money.” Some savings to keep the boat floating when you don’t tolerate your job anymore and just want to tell your boss the big F-word or when the decision to leave is not yours.

Thanks to an emergency fund, I kept my family’s boat floating for months after an unexpected layoff until I found something else.

“[Before picking stocks], ask yourself this simple question: ‘Am I Warren Buffet?’ If the answer is ‘no,’ keep your feet firmly on the ground with indexing.”

The author is a fan of low-cost index funds and that’s the approach he teaches in the book. Stick with a total market index fund and invest regularly the same amount no matter what disaster or recession “experts” are forecasting.

Key Lesson: Stay away from debt, keep your expenses in check, and invest in broad index funds like the Vanguard Total Stock Market Index Fund ETF (VTI) and Vanguard S&P 500 ETF (VOO).

Against the author’s teachings, I have to confess I added a second fund on dividends to my portfolio. Sorry!

4. Psychology of Money by Morgan Housel

This one is less about the mechanics of saving and investing. It covers 20 lessons about money, all of them around the premise that money is a soft skill.

Money isn’t about rational decisions we make in front of an Excel file. It’s more about the emotional decisions we make at the dinner table.

The story I remember the most from this book is the one about the janitor who went unnoticed until he died, and his net worth was revealed. He was a multi-millionaire who donated part of his fortune to the local school and library. In his lifetime, he kept saving and investing his modest salary.

Key Lesson: Money is not what you can see: fancy watches and expensive cars. Money is the assets that haven’t been made into fancy watches and expensive cars yet.

Parting Thought

You could read more books and watch more YouTube videos. Some are more practical, others more philosophical.

But all of them have in common that money is a mindset and a skill we can master like any other skill.

Money isn’t evil. Money is what we decide to be. It’s a multiplier of our values. Remember: “If it’s in our heads first, it won’t be in our hands.”