The average American rates their level of financial literacy as a 6.2 out of 10. If we were back in high school, Americans would give themselves a D- when it comes to understanding and effectively putting to use financial skills like budgeting, investing, and personal money management. This also may be why fewer than one quarter of American households live debt free, while an estimated 340 million Americans struggle with debt. So how does one tackle financial struggles and put core financial skills into practice? Improve your financial literacy.
Improving Your Financial Literacy
Financial literacy is defined by the National Financial Educators Council as, “Possessing the skills and knowledge on financial matters to confidently take effective action that best fulfills an individual’s personal, family, and global community goals.” According to the NFEC, financial literacy topics include financial psychology (behavioral investing), savings, budgeting, loans & debt, economic influence, risk management, personal finance, and more.
Going back to the reference of high school, you may remember learning about the concepts of trigonometry or calculus. But young adults in this pivotal education point seldom learn about the important financial lessons that will arise as they matriculate to adulthood, like how to balance a budget or setting financial milestones.
If you are craving money management tips or are interested in learning the fundamentals of investing, these 7 books are must-reads to help improve your financial literacy. Each book offers overall guidance on how to improve your financial situation and how to align your goals with your financial circumstances for the future.
7 Must-Read Financial Books
While his book, The Richest Man in Babylon, was published in 1926, George S. Clason’s advice still rings true today. Using parables set in ancient Babylon, Clason explains the basics of money, including financial planning, personal wealth accumulation, and the benefit of thrift.
Clason explores 7 simple rules of money–like controlling expenditure and improving your ability to earn–that will help readers bring their financial dreams to fruition. With 1 million copies sold, it’s clear his message packs a meaningful punch nearly 100 years later.
A classic. Rich Dad Poor Dad, written by Robert T. Kiyosaki, has been making waves since its release in 1997. Kiyosaki details how growing up alongside two dads – one biological, the other the dad of his best friend – shaped his view on money. Both dads had conflicting perspectives, one believing you should find a good job and work hard in order to earn your money, while the other believed in the importance of financial literacy and making your money work for you.
The book also shares insight into why conversations around money are better held at home versus school and how to equip your children for financial success in the future. Kiyoski has parlayed his success into a series of 14 books, including Rich Dad’s Guide to Investing and Rich Dad’s Rich Kid Smart Kid
3. The Intelligent Investor | Benjamin Graham
If you’re looking to expand your knowledge on investing, this book is for you. Benjamin Graham’s The Intelligent Investor offers a comprehensive guide on value investing and shows investors how to analyze stocks and bonds to make better investment decisions.
Dubbed the stock market bible, Graham’s work helps investors navigate potential stock market blunders and highlights the importance of investing for the long-term. Warren Buffet even called The Intelligent Investor “The best book on investing ever written.”
4. Your Money or Your Life | Vicki Robin and Joe Dominguez
Recognized as the book that has helped millions of readers have a better relationship with money, Your Money or Your Life offers a holistic approach to personal finance via a 9-step program that promises financial independence.
Emphasizing the importance of aligning your spending with your values, Robin and Dominguez walk readers through steps to get out of debt and develop their savings, saving money through mindfulness, and decluttering your life for better overall living.
5. The Behavior Gap | Car Richard
With a straightforward message–simple ways to stop doing dumb things with money–Richards explores the psychological and emotional factors that play into financial success. The read offers practical advice for overcoming these psychological obstacles and how to start financially fresh.
The Behavior Gap has been embraced specifically by younger generations, like millennials, who want to understand the role that their emotions and behaviors play in their financial decisions.
6. The One-Page Financial Plan | Carl Richards
The One-Page Financial Plan is Carl Richard’s second spot on our list of books to improve your financial literacy. Leveraging his experience as a certified financial planner, Richards follow up publication focuses on a simple, yet effective approach to personal finance. Readers are urged to create a one-page financial plan that will help motivate them on their path to financial success. Along the way, Richards covers tools like budgeting, saving, investing, and planning for retirement.
His advice is practical and engaging and offers real life scenarios that will help improve your financial literacy and strengthen your financial situation. His biggest takeaway: start small and make incremental progress towards your goals and always course correct as needed.
7. How to Make Your Money Last | Jane Bryant Quinn
Even though the U.S. Government has made strides to improve retirement for millions of Americans, many of us aren’t financially prepared to take that next step. One glaring reason why is that many Americans feel financially unprepared and while they crawl their way out of debt they realize they have not sufficiently planned for the future.
In Jane Bryant Quinn’s book How to Make Your Money Last, she provides an indispensable retirement guide chock full of ways to create a sustainable retirement income by minimizing taxes, managing risk, and diversifying investments.
One key to improving your financial literacy? Spend time learning the logistics of retirement early on so that you feel secure in your investments when you’re ready for your retirement journey.
Take control of your finances and improve your financial literacy with these 7 must-read books. We’ve linked each title to a purchasing or listening option, but remember to check your local library for available copies. If you’ve read any of these titles, join us on Twitter and tell us your favorite financial read and how it’s impacted your finances.
Investment advice through Prudent Investors Network, Inc., an SEC-registered investment advisor. This blog is general communication being provided for informational purposes only. This information is in no way a solicitation or offer to sell securities or investment advisory services. It is educational in nature and not to be taken as advice or a recommendation for any specific investment product or investment strategy. This does not contain sufficient information to support an investment decision. Any investment or investment strategy mentioned may not be suitable for all investors or in their best interest. Statistical information, quotes, charts, references to articles or any other quoted statement or statements regarding market or other financial information is obtained from sources which we believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. All rights are reserved. No part of this blog including text, graphics, et al, may be reproduced or copied in any format, electronic, print, et al, without written consent from Prudent Investors. Prudent Investors does not provide legal or tax advice. Please be advised to consult with your investment advisor, attorney or tax professional before making any investment decisions.
