Some people handle their finances like naturals, but for many of us, money management does not come easy. Maybe you’re prone to pulling out your credit card on a whim. Perhaps you want to improve your finances, but you don’t know where to start.
If either sounds like you, you’re not the only one. The Financial Planning Standards Counsel’s Financial Stress survey found that 41% of Canadians considered money their greatest stressor. Even worse, nearly half of all Canadians feel embarrassed about their lack of control over their financial situation.
The best way to reduce your money stress and take control of your finances is to read. There are hundreds of personal finance books available — some are good, and some are bad. We’ve compiled the best personal finance books below.
1. Personal Finance for Canadians for Dummies
- Insight 1: Improve your financial literacy.
- Insight 2: Practice good financial habits.
- Insight 3: Learn how to spot fake financial gurus and ignore them.
- Goodreads rating: 3.78
Part of the Dummies collection of books, Personal Finance for Canadians for Dummies is an excellent introduction to money management for Canadians.
If there’s a money topic you’re unsure about, there’s a section in this book on it. Eric Tyson and Tony Martin cover everything, from improving your financial literacy to taxes to debt to real estate and more.
With that in mind, it’s a long read. This book serves better as a reference whenever you have a specific finance question.
In 2018, Tyson and Martin updated this book to cover more recent finance trends, such as investing apps.
2. The Wealthy Barber
- Insight 1: Pay yourself first by investing 10% of everything you earn.
- Insight 2: Max out your Registered Retirement Savings Plan (RRSP).
- Insight 3: Pay off all non-tax-deductible debt before you invest.
- Goodreads rating: 4.02
One of the best-selling Canadian books ever, David Chilton’s The Wealthy Barber takes an interesting approach — it uses fiction to convey personal finance lessons entertainingly.
The book follows Roy, a barber who, as a young man, started on the path to wealth after learning and following financial advice from the wealthiest man in town.
Roy sees substantial financial growth over his life and passes his knowledge on to a few students as they visit him. Each book chapter represents a different visit and a different lesson that Roy teaches.
The biggest lesson is to pay yourself first. Roy says to invest 10% of your earnings into low-cost mutual funds every month after maxing out your RRSP.
However, Roy notes that you should pay off non-tax-deductible debt first, as the interest on that debt is essentially a negative return on investment.
Chilton released a 2011 sequel called The Wealthy Barber Returns, in which he ditches the fictional approach — casually chatting with the reader about personal finance while expanding on The Wealthy Barber’s lessons.
3. The Total Money Makeover
- Insight 1: Debt is not a tool that will help you achieve financial prosperity.
- Insight 2: You cannot “get rich quick”.
- Insight 3: Prioritize your financial goals over others’ opinions of you.
- Goodreads rating: 4.02
Dave Ramsey lays out a 7-step financial plan for climbing your way out of debt and massively transforming your financial life in The Total Money Makeover.
Before Ramsey gets to the plan, though, he puts you in the right mindset, explaining that you must take 100% responsibility for your financial woes before you can fix them.
He also debunks several money myths, the largest ones being:
- Debt enriches lenders, not you.
- Building wealth is a slow and steady process.
- Living above your means to impress others is pointless.
Ramsey then proceeds with his 7-step financial plan, each chapter covering 1 step:
- Save $1,000 for emergencies.
- Pay off debts in order of lowest to highest balance — the “Debt Snowball”.
- Build your emergency fund to 3-6 months of living expenses.
- Maximize retirement investing.
- Save for college if necessary.
- Pay off your mortgage.
- Build your wealth with all your newfound money.
Ramsey then closes out the book by noting that you’ll be truly wealthy when your investment returns pay you more than your regular income.
4. I Will Teach You to be Rich
- Insight 1: You are 100% responsible for your finances.
- Insight 2: Spend consciously on what you love.
- Insight 3: Automate your finances as much as possible.
- Goodreads rating: 4.09
I Will Teach You to be Rich is aimed at younger people, providing you an actionable 6-step guide on setting your finances straight. Ramit Sethi’s humorous writing style makes this a fun read.
Sethi teaches you:
- Credit: How to optimize your credit cards and improve your score
- Banks: Finding the best bank accounts and negotiating fees
- Retirement: Max out your retirement accounts. Sethi discusses American retirement accounts, but the advice holds true for Canadians.
- Automation: Link as many accounts as possible to automate bill payments, savings, and investing so that you save time.
- Investing: No need to be an expert. Just diversify across several asset classes.
Sethi is all about action. He includes many methods and products he’s used so that you have ideas of where to start.
For example, he tells you which banks and credit cards he uses and why he uses them.
He also shares word-for-word scripts he uses to negotiate away bank and credit card fees.
Overall, I Will Teach You to be Rich is a solid choice for personal finance beginners who want to get smart about their money.
5. Wealthing Like Rabbits
- Insight 1: When it comes to retirement, more is always better.
- Insight 2: Don’t try to “keep up with the Joneses”.
- Insight 3: Don’t take out the biggest mortgage possible.
- Goodreads rating: 4.3
Wealthing Like Rabbits, written strictly for Canadians, proves that personal finance doesn’t have to be a dry, painful topic. In this text, author Robert Brown notes the extraordinary reproductive rate of rabbits and shows you how you can apply it to your wealth through compounding.
Using pop culture references and humorous anecdotes to keep things fresh, Brown covers everything from retirement, debt, mortgages, investing, and more.
If you need a light, entertaining introduction to managing your money, add Wealthing Like Rabbits to your reading list.
6. The Little Book of Common Sense Investing
- Insight 1: Actively managed funds are not good investments.
- Insight 2: The simplest solution is the best solution when investing.
- Insight 3: Invest in low-cost index funds.
- Goodreads rating: 4.18
The Little Book of Common Sense Investing was written by John C. “Jack” Bogle, the founder of Vanguard and creator of the first index fund.
Bogle’s philosophy is that simple is better. You cannot beat the market because there is a losing stock for every winning stock — you’ll only end up matching that market. When you add in fees, you lose every time, so avoid active investing or actively managed funds.
Instead, invest in low-cost, broad index funds. Doing so will keep your fees low — as there is little management required — while providing slow but steady long-term growth.
If you have any interest in investing, this text is a must-read.
7. A Random Walk Down Wall Street
- Insight 1: Short-term price movements in the market are unpredictable.
- Insight 2: Don’t invest in trendy stocks for the long-term.
- Insight 3: Investing in a diversified balance of low-cost index funds is superior to stock picking.
- Goodreads rating: 4.1
In A Random Walk Down Wall Street, economist Burton Malkiel dives into several investment strategies/philosophies and points out the flaws in each one.
He especially tears apart technical analysis — an investing strategy that uses price and volume data to predict future movements — claiming that the market follows a “random walk” pattern of unpredictable short-term price movements.
Malkiel arrives at a similar conclusion as Bogle did — invest in low-cost index funds. Like other personal finance experts, he also advocates building an emergency fund and maxing out your retirement accounts first.
If you’re interested in understanding how the stock market works and learning basic investor psychology, A Random Walk Down Wall Street should be on your reading list.
8. The Millionaire Next Door
- Insight 1: Most wealthy people live frugally instead of lavishly.
- Insight 2: The wealthy allocate resources towards building more wealth.
- Insight 3: Many wealthy people did not receive excessive financial aid from their parents.
- Goodreads rating: 4.03
Everyone’s image of millionaires includes big houses and fancy cars. Thomas Stanley and William Danko, authors of The Millionaire Next Door, interviewed real millionaires, however, and found the opposite — most millionaires are wealthy because they live frugally and pour their resources into opportunities conducive to wealth-building.
In The Millionaire Next Door, Stanley and Danko detail several common traits their interviewees shared, chief among them being frugal lifestyles and prioritization of financial independence over financial showboating.
In fact, those who live to show off their income generally have less wealth because they spend it all on their lavish lifestyle, as the book argues.
Although The Millionaire Next Door was written to an American audience, the content is still applicable to Canadians.
9. Victory Lap Retirement
- Insight 1: Shifting from 100% work to 100% retirement isn’t sustainable for most.
- Insight 2: Create a life from which you neither have to nor want to retire.
- Insight 3: Save enough for essentials, then work as much needed for other wants.
- Goodreads rating: 3.57
As lifespans grow longer, a cushy retirement may no longer be in the cards for many — not to mention that some people get bored of retirement and want to work on something.
Victory Lap Retirement by Jonathan Chevreau and Mike Drak teaches that the key is wrong because you want to, not because you have to. This book guides you towards creating a balanced lifestyle where you can continue to complete meaningful, fulfilling work while also having plenty of time and money for “play”.
Definitely a good book for those closer to retirement — but if you’re young, learning and applying the wisdom between Victory Lap Retirement’s covers will position you for an enjoyable lifestyle long before retirement age.
10. Thinking, Fast and Slow
- Insight 1: It’s easier to recognize others’ mistakes than our own.
- Insight 2: Our minds prefer familiarity over truth.
- Insight 3: Intuitive, emotional thinking and slower, rational thinking both have their places.
- Goodreads rating: 4.17
Less of a strict personal finance book, Thinking, Fast and Slow by Nobel Prize in Economics laureate Dan Kahneman explores how we make decisions.
According to Kahneman, there are two systems of thinking.
- System 1 involves fast, emotion, intuitive thinking.
- System 2 involves slower, rational thinking.
Kahneman discusses the cognitive biases associated with each system and how they affect our decision-making.
You won’t learn any hard money lessons in Thinking, Fast and Slow, but if you’re interested in understanding how you think about things — and how to apply that knowledge to your finances — you should grab this book.
What to read next
Over to you
Have you read any of these books? If so, did you learn something that you’ve used to improve your finances? What is your favorite personal finance book? Please let us know by leaving a comment below.