Semit Rethi’s I Will Teach You To Be Rich is the best personal finance book I’ve found, and it’s the one I recommend to people who are starting to get their financial house in order, are new to investing, or are in their early 20s. If you’re older and are already in good shape financially, this book will be less useful.
Sethi’s book is a fairly easy read – it’s only a few hundred pages of easy-to-understand information, written in a pretty informal tone. He first explains credit cards and credit scores, and talks about things you can do to get fees waived, optimize your credit cards, and avoid falling into the trap of spending a lot of money on interest every month.
Next, he talks about finding a low-fee, high-interest bank account to keep your money in – in an era with low/no fee accounts that pay around 1% interest rates (at the time of this writing, at least), it is amazing how many people continue to pay unnecessary fees at banks that offer negligible interest rates (as a side note, our site – Best Savings Rates – can help you find the best place to keep your money).
Then, he tries to demystify investing. Investing your money wisely is the easiest way to become rich over time, but it is confusing for many people and it is easy to invest in ways that aren’t optimal. For years, I invested in individual stocks and watched as I paid lots of money in commissions, only to see less of a return than if I’d just stuck it in a boring index fund.
The section on investing is probably the most useful and important for people starting out – the sooner you start investing wisely, the more money you’ll have.
Sethi also goes over tracking your expenses (which is really important – how else will you know where you are spending more money?) and tries to keep things in context – rather than making you feel guilty for a latte here and there or eating out a lot, he tries to get you to focus on the important things.
The only things that aren’t great in this book are: 1) His examples of high-interest accounts are out of date, and 2) his advice about negotiating a car deal isn’t very good. Don’t follow it.
Overall, this book won’t make you rich quickly, but it will teach you how to save and invest your money wisely, so that you will be rich at some point in your life. It is available for less than ten bucks at Amazon, and I highly recommend it.