When I was 10 years old, my mother took me on a drive through our neighborhood. My upbringing was solidly middle class. The homes were nice, the cars were large and there was usually more than one in the driveway. My mother showed me a home and asked me if I liked it. Sure, I said. You like that car? she asked. Sure, I said. But by now I was beginning to feel uneasy. After a few minutes of this my mother hit me with the punch line: If you like these things, you need to make sure you can buy them yourself. Today all I really want to buy myself is an iPad, but this was the 1970’s when Apple was just an idea in Steve Job’s mind, the dollar was worth more than it is today, equal pay for equal work was becoming a popular slogan and women were very often dependent on men for their measure of financial security. About a week or so ago I blogged about The Secret Currency of Love, a collection of essays written by women on the topic of women and money. These women shared the ways in which money is used and abused in their lives. They share the Hobson’s choices they have made because of money. The portraits are intimate. The thing that has amazed me is that more than one woman in this collection of essays baldly stated that at her very heart she just wants to be taken care of. Accomplished authors and journalists with a single confession: that at the end of the day they want the burden of caring about money, how it is made and spent lifted from their shoulders. This is 2009! I have seen so many women finding themselves divorced at middle age and having to declare personal bankruptcy even though they had jobs because they had no idea where the money was and what their debts actually were. I have met women, high income earners, who spend with no thought for tomorrow because they not so secretly hope that they will meet someone who will take care of them and relieve them from the burden of having to work and, finally, I have met women intermittently employed while married because they were raising a family only to find themselves divorced without even a basic understanding of how to re-enter the work force or how to apportion their settlements to create a modicum of security for themselves. I have worked with enough women and seen enough among friends and family to believe that expecting someone else to do the heavy financial lifting is simply a recipe for disappointment at best and disaster at worst.
When I think about the imbalance of power being dependent on someone else for information and security entails, I get chest pain. What are we to do? Ultimately many essays conclude that there is nothing wrong with wanting as long as we take care of business. And take care of business we should. I am getting that iPad and I am grateful that I won’t have to get permission before I buy.

Please comment. Am I being too radical?

The idea for this post came from a conversation that I had with my friend, George. I had just finished the Resource Page for one of my blogs. Over the past decade or so, I have read over 100 financial books and decided to list the most influential ones, the ones making the greatest contribution to my financial philosophy and the success strategies I have used over the years. I was shocked to have a list that was ten books long considering all the books I had read. I told George, lamenting the fact that I had “wasted” well over a $1000 dollars on financial books only to have 10 make a difference. George said that he would like to know what about those were and why they made the list. I thought “hey, what a great idea for a blog post”.

The books that made a difference for me all changed the way that I think about money. Interestingly famous books like The Wealthy Barber, The 9 Steps to Financial Freedom or the Automatic Millionaire will never make my list because they will never help the average person gain wealth. The advice in each of these books only works if certain asset classes always appreciate in value. We’ve been through enough bubbles and recessions since March 2000 to know that assets do not always increase in value. It is a nice idea that you can save your money, invest in mutual funds for 30 years and retire comfortably at age 65. Far too many retirees have learned that this just isn’t the case. The problem is that they learn the truth at age 65 when a do-over is impossible. There are too many books that go over the basics of frugal living, debt reduction, budgeting and automating savings to pick one book over the other. To be fair those books will give a very basic financial foundation, but after you follow the specific “how to” strategies, you will face the inevitable question. “What next?” These books will never help you answer that question. The thing is, the answer to “what’s next?” is where wealth is created. The books that made my list made it, because they teach not only the basics of personal finance, but they provide ideas that help answer the question, “what’s next?”

Bling, Basics and Being a Millionaire

If you follow popular culture being a millionaire is all about Bling. The fancy car(s), the rolex watches, the 12,000 square foot home with the 4000 square foot bungalow. Having wealth is all about flash and show rather than cashflow and assets. I believed that until I read two books: Rich Dad, Poor Dad and The Millionaire Next Door. Rich Dad, Poor Dad taught me four important concepts:
1) that my house is not an asset
2) what a cashflow statement and balance sheet are
3) that income does not equal wealth (or that one can be poor at any income)
4) anything that is not an asset is a doodad therefore acquire assets before doodads. Most do the opposite

The Millionaire Next Door taught me that
1) The average millionaire owns their own business
2) Does not provide EOC (economic outpatient care to family members and friends)
3) The average millionaire does not automate his wealth but is an avid accumulator of assets
4) The average millionaire is frugal
5) Millionaires come in teams, if a husband is a millionaire it is because he and his wife are on the same page and vise versa.

Retire Rich, Retire Young helped me think about exit strategies. Robert Kiyosaki and his wife used a business to help them create sufficient income so that they could live on half and use the other half to acquire assets.

Who Moved My Cheese is a wonderful reminder that the only constant is change and that if I am to move forward in life I must be able to adapt and have a healthy response to change.

Your Money or Your Life is an incredible book. This book connects the dots between your work effort, the money your earn and the things that you buy. The concepts in this book allow me to live in full awareness of what things cost, not in terms of money, but in terms of my work product. A vacuum cleaner, for instance, isn’t a vacuum cleaner but four hours of work so the choice for me is to buy a quality vacuum cleaner and take care of it or work for a vacuum cleaner every year. I certainly have better ways to spend my time. The other key concept is that because the things I buy and the vacations I take ultimately cost work product, it is key that I perform work that I am passionate about.

How to Get What You Want with the Money You Already Have was a book I bought on impulse while building my personal finance library. This book taught me to value small sums of money instead of waiting for the big score before I could make major financial change.

Automatic Wealth: Six Steps to Financial Independence actually puts in writing what other financial authors are afraid to say: learning a new skill, one that will allow you to make more money, takes time, about 1000 hours. If you are already working 40 hours a week and can only spare 4 hours a week toward your new skill, you will spend 250 weeks, almost 5 years learning a new skill to increase your income. No wonder most real estate investors don’t make money in real estate. No wonder most Network Marketers never make a dime.

Multiple Streams of Income introduced me to the cold hard reality of the marketing funnel. It explains the seminar junkie phenomenon and makes no apology for it. I can use this knowledge to steer clear of someone else’s funnel or decide to create my own.

Debt is Slavery was a wonderful surprise of a book. It is more than a “debt is bad” book. It is a discourse in financial philosophy about assets versus liabilities, yet it is a very short read only about 120 pages or so.

The Richest Man in Babylon was first published in 1926. I still say “a part of all I earn is mine to keep” to myself at least twice a month. Financial instruments and technology may change but there are no new basic financial concepts. It is all here.

What’s Next?
Once you master the basics of personal finance, you have two choices: 1) you can do the minimum which is live frugally, pay off your home, invest in mutual funds for “the long haul” and hope that is enough or 2) you can become an active steward of your capital for further investment. Each of these books points you in the direction of number two and go into differing levels of detail about how to become an active steward. Maybe you become a writer, maybe you become a cashflow investor in real estate, maybe you become a blogger, maybe you open a brick and mortar business. Maybe you create a web page and sell through affiliate programs, maybe you write a book, maybe you learn about private placements, life settlements and invest in those, maybe you become a network marketer. Each of these strategies will take at least 1000 hours to learn but aren’t you glad that at least one business author had the courage to put that in print to save you some frustration?