📖 The best Finance book you've ever read?
and why...
When it comes to books about money, I used to think Rich Dad Poor Dad by Robert Kiyosaki was the ultimate guide. I read it right after graduating college, and while it opened my eyes to concepts like assets, liabilities, and equity, it’s not an easy read for someone unfamiliar with financial terms.
Recently, I came across two other books that reshaped my perspective on money and financial freedom. Here’s what I learned:
The One Key to Financial Freedom
In Your Money Made Simple by Russ Crosson, financial freedom is boiled down to a single, powerful principle:
Spend less than you make—and do it for a long time.
It sounds simple, but mastering this principle is the foundation for lasting financial independence. Crosson also introduces the Six Boxes of Money, a practical framework that helps you understand where your income goes and how to take control of it.
The book asks a fundamental question:
What’s the simplest way to achieve financial freedom?
Financial freedom here isn’t just about wealth—it’s about having options, feeling unrestricted, and avoiding financial bondage caused by debt or poor money management.
The Psychology of Money
Morgan Housel’s The Psychology of Money takes a different approach, focusing on the behavioral side of finance. It’s not about how much you know—it’s about how you act. Here are some standout insights:
Money Is Emotional, Not Logical
Financial decisions are shaped by personal experiences and emotions, often defying rational behavior.The Power of Compounding
Patience and long-term investing are key. Housel uses Warren Buffett as an example, attributing much of his wealth to starting young and letting compounding work over decades.Tail Risks
A handful of rare, impactful events can shape financial outcomes. Preparing for these “tail risks” is crucial for financial resilience.Saving Money Reflects Humility
Housel explains that saving is the gap between your income and your ego. Living below your means and prioritizing long-term goals over short-term gratification is the real path to independence.
Why I Prefer The Psychology of Money Over Rich Dad Poor Dad
While Rich Dad Poor Dad focuses on understanding assets and liabilities, The Psychology of Money goes deeper, exploring the emotions, habits, and decisions that shape financial success. It’s not just about building wealth—it’s about rethinking how you approach money altogether.
Housel’s writing is relatable and grounded, breaking down complex financial ideas into lessons anyone can apply, regardless of income level. This book doesn’t just teach you about money—it changes how you think about it.
Watch it on YouTube :)