Personal Finance Books – 3 Unique Perspectives
Welcome to this post about personal finance books – 3 unique perspective!
So far in 2020, I have read 9 books, most of which were personal finance related. But, today I want to reflect on the 3 most impactful personal finance books I have read so far. Believe it or not, these books had 3 unique perspectives, which was something I didn’t expect.
So today I want to unpack these books by reflecting on their core messages, comparing and contrasting, and offering my own opinion on which perspective I think is best.
Before we begin, I think it is important to mention that these are just my perspectives on these books. The authors may have intended something different than what I interpreted from their books. In addition, I read some of these books a few months ago, and while I took notes, I may not remember everything perfectly.
But with that out of the way, let’s just into this post and see the 3 different perspectives on these personal finance books!
Personal Finance Books
The 3 personal finance books I will be reviewing in this post are:
- Rich Dad Poor Dad – Robert Kiyosaki
- I Will Teach You To Be Rich – Ramit Sethi
- The Millionaire Fastlane – MJ DeMarco
Each of these books have varying levels of fame, Rich Dad Poor Dad is the best selling finance book of all time, I Will Teach You To Be Rich is fairly popular, and The Millionaire Fastlane is pretty unheard of.
Interestingly enough, I liked the least popular books the most and the most popular books the least, but that’s just my opinion.
3 Unique Perspectives
Rich Dad Poor Dad
Fame level: Best selling personal finance book of all time
Main message: Use a business or passive income to generate wealth
Who this book is for: People looking to understand the philosophies of the rich
My recommendation: 7/10
With this being the #1 selling personal finance book of all time, I had some high expectations going in. While I enjoyed the book, I failed to see what made it the #1 selling personal finance book. The advice was pretty ordinary, with not much deviation from what most personal finance gurus preach. I think it lacked
With that said, there were still some takeaways that I got from the book that I found useful. One of the things that contradicted I Will Teach You To Be Rich was that Kiyosaki thinks that you should spend more time on managing the money you already have instead of focusing on trying to increase your income.
Another controversial thing was that Kiyosaki believes that your house is a liability and not an asset. The thinking behind this is because it ends up costing you money out of your pocket each month (which is what a liability is). While some may say that it grows in value (which is what an asset is), that is not always the case, as seen in the 2008 recession. The extra fees that come along with it could be bettter invested into something else that would generate much better returns. But, at the end of the day, you have to live somewhere, and accumulating equity is better than nothing.
He also advocates against mutual funds, as the returns are not that great. He believes that if you are knowledgeable enough on investing, you could make a much better return on investing in individual stocks. But of course, you have to be very knowledgeable on investing and know what you are doing. For the common person, a mutual fund is a great choice because of the low risk involved.
Finally, he also stated that it’s better to be somewhat knowledgeable about everything, rather than very knowledgeable in one subject. I think it depends, yes you want to have more than one skill, but you also want to be more knowledgeable than everyone else in whatever field you are really pursuing.
I Will Teach You To Be Rich
Fame level: Fairly popular
Main message: Invest consistently, retire at retirement age
Who this book is for: Beginners to personal finance
My recommendation: 6/10
I would say that this book represents the average/ordinary advice that personal finance gurus (including myself) give. Go to college, get a job, pay off debt, invest 10% into mutual funds, reduce expenses, and retire at 65. Sethi stresses that we should focus on the big wins, we don’t need to cut back on every single expense.
Focusing on the big wins and not stressing over the small things allows for happiness in the moment according to Sethi. Once you have saved, invested, paid your bills, you’re now free to use ‘guilt-free spending money’ on whatever you want. I think this idea is great for beginners, but I think those who are more serious about their financial goals might need to be a little more strict.
One controversial thing that Sethi said was that the stock market gets better returns than real estate. This is a big debate in the personal finance community, and the truth is that it just depends. In reality, you should diversify and invest in both.
Kiyosaki advocated for focusing on managing the money you already have while Sethi said that you should spend less time worried about how you spend your money, and more on how you can increase it. In reality, you need to do both, manage the money you already have and increase your income beyond what it currently is.
The Millionaire Fastlane
Fame level: Unheard of
Main message: Create a business that creates your wealth and live off of passive interest
Who this book is for: Entrepreneurs and people looking for a fresh perspective in personal finance
My recommendation: 10/10
If you’re looking for a fresh perspective on money and really a radical view on life in general, check out this book. I’ll admit, some of what DeMarco has to say sounds crazy because he speaks directly against what other financial gurus have to say, but he has fair points.
For starters, his entire philosophy is about accumulating wealth fast. Not fast like 20 or 30 years, but fast like less than 10 years. You might be reading this and think of FI/RE, but this is not that. FI/RE is all about reducing expenses and increasing savings. This is about increasing income, and living a lavish lifestyle once you achieve your goal.
He believes that we should enjoy our life now, and not sell our current selves to achieve wealth in a wheelchair 40+ years from now. This is what the slowlane do. In I Will Teach You To Be Rich, the slowlane is advocated. It is about investing 10%, living below your means, and retiring at 65. The slowlane doesn’t work because all of the mathematical equations are limited by time. And since time is limited, your income will be limited too.
The solution to this is to create a business using the CENTS model, liquidate it, and then live off of the passive income earned from it. If you sell a business for $10 million, your passive income could be anywhere from $300,000-$500,000 per year, or $25,000-$40,000 per month!! Imagine a life with that kind of income.
It may sound impossible, but he has done it, and thousands more have too! The key is the law of effection, you must impact millions of people to make millions. Steve Jobs, Tom Brady, Bill Gates, Donald Trump, they all impact millions, and therefore they make millions (if not billions).
The premise is simple, you just need to create a business that follows the CENTS model. You need Control, a low barrier to Entry, a Need for that business, it needs to be free from Time, and you need to be able to Scale it. If you can do all that you should be well on your way to freedom.
One other interesting idea is that college may not be worth it. For one, it generates a lot of parasitic debt (debt that requires you to work more to pay it off). You also might be able to teach yourself everything you need to know from the internet and other resources depending on what field you are going into. For someone like me who wants to go into business, college might not be necessary, and could be a major financial setback.
DeMarco also had a second book, called UNSCRIPTED, which I have read also. I wouldn’t recommend this book as much as Millionaire Fastlane. It’s one big rant, and the stuff that’s not a rant was already mentioned in his first book. Nonetheless, I still included some of the philosophies in his second book as a part of this reflection, just because it’s all the same perspective.
Once again, DeMarco advocated for increasing your income, rather than focusing on decreasing your expenses. He believes that a business is the best income and wealth generator because it is fast and unlimited.
Similarities Between The 3 Personal Finance Books
While all of the books had some differing perspectives, they still had some similarities as well. Obviously if all 3 of these books suggested doing these things, you should probably do them.
The first major thing that I noticed was that all 3 books (and everything I’ve ever read/watched) has advocated for continuous education. It doesn’t matter if you go to college or not, start a business, or whatever. Continuous education throughout the entirety of your life is essential to success. You should always be learning new skills and adapting to the world.
The next big one that I noticed was that the importance of using money to create more money was emphasized in all 3 books. Which obviously, the entire idea behind investing. If you want to create and maintain wealth, you need to invest, there’s no doubt about that.
There’s a few other things that both Rich Dad Poor Dad and The Millionaire Fastlane talked about, but I Will Teach You To Be Rich did not. The first of which is that wealth is created by a business or by some other form of passive income. Your income can’t be tied to your time because your time is limited, and therefore your income will be to.
The next thing was in regards to financial slavery. There’s really 2 things that keep you a slave to your job. The first of which is financial fear. You need a consistent income in order to pay your bills. And the other is parasitic debt. Parasitic debt is debt that you incur that requires you to work to pay it off. If you buy a new car that creates a car payment of $500/month, than you will have to work extra to earn an additional $500/month. If you didn’t have the car payment, than you wouldn’t have to work more than you want. The idea is to avoid parasitic debt whenever you can in order to have more financial freedom and less slavery.
There’s a lot of people out there who advocate for balance in all areas of you life, I myself, am one of those people. However, interestingly enough, both Kiyosaki and DeMarco advocated against balance. They both said that successful people start out as very unbalanced just focusing on mastering one thing. Then, as you become successful with that, then you move on to other things that incorporate more balance.
Finally, both of these books talk a lot about failure, and I think Kiyosaki says it best, “People who avoid failure also avoid success”. Think about that for a minute. If you’re so worried about the possibility of failure, than you’ll never experience the possibility of success. So, don’t be afraid to try.
If you’d like to get these books, here are the links to them on Amazon:
- Rich Dad Poor Dad – Robert Kiyosaki
- I Will Teach You To Be Rich – Ramit Sethi
- The Millionaire Fastlane – MJ DeMarco
My Own Beliefs
After having my opinion molded by these books and several others, I have established my own beliefs. My own beliefs are sort of a summation of all of these books combined with some other stuff mixed in there that comes from other sources and from my own personal experiences.
A lot of my own beliefs have been stated up above, especially where we talked about the similarities between all 3 books. Nonetheless, I will state some of them again just to reiterate:
- College may or may not be worth it depending on your career path.
- You should avoid as much parasitic debt as you can because it requires you to work more to pay it off.
- Reducing your expenses and increasing your income are both very important.
- You should focus on enjoying life in the moment, not always preparing for the future. But, you also need to do a fair amount of making sacrifices to make progress towards your financial goals.
- As far as what you invest in, you should diversify into real estate, stocks, mutual funds, etc.
- You can retire way before 65 if you’re willing to make sacrifices.
- Continuous education is key, you should be teaching yourself new things all the time.
- While balance in all areas of your life is important for happiness and emotional well-being, you are going to need to be unbalanced if you want to succeed. You’ll have to work harder than everyone else to achieve more than everyone else.
- You need to be willing to fail in order to succeed.
- The fastest way to create wealth is to make a business that follows the CENTS model and impact millions of people.
That’s it! There’s my take on those 3 personal finance books. Each has a different perspective but they all have some similarities. If those books sounded interesting to you, make sure you check them out! While each person advocates something different, you also just need to figure things out for yourself. Best of luck on your journey to financial freedom!
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