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Inspiring personal finance books

By Naomi Mannino ·
Friday, January 6, 2012
Posted: 3 pm ET

You can imagine that because I am a personal finance reporter, I read stacks and stacks of personal finance books. But only two get taken out repeatedly and are dog-eared with coffee stains because they give me that proverbial kick in the butt to do something about my finances and they tell me what and how to do it. Plus, I'm here to report that their simple financial management techniques work!

"The Automatic Millionaire" by David Bach: His mantra is simple. Pay yourself first: Find money you waste every month, your  "Latte Factor," and have that amount automatically deducted from your account every pay period and moved directly to savings. Make your money management automatic. Set up direct deposits for income and auto bill pay for recurring expenses. This way, you don't need a budget because all the money is automatically paid out. Whatever's left you can spend on food, gas and entertainment. The plan seems simple. And it is. This book easily changed my personal finances years ago when I first read it for the better and now I have savings. This year, I took out the book again to re-up my automatic inspiration to open some Simplified Employee Pension, or SEP, IRAs and make those deposits automatic too.

"The Total Money Makeover" by Dave Ramsey:  Now you might assume a book about budgeting is unnecessary after reading a book about why you don't need a budget (above). But if you're having money problems, the simple premise of this book is to write down every dollar you spend so you actually know where your money is going (even if you think you already know).  Once I wrote everything down, I realized I was spending big in two huge categories: Groceries and competitive sports for my kids.

That spurred me into couponing to save big on the food and drugstore items, which I am now an expert at (and have written many articles about). I also learned to divide yearly lump sum payments by 12 to save the monthly amount in order to be able to afford them when they are due, which lowered my stress level immensely.

Using a combination of techniques from those two books was life-altering for my family -- in the best way possible.

Upon flipping through both these books again on New Year's Day (yes, they are that easy to read!), I was able to make the decision to switch banks and to ditch cable, which I wrote about earlier this week. Incidentally, David Bach also wrote a newer book called "Fight For Your Money," and the Consumer Reports February 2012 issue's main feature is "Fight Back Against Your Bank."

So which personal finance books  inspire you to save money, change your finances and fight back?

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Peter Walsh
January 11, 2012 at 11:00 pm

Automatic savings are certainly effective in helping to enforce a saving habit, but I do prefer to increase income rather than save a latte per day.

I know some people find it easier to be frugal than to earn more, however, for me, looking for a way to up revenue is a better mindset than losing the latte. (I do value my daily coffee.)

The book I would recommend is "The Goal" by Eli Goldratt, not a personal finance book at all (on the surface), but oh so inspiring and a great mind shift.

Naomi Mannino
January 09, 2012 at 10:14 am

I never read Ben Franklin's "The Ways to Wealth" and am ordering it today! Here's one little nugget from it:
“Think what you do when you run into debt; you give to another power over your liberty.” Here's another
"Away, then, with your expensive follies, and you will not have then so much reason to complain of hard times." So true...

casey kepley
January 08, 2012 at 10:30 am

Good post. I have read Dave Ramsey's book as well. I like how he touches on behavior towards money. coming up with a personal financial plan is a great way to track where your money is going, paying off debt and knowing where to put your money for future investments. It's hands down the best thing you can do for yourself and managing your finances.

January 07, 2012 at 3:34 pm

"The Ways to Wealth" by Ben Franklin

Save First
January 07, 2012 at 12:02 am

YES! Everybody repeat this with Naomi and me...PAY...YOURSELF...FIRST!

As a frequent poster here, I love to see this finally come up.

More importantly, make YOUR pay the sticky payment and budget around it, for the truly adventurous. My wife and I adopted this principle years ago when we foolishly were spending (OK, it was me more than her) and man, did it make a difference.

We flipped from free-spirit spending to a contest of "how much can we save per month" and it has been an absolute lifesaver. It forces you to look at the little things and realize how much wasteful spending happens without much cognitive recognition.

We're not quite there, but we have a great plan towards it.

Felton Morgan
January 06, 2012 at 4:51 pm

Excellent article.I will buy "The Automatic Millionaire".