My name is Roman. I’m 15 and a sophomore in high school right now. I’ve been reading financial and self-help books since the beginning of freshman year. This came from a desire to improve myself and prepare for life after high school. Most teenagers won’t have this same desire or do these same things without some encouragement, and I hope that this column can be that for them—an encouragement for teenagers to start their financial education now.
This column is written to be read by teenagers and parents alike. It would be even better if they read it together and discuss everything written.
These books are a great place to start a financial education. But do not treat them as a magic cure to get your teenager to read financial books, or books at all. I really enjoy reading books. I also really enjoy reading financial books. This is not very common, so do not expect the same for your children.
These books are the ones that I started with, and I really enjoyed them. But this is just a suggestion for a place to start. Books are also only half of a good education; you also need to apply what you learn, and you need to get some real-life practice. A theoretical budget is a lot easier to follow than a real one. Try to give your teenagers some real experience, not just a bunch of books to read.
But if you do give them a bunch of books to read, these are the ones I would give them.
The Psychology of Money by Morgan Housel
The Psychology of Money is a must-read for teenagers. It has quick chapters that simplify many financial ideas. If you are trying to help a young person learn how to think and how to build a good relationship with money, this is the book. It covers concepts from how we view luxury items to how wealth changes people. Here are some chapters that are great to learn from.
Chapter 8: The Man in the Car Paradox
People do not admire you; they imagine being you. We often buy flashy things to be admired, such as cars, clothes, etc. But when we see someone driving a nice car, we do not think about or immediately respect the person in the car. We think about ourselves in the car and the respect we would earn if we had that car.
“No one is impressed with your possessions as much as you are.”
Teenagers are exposed to many images of wealth and luxury. Every time teenagers look at social media, they see 20-year-olds with Lamborghinis or Rolexes. Walking around town, they will see a fancy car and think about themselves driving it. Just check their camera roll; most teenagers will have at least one picture of a really nice car they saw on the road. The coolest car I’ve ever seen was a McLaren P1 on the freeway. I imagine it was rented. But respect does not come from material things. It comes from your actions. Teaching teenagers this lesson can help them resist wasteful spending just to show off.
Chapter 9: Wealth Is What You Don’t See
Real wealth is invisible. We often assume people with expensive things are wealthy. But those things are evidence of great spending, not great saving. A $100,000 car only tells you somebody spent that money.
“The world is filled with people who look modest but are actually wealthy, and people who look rich who live at the razor’s edge of insolvency.”
Teach teens to admire financial discipline, not excessive spending. Wealth is built by consistently spending less than you earn and letting that money grow quietly over time.
If you want a teenager to build a good relationship with money, this book is one of the best to give them. This book can change how they spend and how they view “shows of wealth” from others.
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How Money Works: The Facts Visually Explained
How Money Works is an easy guide with cool pictures to understand all things money-related. This book is a wonderful place to start building a clearer picture of how money functions. It teaches topics from investments, insurance, banking, etc. The use of visuals makes the content less boring and easier to understand and visualize. The book also avoids confusing words, which is great for teenagers.
If you are looking for a beginner's introduction to many economic concepts, this is a great place to start.
The Richest Man in Babylon by George S. Clason
The Richest Man in Babylon is not about the technical details of investing or the stock market. Instead, it teaches the core principles of money management. This wisdom remains relevant regardless of how the financial world changes. These lessons, presented through simple parables, are practical and easy to understand. Here are a couple of takeaways from the book:
A Part of All You Earn Is Yours to Keep
Lesson: Pay yourself first.
This principle emphasizes the importance of saving. Consistently saving a portion of your income is the first step to building wealth. My first job was refereeing kids' soccer games. I made around $15 a game. I started my first budget with a savings rate of 20%.
Men of Action Are Favored by The Goddess of Good Luck
Lesson: Good fortune favors those who take initiative.
Wealth does not fall into your lap. Success comes to those who act—people who hone their skills, pursue opportunities, and take steps toward their goals. The more effort and intention you put into your pursuits, the more “luck” you are likely to encounter.
Final Thoughts
The steps to wealth can be summed up into simple stories and sayings. Nothing about it is too complicated for the average person. But it does take an above-average ability to do what is necessary to become wealthy. If teenagers learn to follow these stories at an early age, then they can really get a head start on everyone else.
The Way to Wealth by Benjamin Franklin
If you need something short because reading is boring, The Way to Wealth is an excellent choice. In only 30 pages, it contains valuable lessons and some quotes to remember. Even with the old-time language Franklin uses, the wisdom he says remains relevant. This essay/book draws from Poor Richard’s Almanack, a publication by Franklin providing useful advice to colonists.
Industry
Sloth carries a much heavier tax than any government. Hard work is the foundation of success. The ability to sit down and focus for even just an hour or two is a priceless skill. School and homework are great places to practice this.
“Early to bed and early to rise, makes a man healthy, wealthy, and wise.”
This quote from Franklin explains that work not only gives results but also good luck. A good example of this principle is this column you're reading. I worked hard to find time during school to read all these books, and the opportunity to write this column and get paid for it is the good fortune that followed that work. When you put in consistent effort, opportunities arise. Or to use another quote,
“Diligence is the mother of good luck.”
Care
You must actively manage your responsibilities. Do not place too much trust in others. Keep your personal responsibilities in order. When you are worried about what still must be done, it is hard to fully enjoy anything.
“For want of a nail the shoe was lost; for want of a shoe the horse was lost; and for want of a horse the rider was lost, being overtaken and slain by the enemy; all for want of a little care about a horseshoe nail.”
This saying reminds us that neglecting smaller tasks can lead to major failures elsewhere. Make sure you have a solid foundation to build from.
Frugality
Raising your income does little to help you if you increase your spending just as quickly. Teach to raise your savings rate, not your spending rate, as your income rises. The key to wealth is not just earning more but keeping more in your possession. Do not let more money become more to spend; let it become more to save.
“If you would be wealthy, think of saving as well as getting.”
If the money in matches the money out, you will be left with zero. Without learning to save and forgo purchases, it is impossible to save more.
Knowledge
Wisdom is useless if not applied. Do not learn only from your own mistakes. This can only be controlled by yourself. You cannot force people to learn and apply lessons.
“Experience keeps a dear school, but fools will learn in no other.”
The advice is simple: work hard, be mindful, spend wisely, and learn from others. These principles do not go out of date. They offer the perfect blueprint not just for wealth, but also for a life of honest work and meaning. In the end, it is up to the student to apply all this.
The Millionaire Next Door by Thomas J. Stanley and William D. Danko
The data in The Millionaire Next Door is old and all the data tables get a little boring, but what it teaches still stands true today. Building wealth is less about your income or profession than it is about your relationship with money. Most people would not recognize a millionaire walking down the street.
The book also teaches what kinds of financial aid are beneficial to young people. Most types of financial giving lead the receiver to become complacent and lose their drive and ambition because they were just given the money; they did not work for it. If you do not give your kid an allowance, it forces them to get a job, because they do need the money—and they get to learn the lessons that come with that experience. I’m not saying don’t give them an allowance, but be aware of how it affects them.
This book opens the window into the minds of the affluent. It teaches you how they make decisions and their approach to personal finance. The media today has warped the idea of wealth into excessive spending. This book shows that the typical millionaire is extremely frugal, and yet they are happy.
This book also showed me the reason behind some of my parents' habits. Whenever they sat down to budget, I wondered why they would do something they seemed to dread. This book showed me the benefit of these possibly unpleasant habits. Teenagers need to know what millionaires really look like and how they act—not just how they see them online.
How to Think About Money by Jonathan Clements
Clements believed that changing how we think about money is the first step toward a better life. Teenagers and young adults need to rethink their relationship with money early on to really take advantage of all the years ahead of them. How to Think About Money offers five steps to change your relationship with money.
Step #1 Buy More Happiness
More money does not equal more happiness. More meaningful spending equals more happiness. Clements suggests that money accounts for only 10% of our happiness. More money is often spent on more stuff, and while this stuff leads to a short-term increase in happiness, you will quickly adjust to having that new item. Then, you'll be just as happy as you started.
Controlling your time is one of the greatest happiness boosters. More money can help you gain that. Creating memories with people you care about is another one of those great happiness boosters. Shared experiences like fun hangouts will bring more joy than buying material things.
Step #2 Bet on a Long Life
Plan like you will live a long time, because you will. Every dollar you save now is for the benefit of your future self. I currently save 30% of everything I make. Being frugal earlier allows you to live better later—like in those poor college years and beyond. When you save more of your money, the money you do decide to spend becomes more valuable, and you spend it better.
Step#3 Rewire Your Brain
With all the time teenagers spend online, their minds must change a little. Don’t let them come to believe that fancy things equal wealth. True wealth is not seen. Fancy cars and big houses are often signs of spending, not saving. It is important to learn to see wealth as what is saved, not what is shown off.
Step #4 Think (Really, Really) Big
Every financial decision is part of a bigger picture. Everything will cost more than you expect. You should always expect college, a home, and a car to be more expensive. It is important to learn to be overprepared for anything that may happen. It is also important to learn to look at all financial decisions as interconnected, not isolated events. Don’t let your different accounts become isolated.
Step #5 To Win, Don’t Lose
Teach your teens defense while investing. Diversification of your investments is a fantastic way to minimize loss. Teach them to avoid high fees and buy insurance to defend against big risks. The earlier you start, the better your chances are of living well later. Financial success is not about being the richest, but having enough for yourself and your family.
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Just Keep Buying by Nick Maggiulli
Maggiulli’s book is written from the data; every piece of advice is backed by real-world evidence. Just Keep Buying is cool to read because it only pulls from data sets. It is also cool to read because there aren't many data tables. It is broken down into two main parts: saving and investing. Saving first and investing second, because you cannot invest with nothing.
Part 1: Saving
“There is a limit to how much you can cut, but there is no limit to how much you can earn.”
To save more, Maggiulli recommends focusing on growing your income. You can only cut your expenses so far. Teach your kids to be industrious. He also has a simple recommendation on when you should shift your focus from saving to investing. When your annual savings > investment return, focus on saving. When your investments return > annual savings, focus on investing.
Part 2: Investing
“You build wealth by buying consistently and holding over time.”
The largest benefit of teaching teenagers basic finance is the added years of compounding they will get. The earlier you start investing, the more time works in your favor. Teach your teenagers how to invest. Also, teach them that timing the market is a losing game. Just invest consistently. It is also good to learn that volatility is not a bad thing. Luck is a factor in investing, but not one that is controllable, so stick to a smart, consistent system to increase your chances of success.
Maggiulli wrote this book as the guide he wished he had when he was starting. Earn more, save, and invest consistently. Try to automate good habits, think long term, and let time do its thing.
The Bottom Line
These are the books that jump-started my financial education. Your teenager will probably be reluctant to read any of these books, but if you can show the value that they offer—especially the monetary value—they may be a little less reluctant. And once again, books are only part of an education. They are a good place to start, but it takes more than books to really learn or teach something.
What other books are worthwhile for teens to read? Aside from reading, are there other good ways for teens to learn about money and finance?