5 great books all about money to read for World Book Day

On 7 March, people across the UK will celebrate World Book Day, highlighting the importance of books and reading for children’s education. You may well have children or grandchildren headed to school dressed as their favourite literary character to mark the day.

Of course, our education is a lifelong mission, and we never truly stop learning. That’s why this World Book Day presents an opportunity to expand your financial horizons by reading a book all about money.

Read on to discover five great books that focus on finances to pick up this World Book Day.

1. The Millionaire Next Door, Thomas J Stanley and William D Danko (1998)

In The Millionaire Next Door, Thomas J Stanley and William D Danko profile American millionaires, looking at who they are, what they do, and how they use their wealth.

The authors divided people into three categories based on their earnings and relative net worth:

• Under Accumulators of Wealth (UAW), who have a low net worth compared to their income.
• Prodigious Accumulators of Wealth (PAW), the opposite of UAWs.
• Average Accumulators of Wealth (AAW), who essentially are where they are supposed to be for their age.

The book’s fascinating central finding is that millionaires were not predominantly found in affluent and white-collar communities as the authors expected. Instead, they were disproportionately clustered in middle-class and blue-collar neighbourhoods.

Rather than spending money on extravagant lifestyles and luxury goods like those on higher incomes, the millionaire households instead typically lived below their means.

This conclusion presents many interesting lessons, as it shows that having a high income is not necessarily the direct route to being wealthy. Instead, there’s a balance to be found between having money and using it effectively.

Equally, if many millionaires are living below their means for the sole purpose of wealth accumulation, it begs the question: are they truly enjoying the money they have?

2. Moneyball, Michael Lewis (2003)

Author and journalist Michael Lewis is well-renowned for his financial books, and one of his most famous works is the 2003 hit Moneyball. You may have even seen the film adaptation of the same name starring Brad Pitt and Jonah Hill.

The book tells the story of the American baseball team, the Oakland Athletics, and the work of their general manager, Billy Beane, who assembled a highly successful side on a far smaller budget than the other teams.

Lewis explains the shift from the subjective way previous managers and scouts used to select baseball players for their teams to that based on “sabermetrics”, a form of statistical analysis that uses data to inform such decisions.

The latter method is what Billy Beane used to take the Oakland Athletics from relative obscurity to reaching the playoffs every year from 2000 to 2003. The team also became the first side to win 20 consecutive games.

The book is hugely entertaining and shows the immense value of using data and experience to inform your financial decisions, rather than following the crowd with folk wisdom and outdated ideas.

3. Freakonomics, Steven Levitt and Stephen J Dubner (2005)

While it’s somewhat obvious that money and economics play a role in almost every aspect of our lives, Freakonomics takes this to the extremes. That’s why the book’s subtitle is A Rogue Economist Explores the Hidden Side of Everything.

Alongside journalist Stephen J Dubner, economist Steven Levitt explores the “hidden” side of various aspects of the financial world in a series of articles, explaining how all economic decisions at their root are about incentives.

From sumo wrestlers and their willingness to cheat, to how there are socioeconomic patterns in the naming of children, Levitt uses stories and case studies to show that economics is not about money at all – it’s about how people behave to get what they want.

Levitt’s work is very interesting and hugely entertaining, and also contains great food for thought when thinking about our own financial decisions.

4. The Big Short, Michael Lewis (2010)

The Big Short is perhaps one of the most interesting financial books of the 2010s.

Another Michael Lewis bestseller that became a Hollywood hit, The Big Short tells the story of the 2007-08 financial crisis. The book tracks the bubble and ultimate collapse of the US housing and sub-prime mortgage market, following those who bet against it to achieve remarkable returns.

Meanwhile, Lewis also notes some of the individuals who lost out particularly badly as they failed to see the mistakes that had been made, instead focusing on the profits they could make in the short term.

This fascinating retrospective explains the mechanics of how one of the most significant financial crises occurred. It contains many valuable lessons about how markets work, where they go wrong, and in particular, why an entire focus on short-term gains can lead to disastrous results.

5. The Psychology of Money, Morgan Housel (2020)

Although we all might like to think that we are wholly rational, independent thinkers who can’t be swayed one way or another, this isn’t necessarily the case. Our in-built psychology leads us to biases and mistakes that, while avoidable, are all too easy to fall victim to.

This is exactly what author Morgan Housel explores in The Psychology of Money, looking at how you can achieve financial freedom by making smarter financial decisions.

Housel explains that while we often think of money in numeric terms ruled by data and formulae, we actually make decisions based on inherent biases and our experiences – despite those experiences only counting for a tiny proportion of what happens in the real world.

Through a series of short stories on topics ranging from luck and risk to getting wealthy versus staying wealthy, Housel explores how you can make better sense of money and improve your relationship with it.

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Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.