Listening to audiobooks has become my new favorite way to read. I don't have to carve out time to curl up with a book. I can listen and learn while driving, working out, or cleaning the house.
While I'm happy to listen to anything from fiction to essays, my favorite audiobooks help me learn more about money, economics, and behavioral finance. The following five titles are the must-listen audiobooks you should totally check out. (See also: The 5 Best Money Podcasts)
1. The Millionaire Next Door: The Surprising Secrets of America's Wealthy
Written by Thomas J. Stanley, Ph.D and William D. Danko, Ph.D., and originally published in 1996, The Millionaire Next Door is a classic personal finance book that remains a perennial favorite. Stanley and Danko conducted 20 years' worth of research into the habits, behavior, mindset, and choices of the average millionaire.
It turns out that most millionaires live modestly, residing in an inexpensive house, driving an older car, and wearing off-the-rack suits and clothing. Stanley and Danko compare the behavior of UAWs (Under Accumulators of Wealth) with PAWs (Prodigious Accumulators of Wealth). They found that UAWs tend to focus on status purchases in order to show off their income, whereas PAWs are much more interested in investing their money in ways that will grow their net worth.
Twenty years after the book's initial publication, the revelation that millionaires tend to be frugal, hard-working, and unpretentious may no longer be particularly surprising. However, there is still plenty to learn from this book. For instance, Stanley and Danko describe the roughly 60 hours one UAW spends researching a new car purchase in order to get the best deal, when his time would have been better spent creating wealth or researching an investment that would not depreciate as soon as he drove it off the lot. Hearing that example helped me to realize that I often give more research time to purchases than I do to investments, which is not the best way to grow my wealth.
While many of the insights gleaned from The Millionaire Next Door remain valid, it is important to remember that the book is a product of the 1990s. The millionaires interviewed for the book happened to have started investing about 20 years previously, at the beginning of what became the largest bull market in history.
But Cotter Smith's narration is engaging and makes the sometimes dry numbers, facts, and figures very easy to listen to.
2. Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Independence
Unlike most of the books on this list, the audiobook version of Your Money or Your Life is an abridged adaptation of the classic personal finance book by Joe Dominguez and Vicki Robin. The print version of this book offers a clear step-by-step explanation of how to implement Dominguez's path to financial independence in your own life, while the audiobook offers more of an introduction to the mindset of financial independence. I listened to this audiobook and then purchased the print version to read.
That being said, Robin's abridgment is an excellent primer on how to change the way you view money. In particular, the description of finding your enough point, so that you use your money to buy just enough to make you feel fulfilled is a revolutionary concept in our consumer-driven world. Changing your mindset to include the idea of enough makes frugality both freeing and enjoyable, rather than a chore. The audiobook will help you to see that while your choices are limited, you have the ability to choose what matters most to you and live a satisfied and financially independent life.
The particular recommendations Robin gives regarding investments — which were based upon Joe Dominguez's own investing strategy — are sadly out of date. Thirty-year U.S. treasury bonds, which were the cornerstone investment of both authors' retirements in their 30s, no longer offer a return that could lead to financial independence. However, having the opportunity to change your view of money and spending is well worth the listen, even if the specific nine-step program is no longer feasible as written.
Robin's narration is chatty and informal, and you feel like you have had a conversation with a passionate and wise friend.
3. Predictably Irrational: The Hidden Forces That Shape Our Decisions
This audiobook is both surprising and humorous, as it explains why and how human beings cannot be counted upon to act rationally. Dan Ariely, the pre-eminent behavioral economist, conducted all of the rigorous experiments he describes over the 13 chapters of Predictably Irrational. The experiments ranged from the silly to the racy, and included everything from leaving plates of cash alongside six-packs of soda in communal dorm refrigerators — to prove that individuals are honest about cash but not beverages — to asking male volunteers moral questions while they were in a state of arousal — to prove that morals are flexible depending upon our circumstances.
While the book does not offer traditional financial advice, it gives insight into why you sometimes make stupid money decisions. With each experimental result, Ariely also offers some guidance on how to avoid the particular logic trap his experiment has illuminated. For instance, Ariely outlines several methods for pre-committing to your choices before temptation strikes, since several of his experiments proved that morality and commitment are dependent upon circumstance.
Ariely's amusing writing style paired with esteemed British actor Simon Jones's narration makes this the kind of audiobook you extend your workout to keep listening to.
4. It's Not You, It's the Dishes: How to Minimize Conflict and Maximize Happiness in Your Relationship
It's Not You, It's the Dishes, written by Paula Szuchman and Jenny Anderson, might seem like a self-help and relationship guide, but it is the most concise and straightforward introduction to the basic principles of economics you'll find.
Szuchman and Anderson start with the definition of economics as the study of how people, companies, and societies allocate scarce resources. From there, they provide an excellent introduction to 10 different principles from the field of economics, including comparative advantage, loss aversion, supply and demand, moral hazard, incentives, and trade-offs, among others. In each chapter, they apply one of these economic theories to marital relationships.
The stated purpose of the book is to help the listener improve his or her relationship, but I personally found that the detailed and well-written explanation of economic principles, along with the micro-examples of how these principles play out in a marriage, helped me to better understand how all groups handle scarce resources. It also helped me to think about the ways that I make decisions in every sphere of my life.
Szuchman and Anderson profile many couples throughout the 10 chapters, and it is likely you will be able to relate to several of the men and women who wish to have a more equitable relationship. The authors also manage to make their insights surprisingly funny. I LOLed several times while listening.
5. The Paradox of Choice: Why More Is Less
We tend to think of options as a good thing, but anyone who has scrolled through the wide array of Netflix streaming options for 30 minutes, only to skip watching a movie altogether, can attest to the paralyzing nature of too many possibilities. In The Paradox of Choice, Barry Schwartz explains over 11 chapters why the abundance of choices we face in modern society often leads to unrealistic expectations, second-guessing, paralysis, anxiety, and stress.
Schwartz introduces the listener to two types of decision makers: maximizers and satisficers. The maximizers believe that there is a platonic ideal of whatever it is they are looking for out there, and will agonize over any and every decision for fear of having missed out on that ideal. FOMO, essentially. Satisficers, on the other hand, figure out the bare minimum they need to feel satisfied with a decision, and stop looking when they find something that meets the criteria. Guess which type of decision maker tends to be happier?
While this title is another one that is not strictly about finance, listening to this audiobook results in a kind of unconscious frugality. That's because Schwartz recommends fighting the paradox of choice by ignoring opportunity costs — the loss of other options when you choose one particular path — by making your decisions irreversible. For instance, we all tend to be tempted by "new and improved" because we are afraid of missing out on something by sticking with our old version. But deciding that keeping a product, whether it's a laptop, a car, or an iPhone, until you are actually and truly dissatisfied with it will keep more money in your pocket while helping you feel more satisfied with your choices.
This article first appeared at Wise Bread.