Paradigm is a word used across many different arts and sciences. It’s best defined in the Merriam Webster’s Dictionary, “as a philosophical or theoretical framework of any kind.”
A paradigm is neither right nor wrong, it’s a mindset. The simplest example I can give is that only a few hundred years ago every one thought our world was flat. It took Christopher Columbus exploring the world to change people’s theoretical framework of the world being flat. Columbus challenged conventional thinking and succeeded in shifting a world’s theoretical framework of the structure of the world.
So what does this have to do with finance? Every one of us has a certain framework about their finances. There is a good chance that the two of ours is different. That doesn’t mean that either of us is right or wrong.
The people you are closest to, no matter if it’s family, friends, experts, a late night infomercial, are the people that compose your theoretical framework. If someone close to you made millions in the real estate market, you’re likely to think that real estate is the best way to achieve financial abundance.
As a soon to be financial planner, I pride myself on becoming one of the most knowledgeable experts in my field. For about two years, every week, I make sure I complete an entire book on finance.
After reading close to 100 books on all topics of money, I have found three books I have read that induced a paradigm shift.
- Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Revised and Updated for the 21st Century
- The Bogleheads’ Guide to Investing
- Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money–That the Poor and the Middle Class Do Not!
Your Money Or Your Life: Transforming Your Relationship With Money And Achieving Financial Independence was able to do exactly what the subtitle says. The authors go through a very detailed 9-step program that included many paradigm-shifting moments. I didn’t agree 100% with the author’s program, but once finished, I was able to challenge a lot of the common beliefs I thought were right about personal finance.
The next book that composes my framework on personal finance is The Bogleheads Guide to Investing. Before reading, I confused gambling with investing. After reading, I had an easy to implement investing strategy that could produce the results I wanted for any savings goal during my entire life.
The third book is probably one everyone has head of, Rich Dad, Poor Dad. This book has the widest range of reviews that a book can have. In my opinion, there were some parts that were misleading, some parts were self-promotional, and some were thought provoking. Unfortunately, many people confuse this book for a real estate investing book, which is pretty easy to do. Instead, I saw this book as a fundamental way to build wealth.
These three books are extremely different. Individually, each book was able to challenge conventional thoughts I had about money. Combined, the books have enabled me to compose a very fundamental way I think about money and building wealth.
These principles include:
- Every dollar that goes in and out of your life should have a purpose.
- Invest in yourself
- Diversification in income, investments, and education is very important
- Let money work for you
Paradigm shifting books are like finding a needle in the haystack. It takes an author to challenge and PROVE that our conventional beliefs are wrong. Very few books are able to accomplish this because it’s not easy to do.