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Bestselling Financial Advice Books vs. Professors: Answers to 4 Money Questions

by emcarthy
Expert Opinion October 28, 2026 at 02:41 AM

Dispensing personal finance advice to the masses is big business. Authors such as Robert Kiyosaki ("Rich Dad, Poor Dad") and Dave Ramsey ("The Total Money Makeover") have sold millions of books. Ramsey also has a large web and radio audience, and advisor-authors like Suze Orman frequently dispense advice to national television audiences.

1. How Much Should I Save?

Bestsellers: Save 10% to 15% of your income regardless of your age and current life circumstances; save more if you can as you get older. The reasoning? Tony Robbins ("Money: Master the Game," 2014) cites the value of compounding and how it's critical not to avoid interruptions in your savings plan.

David Chilton ("The Wealthy Barber Returns," 2011) argues for saving in one's early career because income is low and the costs of getting established in life are high. Costs rarely stabilize, Chilton says, and most people can't transition successfully from saving nothing to saving a large percentage of their income.

Professors: Choi notes that academics have a different perspective: "Because income tends to be hump-shaped with respect to age, savings rates should on average be low or negative early in life, high in midlife, and negative during retirement."

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2. Should I Use Mental Accounts for Savings?

Bestsellers: Divide savings into mental accounts devoted to different goals. According to Choi, commonly mentioned mental accounts are a fund for emergencies, a retirement savings fund, a fund for major purchases such as a house or a car, and a fund for children's college tuition. Burton Malkiel ("A Random Walk Down Wall Street," 2019) writes, "A specific need must be funded with specific assets dedicated to that need."

Professors: "Standard economic theory does not earmark portions of household savings for specific purposes; money is fungible." Yet "using mental accounting when choosing savings rates has some advantages," he continues.

Dean Karlan et al. ("Getting to the Top of Mind: How Reminders Increase Saving," 2016) argue that mental accounting increases motivation to save by "making salient the link between today's saving and specific future expenditures."



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4. How Much Should I Invest in International Stocks?

Bestsellers: Hold international stocks, but in lower proportion to their global market capitalization weight. Choi writes that John Bogle ("Common Sense on Mutual Funds," 1999; "The Little Book of Common Sense Investing," 2017) notes that a significant portion of the revenue and profits of S&P 500 companies comes from other nations, so U.S. stocks already provide international exposure.

And J.L. Collins ("The Simple Path to Wealth," 2016) writes that increasing cross-border market integration has reduced the diversification benefits of holding foreign stocks. Bogle and Collins also argue that the U.S. is the most attractive market to invest in because its economy will experience the strongest future growth.

Professors: Hold international stocks in proportion to their global market cap weight. Their reasoning: "The correlation of multinationals' stock returns with their domestic stock market is very high, limiting the international diversification benefit obtained by buying the multinational stocks of one's own country" (Karen K. Lewis, "Trying to Explain Home Bias in Equities and Consumption," 1999).

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