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Many of us go to school, learn how to earn money in a skilled profession, and then spend our lives working for money to pay the bills. What if, instead, you were able to figure out how to use that money to work for you? If you want to accelerate your path to financial freedom, one of the best things you can do is to educate yourself through reading books. That’s why in this post, I am sharing the seven best financial freedom books to read if you’re looking to change the course of your finances.
It is far too easy to go through the daily grind of getting up, going to work, and then coming home to cook dinner and watch TV, all while losing sight of your big picture financial goals.
However, with just a small time investment, you can proactively take steps towards changing this cycle. It is possible to reach a point of being able to work because you want to, not because you have to. Not having to work for money is financial freedom – and these books will help you get there.
Each of these books has taught me something valuable about personal finance, and that’s why I think each one deserves a place on your bookshelf.
So, without further ado, here are my seven favorite financial freedom books.
Financial Freedom Book No. 1: The Best for Getting Your Mindset Right
Rich Dad Poor Dad by Robert Kiyosaki
Okay, I realize this book is a bit cliché. You are probably hard-pressed to find a single list about personal finance books without finding this book somewhere on the list.
I never picked up Rich Dad Poor Dad until recently when it came recommended to me by a family member. Once I picked it up, I couldn’t stop reading it.
This book is THE best personal finance book about your money mindset. This book is engaging and will force you to consider your values when it comes to money.
Kiyosaki explains concepts simply and thoughtfully. Without giving away the premise of the book, Rich Dad Poor Dad encourages you to think about how you can acquire assets that produce income. The assets you buy are what ultimately get you off the hamster wheel of relying on a job for money.
In a few words, the book will teach you that the poor work for money and the wealthy have money work for them. This book covers the differences between being rich and wealthy, and why it’s better to be wealthy.
Just trust me. If you read no other book this year, make it this one.
Financial Freedom Book No. 2: The Best for Actionable Money Moves
I Will Teach You to Be Rich by Ramit Sethi
If you haven’t heard of this book, you’re probably ready to stop reading because this book sounds like a scam. Yes, it does. The author knows it does, too. It’s a name he came up with in his college dorm room, and unfortunately, it’s the name that has stuck with his brand today.
However, despite the title of this book, it is the book I would recommend most commonly to people looking to get their finances in order. Sethi is a Stanford-educated personal finance guru that shares straightforward, actionable steps to get your finances in order. He’s funny and engaging, making this book an easy read.
The book covers six key areas of personal finance:
- How to Deal with Credit Cards
- How to Leverage Bank Accounts to Your Advantage
- Why a Retirement Account is Important
- How to Save Money (without having to give up the things you want)
- The Steps to Automate Your Finances (this section alone is worth buying the book)
- How to Use Investing to Grow Rich
If you read only one book on this list about the mechanics of personal finance, make it this one.
Financial Freedom Book No. 3: The Best for Understanding Mutual Funds
Common Sense on Mutual Funds by John Bogle
If you don’t know who John Bogle is, by the end of this book, you will – and you’ll be thanking him for the rest of your life. Bogle is the guy who quite literally invented the index fund.
If you don’t know what an index fund is, in a nutshell, it is the lowest-cost way to invest in the stock market in a diversified way.
Bogle had a realization that many people were paying active fund managers (investment “professionals”) lots of money to choose stocks that would “outperform.” Turns out, though, most of these funds don’t outperform. So, Bogle invented the index fund as a low-cost way to buy a diverse cross-section of stocks all at rock-bottom costs.
In this book, Bogle shares how low-cost, diversified index funds can outperform investment professionals over the long-term. This book provides a framework for investing in any market and will help you identify good and bad mutual funds.
So, before you select your investments in a 401(k), IRA, or another brokerage account, this is a must-read. You’ll choose better funds that will help you earn more wealth over the long run.
Financial Freedom Book No. 4: The Best for Learning Why Index Funds Work
A Random Walk Down Wall Street by Burton Malkiel
In this book, Burton Malkiel makes a compelling case for index funds, explaining that stocks perform as a random walk. In other words, individual stocks take an unpredictable path, and it is impossible to know if they will move up, down, or sideways.
He explains the flaws of both technical and fundamental analysis, and why it’s impossible to outperform market averages consistently. In other words, he makes a case for how you can use index funds to your advantage.
While the stock market is unpredictable, investing over the long run is highly predictable. To quote Warren Buffett, “lethargy bordering on sloth remains the cornerstone of our investment style.”
This book will teach you how to take such a passive approach to invest and why this approach yields the best possible returns.
Financial Freedom Book No. 5: The Best for Building Your Investing Portfolio
How a Second Greater Beats Wall Street by Allan Roth
If you read Common Sense on Mutual Funds and a Random Walk Down Wall Street, by now, you understand why low-cost index investing is such a fantastic tool.
In this book, Roth explores dead simple approaches to building a simple portfolio of stocks and bonds – one that is likely to outperform that of investment pros.
Think of Common Sense on Mutual Funds as the “why” and this book as the “how.”
This book will share a few different mixes – ones you can put into practice. And guess what – these portfolios will work forever. Investing doesn’t need to be complicated, and these simple portfolios are just what you need to design your portfolio.
Financial Freedom Book No. 6: The Best for Understanding Rich Habits
The Millionaire Next Door by Thomas Stanley
While many of us think of the wealthy as those driving BMWs and living in million-dollar houses, that is often not the case.
Most people who are genuinely wealthy are the ones driving Honda Accords and living in modest houses. Why? Because the wealthy save a significantly higher percentage of their income than they spend.
The “rich,” on the other hand, are often the ones spending almost everything they earn (and sometimes more).
The author explores in great detail the habits of the affluent so that you can consider whether you have the right habits to build wealth.
Financial Freedom Book No. 7: The Best for Automating Your Finances
The Automatic Millionaire by David Bach
We all face countless choices in our daily lives. One of the secrets to building wealth is taking decisions out of the equation – making money do the things we want it to be doing all with little input from us.
This book will share the key steps to take to build wealth, as well as the order in which you should take action to maximize your wealth-building potential.
The real power in this book is showing how to use the psychology of money to take action consistently without letting yourself get in the way.
The Best Financial Freedom Books: A Summary
There are so many books on the topic of financial freedom that it was hard to narrow it down to just seven. But these seven books will get just about anyone started on the path to financial freedom. To recap, here are my seven favorite books to read before the end of the year.
1. The Best for Getting Your Mindset Right: Rich Dad Poor Dad
2. The Best for Actionable Money Moves: I Will Teach You to Be Rich
3. The Best for Understanding Mutual Funds: Common Sense on Mutual Funds
4. The Best for Learning Why Index Funds Work: A Random Walk Down Wall Street
5. The Best for Building Your Investing Portfolio: How a Second Grader Beats Wall Street
6. The Best for Understanding Rich Habits: The Millionaire Next Door
7. The Best for Automating Your Finances: The Automatic Millionaire
If you can only pick one book, start with Rich Dad Poor Dad. Because, without the right money mindset, the rest doesn’t matter.
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