3 Must-Read Finance Books to Achieve Financial Independence

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Imagine what you could do if you did not have to work for money. You can do all the things that you have been putting off for years because you just do not have the time. Time is our most valuable resource and we sell it to our job in exchange for money. Time is the ultimate of limited resources with no way to retrieve it once spent (until of course time machines are invented :p )

I know I have a huge list of things I would like to do that I just do not have time for. We all do.

If we take work out of the equation, we free up 8+ hours per day, probably 10 hours per day to do the things that truly matter to us. We can take this time to pursue our passions, to learn a new language, to brush up on our painting skills, learn how to weld, whatever your heart desires.

If you had 10 hours per day, what would you do with them?

Well, I am sure you can find something fulfilling to do with them. I know I can.

In 2017, I read a bunch of finance books and have boiled down the must-read list to these 3 that will teach you everything you need to know to take back your life.

The Only 3 Finance Books You Need To Read

  1. The Richest Man in Babylon
  2. Your Money or Your Life
  3. The 4-Hour Work Week

1. The Richest Man in Babylon

First off is a true classic from the 1920s, the Richest Man in Babylon. If you are a Christian and have ever read the bible, you will recognize the writing style. The book is a collection of parables from Babylon about the simple truths of money. It comes with stellar reviews from almost everybody that reads it. It may be short, but it is to the point with its 7 simple steps to financial success.

Staying with the parable theme of the book, these are the 7 cures to a lean purse:

  1. A part of all I earn is mine to keep.
  2. Control thy expenditures
  3. Make thy gold multiply.
  4. Guard thy treasures from loss
  5. Make of thy dwelling a profitable investment
  6. Ensure a future income
  7. Increase thy ability to earn

These all may be said in a different way than we are used to today, but the simplicity of the steps is what makes them sound. When the steps to financial success are laid out in a confusing way, they are likely not genuine.

The key point of the Richest Man in Babylon is step one: a part of all I earn is mine to keep. For every dollar you make, save $0.10, or for every $100 save $10. Save it first and you will never miss it. You can live on 90% of your income no matter how small.

There is tons of simple wisdom contained in this short book that it is definitely worth a read.

Check out the Richest Man in Babylon today.

2. Your Money or Your Life

The second book on the must-read list is a powerhouse of the financial independence world, Your Money or Your Life. It marches to the same tune as the Richest Man in Babylon but focuses on 9 simple active steps that you can take to take back your life.

Your Money or Your Life details 9 simple steps to help you organize your finances and your values because they should be one and the same. When your cash flow and your values align you are leading a good and fulfilling life.

The 9 steps to achieving financial intelligence, financial integrity, and financial independence are:

  1. Figure out all the money you have made in your life
  2. Track your expenses down to the penny
  3. Perform monthly tabulations of all expenses and income
  4. Assess your monthly tabulation based on your values
  5. Plot your monthly income and expenses over time on a wall chart
  6. Decrease your expenses
  7. Increase your income
  8. Watch for the crossover point, when your passive income from investments surpass your monthly expenses, you are then financially independent.
  9. Invest your savings for success and security.

These 9 steps are a sure way to achieve FIRE, or if FIRE is not a goal for you, they will help you better understand yourself.

Your Money or Your Life is a book about money, but it is also a book that makes you take a long hard look at yourself and will certainly improve your self-worth.

3. The 4-Hour Work Week

The final book in my recommended reading list is the 4-Hour Work Week by Tim Ferris. This book takes a different approach to FIRE and retiring early. Instead of focusing on quitting work in general, you are focused on building a business that generates passive income. The idea is that you build a business and then outsource most if not all  of it, so that you are not needed. You just stay around with the business to collect the income that is generated.

My favorite takeaway from the 4-Hour Work Week was the “freedom factor”. Your freedom factor increases with the amount of W’s that you control:

  • Where you are
  • When you want to be there
  • With whom you spend your time
  • What you are doing
  • Why you are doing it

The more of these that are under your control, the more freedom you have to control your own life. Basically, working for someone else you do not have control over these unless you go to work because you truly want to.

In the 4-Hour Work Week, Tim Ferris details what you can do with your newfound free time if you do achieve the 4-hour work week and also the steps and resources needed to get there. Because the book was written a few years ago, a number of the resources are out of date, but the process is still relevant.

This book truly transformed and solidified my approach to FIRE. It is a must-read for anyone that feels they are in the rat race and are looking for a way out.

Check out The 4-Hour Work Week today.

Optional Reading

I read a number of other books this year that were good reads for sure but were not nearly as influential and essential as the 3 books above. They were:

  1. Rich Dad, Poor Dad (explains the difference between poor and rich people)
  2. I Will Teach You To Be Rich (basics of personal finance duplicated with Your Money or Your Life and The Richest Man in Babylon)
  3. The Ascent of Money (the history of money and markets if you are interested)
  4. The Millionaire Next Door (the authors surveyed 1000s of millionaires. This is full of statistics of millionaires from the 1990s)
  5. The Boglehead’s Guide to Investing (Everything you need to know about investing)

If you want a deeper dive into investing than you should definitely read the Boglehead’s Guide to Investing. Jack Bogle is the figurehead for the movement because he is the founder of Vanguard and the biggest proponent of index funds out there.

Conclusion

In order to get the best overview of personal finance, you need only read the 3 books above. They contain everything you need to know to get started. Following the steps in the big 3 will teach you to be a good steward of your money and will be a base to continue learning more and more in the future.

Good luck on your journey towards personal finance mastery. These resources will help you along the way. And as always, I am here to help you on your journey.

So readers, do you have other favorite personal finance books? Let me know in the comments.

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