You might have heard of financial freedom, the FIRE movement, and early retirement, and now you want to know more. You’d like to start with the best possible books to find out the pillar principles of building wealth. After some careful consideration, I managed to pick what I consider the best finance books for beginners to grow your wealth to financial independence.
You might be asking yourself, why don’t you have more money saved? How do you pay for that broken car window? How do you pay for insurance, fix your garage or the roof on your house? These books will help you form the foundation for financial literacy, and teach you how to start accumulating money, so you can have a budget to pay off all those expenses.
They contain basic steps on how to budget, get out of debt, save money, invest and achieve financial independence. If you don’t know what financial independence is, it’s when you have a passive income flow that is higher than your living expenses. It means you don’t have to work anymore, the money just keeps coming in, and you can do whatever you want. Wouldn’t that be a great feeling?
Can we achieve financial independence? How do we get there? Well, I’m in the same boat, and the first thing I did was to find out the best finance books for beginners and start reading.
Books in this list represent the pillars in a beginner’s finance education.
What are the best finance books for beginners?
1. The Richest Man in Babylon by George Clason
This is arguably the best finance book for beginners.
The Richest Man in Babylon is an incredible book in its simplicity and the way it teaches you about finance. It’s a series of personal finance lessons taught through parables set in ancient Babylon.
It uses ancient Babylon as the setting for all the stories it tells, and through these stories, you will see how simple gaining wealth is. We like to complicate our lives all the time, but when it comes to financing it’s important to keep things simple. This book will help you in this.
The book is an easy read, you can finish it in just a few days of laid back reading. It will give you pillar advice in finance, and help you start forming fundamental personal finance habits. So go get it, and ‘start thy purse to fattening‘ ;).
2. Get a Financial Life by Beth Kobliner
If you are in your 20s read it now. If you are older, read it yesterday.
The book is filled with loads of practical basic financial information, easy to read and understand.
Being an extremely helpful book, you’ll refer to this book later on as a reference when you have questions about finance. It’s an extremely helpful read, written to be understood by everyone, and will start building the motivation you need to save money and start taking care of your money. If you don’t take care of your money, your money won’t take care of you.
P.S. If a few concepts don’t seem to come easy to you, don’t worry. It’s normal, just move on to the next book and keep reading.
3. The Simple Path to Wealth by JL Collins
This book is about achieving financial independence slowly.
It’s not about getting rich quick. It’s not about scamming the system or using complicated strategies to invest. It’s about using sound principles to achieve financial wealth.
Being a straightforward investment book filled with humor and empathy, it’s very accessible and it will explain to you important concepts about financial independence in a fun way.
The Simple Path to Wealth goes straight to the point with clear advice on investing. Some people think investing is difficult and complex, but at its core, it’s very simple. This book will help you see that.
4. The Millionaire Next Door by Thomas Stanley
When you think of a millionaire, what do you picture?
Do you picture someone spending a lot of money on flashy clothing, cars, and parties? If you do, then you’re just like me and most of the people in the US.
But we are wrong.
Most millionaires aren’t like that. They don’t spend money needlessly – they are frugal. They don’t gamble – they invest in sure things, such as index funds. Most of them own a home, are first-generation affluent, and didn’t receive any inheritance. Most millionaires live below their means, even after they become rich. And most of them are well educated and save like crazy.
The Millionaire Next Door is something like an interpretation book of the biggest experiment on millionaires ever done. For most of us, it changed the picture of our reality. It will show you how millionaires live, who they are, and how they became millionaires in the first place. It doesn’t mean we have to be like this, but it gives a fascinating insight into the average US millionaire.
The conclusions from the experiment in this book are fascinating, but you can easily read a third of this book and skip the rest. It’s just beating a dead horse honestly, and I just want to save you some time.
5. Your Money or Your Life by Vicki Robin and Joe Dominguez
If you’re new to financial independence and the FIRE movement, then this book will most surely leave a lasting impression on you.
It’s one of the most lucid, insightful, and valuable books on money. I’ve met people who said they think about this book years after they read it. That’s how powerful it can be. The idea of early retirement on a small wage may be ludicrous to some, but this book shows how it’s not crazy at all. It is possible.
YMYL may not be the most modern book on investing, but it does a great job of teaching you how to start organizing your finances from a total net worth perspective, not just budgeting from paycheck to paycheck. So pay attention to those chapters.
This book may or may not be revolutionary for you. One thing is certain: it will probably change your emotional relationship with money, and the way you look at and experience the material world.
6. I Will Teach You to be Rich by Ramit Sethi
One of the best finance books for beginners, by far. Everyone should read this.
It gives you step-by-step practical suggestions for getting your finances in order. This book is different than many other financial books, as it has a variety of different, practical suggestions rather than one main advice for attaining financial independence.
I Will Teach You to Be Rich is geared towards the younger generation and beginners in finance, but if you’re new to the FIRE movement this book is for you, no matter your age. And the fact is, the sooner you read this book, the better. It’s well worth the price and read the time because it’ll give you a solid foundation and concrete tools to use in many situations and achieve your financial goals.
7. The Little Book of Common Sense Investing by John Bogle
To become wealthy, you need to start investing.
The sooner you start, the better, and this is a great book to get you into that world. This book is easy to follow, and you shouldn’t get scared because it has the word “investing” in it. You need to invest. You should invest.
The author John C. Bogle was the founder & CEO of Vanguard, and he created index investing.
Don’t know the best investment? Then this Little Book of Common Sense Investing will show you the best one. What the heck, I’ll tell you: it’s an index fund. Investing in index funds, and being consistent about it is the best way to get rich.
The market always grows, so investing in S&P 500 index or a total market index is a no-brainer. Keep buying consistently over time, stay on course and always assess your risk correctly (have enough cash or bonds on hand to sleep well at night).
8. Your Money and Your Brain by Jason Zweig
After the basics, it’s important to learn about the psychological aspect of investing, so you can avoid mistakes most investors make.
Your Money and Your Brain is a behavioral finance book, easily accessible to beginner investors. It touches on how the body reacts physically and mentally to the changing stock market. It does this through a fascinating survey that demonstrates how people can be convinced to act against their interests, senses, and goals.
The human brain is ancient and is still optimized for the hunter-gatherer society where humans have spent most of their existence. To overcome obstacles that come from this, Zweig will steer you with suggestions he leaves after every chapter that will help you to avoid getting tricked.
It will help you obsess less about the stock market, and increase your happiness, which come from being involved in a community and having a cause, rather than having possessions that fade over time.
An interesting read, and a must to get a glimpse into the psychology of an average investor.
9. You Can Be a Stock Market Genius by Joel Greenblatt
This is an excellent book overall and one of the best value investing books ever written. Being quite different from almost all other similar books, it focuses on finding special situations to invest in.
You Can Be a Stock Market Genius will open your eyes to new opportunities to look out for when investing, from spinoffs, mergers and takeovers to bankruptcies. The book does this in a very simple and fun way.
Joel was able to make reading about complex topics painless and fun, which is why this book is an excellent read for beginners looking to get into investing.
And invest we must. So go get it, read it, and increase your value. You will notice that when you increase your value, your material wealth will increase as well, and with this, your ability to take care of your friends and family, and improve your community and the world.
Money management at its core is relatively simple, but it can become complex if we fail to recognize and stick with the basic principles that grow our wealth.
Budget and reduce expenses, pay down high-interest debts, contribute to IRA, save for retirement, invest consistently and enjoy life. But to do that, we need to learn, and these books help greatly, so we can get wealthy, take care of our families, improve our communities and live happier lives in general.