Are you looking to achieve financial freedom? Do you dream of retiring early and live a life of financial independence? If so, you’re not alone.
According to a recent survey, over a third of people turn to “family and friends” for financial advice. Combine that with the fact that the federal reserve still reports that the average American family is not able to pay off their credit cards monthly.
This highlights an exciting contradiction in that most turn to people with financial advisors who need more financial education.
Financial freedom books are the cornerstone of one’s quest to become financially free. As Robert Kiyosaki famously says, you must “Increase your financial education.” By reading the right books, we can gain the knowledge and skills to control our finances and achieve our goals.
You won’t get the same resulting information from watching endless YouTube videos on financial freedom; instead, read and absorb information from what I’ll call “foundational books.”
These books are big on what I’ll call “financial frameworks,” which are ways and models of how people think about money and finances.
In this article, we’ve compiled a list of the best books for financial freedom. Whether you’re beginning your financial journey or looking to take your economic circumstances to the next level, these books will provide the guidance and inspiration you need to succeed. From personal finance classics to modern-day bestsellers, we’ve got you covered.
So, what are you waiting for? If you’re willing to take control of your personal finances and achieve financial freedom, read on to discover the best books for the job. By the end of this article, we guarantee you’ll have a reading list that will set you on the path to financial independence.
Key Takeaways:
- Financial freedom means having enough money to cover your expenses and having the freedom to choose how you live your life.
- Developing a positive attitude towards money and changing our behavior is essential to achieving financial freedom.
- Reading foundational financial books is essential to gain knowledge and skills to control finances and achieve goals.
- Some of the best books for financial freedom include Rich Dad Poor Dad, Rich Dad’s Cashflow Quadrant, and Tax-Free Wealth.
- The Wealthy Code provides a detailed view of wealth-building, while Principles For Dealing With The Changing World Order discusses successful investing and wealth-building principles.
- Habits shape our lives, including financial practices, so Atomic Habits and Think and Grow Rich are recommended reads.
- Taking action toward financial freedom is essential, and studying and becoming financially literate is important, especially for those over 40.
Understanding Financial Freedom
What is Financial Freedom?
The most common definition of Financial freedom is living comfortably without worrying about money. It means having enough money saved to cover your expenses and having the freedom to choose how you live your life. Financial freedom is about having money, controlling your finances, and making decisions aligning with your values and goals.
Financial freedom means the cash flow from our investments meets all our expenses.
Why is Financial Freedom Important?
Financial freedom is important because it allows us to live the life we want without being held back by financial constraints. It gives us the means to pursue our passions, take risks, and make choices that align with our values. Financial freedom also provides a sense of security and peace of mind, knowing that we have the resources to handle unexpected expenses or emergencies.
The Psychology of Financial Freedom
The psychology of financial freedom is complex and involves both mindset and behavior. To achieve financial freedom, we must develop a positive attitude towards money and be willing to change our behavior. This includes developing financial literacy, setting financial goals, and creating a budget. One of the biggest obstacles to achieving financial freedom is our mindset toward money.
Many of us have mindest and limiting beliefs about finances that hold us back from achieving our financial goals. We may believe that money is scarce, that we cannot earn more, or that we do not deserve financial success. These beliefs can lead to self-sabotaging behavior and prevent us from taking steps to achieve financial freedom. We need to develop a growth mindset towards money to overcome these limiting beliefs. This means believing we can learn and grow our financial knowledge and skills.
We also need to cultivate a sense of abundance and believe that there is enough money to go around. In addition to mindset, behavior plays a crucial role in achieving financial freedom. This includes developing financial literacy, setting financial goals, and creating a budget.
Financial literacy involves educating oneself on the basics of personal finance, including budgeting, saving, investing, debt management, and timeless wealth creation principles. Setting financial goals helps us stay motivated and focused on our financial objectives, and creating a budget helps us track our expenses and ensure we live within our means. In conclusion, achieving financial freedom requires both a positive mindset and proper behavior.
By developing financial literacy, setting financial goals, and creating a budget, we can take control of our finances and achieve the financial freedom we desire.
Building a Foundation for Financial Freedom
Financial freedom is a definitive goal that many of us aspire to achieve. However, it can take time to figure out where to start. Building a solid foundation is essential to achieving financial freedom, and this section will discuss the critical steps to building a foundation for financial freedom.
Creating a Budget
Creating a budget is often the first step to building a foundation for financial freedom. A budget helps us to track our income and expenses, and identify areas where we can cut back on spending. By creating a budget, we can ensure that we live within our means without overspending. We can also allocate our money towards our financial goals, like paying off debt, building an emergency fund, and investing for the future.
Paying off Debt
Debt can be a significant obstacle for many to achieving financial freedom. Bad or high-interest debt, such as credit card debt, can quickly spiral out of control and lead to financial stress. We can free up money for our financial goals by paying off debt. We can use the debt snowball or avalanche method to pay off debt systematically. The debt snowball method (from Dave Ramsey) involves paying off the smallest debt first. On the other hand, the debt avalanche method is more about paying off the debt with the highest interest rate first.
Saving and Investing
Saving and investing are crucial to building wealth and achieving financial freedom. By saving money, we can make an emergency fund to cover unexpected expenses and avoid going into debt. Investing our money in stocks, bonds, and other assets can help our money grow over time. We can invest our cash using investment vehicles such as 401(k)s, IRAs, and brokerage accounts.
Growing Your Income
Growing our income is another key step to achieving financial freedom. We can grow our income by negotiating a pay raise at work, starting a side hustle, or creating passive income streams. By increasing our income, we can put more money towards our financial goals and achieve financial freedom faster.
By creating a budget, paying off debt, saving and investing, and growing our income, we can build a solid foundation for financial freedom. It definitely takes time and effort, but the rewards are more than worthile. We can achieve financial freedom and live the life we want.
Personal Finance Books for Financial Freedom
First are a list of books that contain financial and economic frameworks that are essential to being financially free.
Rich Dad Poor Dad by Robert Kiyosaki
Rich Dad Poor Dad is a core personal finance book that has helped millions start their jounry towards financial freedom. The book teaches readers how to think like the rich and build wealth by investing in assets that generate passive income.
This book claimed to be the #1 personal finance book of all time and was initially published in 1997. Interestingly, it was intended as a pre-sell book for the Rich Dad company and their “Cashflow Board Game” board game.
Robert Kiyosaki tells the tale of his two fathers, one his “rich dad” and the other his “poor dad,” and the financial lessons he learned from each one of them and in contrast to one another.
His “rich dad” ironically was a father of a friend of his growing up but was the one who gave him his original financial education.
My most significant “core” concept and take away from this book are that the rich don’t work for money but rather to acquire assets that pay for their living expenses. The poor work for money (and in turn exchange their time for money) while the rich have money work for them.
He introduces how people who pay themselves first use their income from a job to buy assets that fund their “liabilities,” aka lifestyle.
Investing in your financial education and continually learning from books and mentors is also stressed in the book.
Rich Dad’s Cashflow Quadrant by Robert Kiyosaki
Rich Dad’s Cashflow Quadrant is another excellent book by Robert Kiyosaki that focuses on building wealth through passive income. The book teaches readers about the four different ways to make money: as an employee, self-employed, business owner, or investor.
Kiyosaki explains the advantages and disadvantages of each quadrant and provides strategies for moving from the left side of the quadrant (employee and self-employed) to the right side (business owner and investor).
This is the 2nd book in the Rich Dad series, and I recommend you read this and the above one in order as this one functions as more of a 201-level guide to financial freedom and goes into a bit of detail on the “how to achieve financial freedom” spectrum.
While those categorizations are helpful, most notably, each quadrant is taxed very differently, with the proverbial “left-hand” side of the quadrant (E & S) paying the most in taxes and B & I quadrants paying the least.
His poor dad and the general education system ironically teach people to be good employees or small business owners, paying the most taxes.
Contrast that with his rich dad, who taught him to grow himself in the B & I quadrants, where the “rich” earn their money and are not coincidentally taxed the least.
Why The Rich Are Getting Richer by Robert Kiyosaki
Third on this list of financial freedom books is the third one from Robert T. Kiyosaki titled, “Why The Rich Are Getting Richer.”
This should be the third one in the Rich Dad series that you read because each sequentially builds upon the previous concepts introduced in books.
The big concept in this book for me was how the rich use debt to become wealthy. There is a difference between good and bad debt, and Robert refers to borrowing money from either banks or private investors to buy assets that put cash flow in your pocket monthly.
Since 1971, when the United States came off the gold standard, debt IS money. You can borrow it and use it for whatever purpose you want. Most recently, in 2021 and early 2022, you could borrow money at meager interest rates, locking those payments for 30 years while inflation grew faster than the interest rate. True financial arbitrage.
Tax-Free Wealth by Tom Wheelwright
Tax-Free Wealth is a book that teaches readers how to legally reduce their tax liability and keep more of their hard-earned money. Tom Wheelwright explains the tax code in simple terms and provides strategies for minimizing taxes through real estate investing, business ownership, and other tax-saving techniques.
In “Tax-Free Wealth,” Tom Wheelwright delivers two core financial concepts:
To change your tax, you need to change your facts. This means that to really cut your tax liability, you need to change how you are earning your income. Rather than nipping at the fringes, think about making money from the Business or Investor quadrant rather than the Employee or Small Business quadrant.
Most of the tax code is different from how people will be taxed, but rather a tax incentive. The government will incentivize (through taxes) behaviors they want to happen. The most significant tax breaks come from that—things like real estate, food, research and development, and energy. Generate your income from those, and you’ll benefit the most from taxes.
What I Learned Losing A Million Dollars by Brendan Moynihan & Jim Paul
What I Learned Losing A Million Dollars is a book that teaches readers about the psychology of investing and the importance of risk management. Brendan Moynihan and Jim Paul share their experiences of losing a million dollars and the lessons they learned from their mistakes.
Ironically, you’ll learn a lot about investing mindset and how to invest from a journal of someone and how they lost a ton of money.
“What I Learned Losing a Million Dollars” delivers the big takeaway: take your emotions out of investing and think through it instead. You do this before you invest a dime into something by clearly establishing your exit criteria (both good and bad) for an investment.
When anyone is in the middle of the moment and losing money on an investment, separating your emotions from what is best for you financially is hard. You will limit your losses to a known quantity by establishing clear exit criteria.
The differences between investing and speculating are also critically laid out here. Eye-opening was that most people who think they are investing are speculating with their money.
The Wealthy Code by George Antone
The Wealthy Code is a book that educates readers how to build wealth and abundance through real estate investing and other passive income strategies. George Antone provides practical advice and proven strategies for creating a passive income stream that can lead to financial freedom.
This book takes off from Rich Dad Poor Dad’s end and provides a more detailed and tactical view of wealth building.
“The Wealthy Code” delivers the core concept of breaking down wealth into its separate components and how they tie into each other conceptually.
Wealth (and, in return, financial freedom) comes from cash flow. Cashflow comes from Arbitrage (or spreads, as Antone refers to it). Arbitrage comes from leverage and learning how to use other people’s money (aka good debt).
Arbitrage is one of the hardest things to grasp that the author lays out clearly. Suppose you borrow money at 6% and invest it at a 9% return; that creates a spread on your investment. That’s how you can accelerate your path to financial freedom.
Principles For Dealing With The Changing World Order by Ray Dalio
Principles For Dealing With The Changing World Order is a book that teaches readers about successful investing and wealth-building principles. Ray Dalio shares his experiences and provides practical advice for navigating the complex world of finance.
This is one of the more conceptual books on the list, but it lays out Dalio’s framework for how macroeconomics (and politics) comes in cycles. He put together this framework by studying the great economic powers in the world over the last 500 years.
Once you know about these cycles and where we (in this case, the United States) are, you can understand what is going on at the macroeconomic level and use that to your advantage.
For example, he theorizes that the USA is on the decline and China is on the rise. In the context of financial freedom, this means that dollars (or cash) on hand aren’t efficient. Taking that one step further, you should invest in assets that keep up with inflation.
8. Killing Sacred Cows by Garrett Gunderson
Killing Sacred Cows is a book that challenges conventional wisdom about money and investing. Garrett Gunderson provides a fresh perspective on personal finance and shares his experiences building wealth through unconventional strategies.
This is one of the more contrarian books on this list but also most effective at addressing head-on some honestly destructive myths about money and financial freedom that are out there.
In Killing Sacred Cows, the two biggest takeaways were that 401ks and stocks are some of the riskiest investment vehicles available and make people think of a speculating mindset rather than an investment one.
Also, you need to invest in “high-risk” financial vehicles (stocks, 401k, etc.) to garner high returns. Contrast that with his take that reducing risk in investments will increase your returns over the long haul.
The Psychology of Money
Understanding the psychology of money is crucial to achieving financial freedom. It is not just about earning money but also about how we think about and manage it and our relationship with money.
Mindset is equally, if not a more, critical aspect of financial freedom that is often overlooked. Financial freedom books are not merely “how to” books in investing but rather help you have the proper frameworks and thought processes for dealing with money.
It’s also not just about grinding away towards financial independence, hoping to “one day” retire early but freeing yourself up to achieve greater purposes in life.
It’s very contrarian to work towards financial freedom in today’s society and focus as well as a different way to look at what is going on in the macroeconomy and world are incredibly critical.
Here are a few, select books that can help you understand the psychology of money:
Atomic Habits by James Clear
Our habits shape our lives, including our financial habits. Atomic Habits by James Clear is a great book that can help you understand the science of habit formation and how to build good habits that support your financial goals.
Atomic Habits by James Clear is a must-read for those who want to improve both themselves and their finances.
The core concept in this book is how to position yourself for incremental improvement over time. Make yourself just 1% better each day by establishing small (hence the word Atomic) habits, and simple steps each day make you better.
Through the maintenance of these and over time, under such change, you will radically change your life.
Think and Grow Rich
Think and Grow Rich by Napoleon Hill is a classic book that has helped millions of people succeed. The book focuses on the power of positive thinking and it can helping you achieve your financial goals.
One exciting concept later in the book is having a “major definite aim” that helps center you and guide you as you attempt to take on tasks greater than yourself.
The One Thing by Gary Keller
The One Thing by Gary Keller focuses on the most important thing in your life and letting go of distractions. This book can help you identify the most important thing in your financial life and focus on it to achieve financial freedom.
The core concept in “The One Thing” is what one thing can you do today that will make things easier or unnecessary? Focus is a critical concept; doing one thing at a time will make you more successful, do less, and have more.
Think in terms of this. By doing “less” and applying focus to the one (or maybe a handful) of things you want to do each day, you can move the needle and accomplish more.
The Richest Man in Babylon
The Richest Man in Babylon by George S. Clason is a timeless classic that teaches wealth-building principles. The book takes place in ancient Babylon and tells of a man who learns the secrets of wealth-building from the richest man in Babylon.
Antifragile by Nassim Taleb
Antifragile by Nassim Taleb is not a book about money, but it is a book that can help you understand the concept of antifragility, which is the ability to thrive in chaotic and uncertain environments. This is an important concept to know when it comes to managing your finances, as the financial world can be unpredictable.
Antifragile is the most controversial book on this list of best financial freedom books because it lays out the author’s views on what makes things thrive during times of high uncertainty or stress.
For example, when you exercise, you are putting stress on your body, but it adapts to that and grows and improves.
The barbell concept is critical to understand as the book applies to financial freedom.
Picture a barbell, with one side of the barbell being resistant to what the author refers to as adverse “black swan events” and the other exposing oneself to the potential upside.
How this applies to us is to take adequate financial safety measures to ensure we can withstand a negative downturn (such as in 2022 or 2008 with traditional wall street investing) while simultaneously capturing any potential upside.
Taking Action for Financial Freedom For People Over 40
Now that we’ve covered our list of the best books on financial freedom, it’s time to take action. Reading about financial independence is one thing, but taking action is another. In this section, we’ll discuss the importance of financial literacy and how to take steps toward financial freedom.
It’s even more important to study and become financially literate for those of us over 40. My mentors at Cashflow Tactics stress that it’s about taking simple steps every day.
The Importance of Financial Literacy
Financial literacy is the foundation of financial freedom. With it, we may make better financial decisions, leading to debt and financial stress. Becoming financially literate means understanding basic economic concepts such as budgeting, saving, investing, and debt management. It also means digesting and learning about the latest financial news and trends.
One way to improve our financial literacy is to read books on personal finance and investing. The books we’ve discussed in this article are a great starting point.
Taking Action
Now that we better understand financial literacy and the importance of bank accounts and credit cards, it’s time to take action. Here are a few steps that we taking toward financial freedom:
- Create a budget and stick to it
- Pay off high-interest debt
- Start saving for cash flow
- Invest in assets that keep up with inflation
- Stay up-to-date with the latest financial news and trends
Remember, financial freedom doesn’t happen overnight. It takes time, effort, and discipline. But by taking action and making informed financial decisions, we can achieve our financial goals and live a life of financial freedom.
Top One Book Should You Read To Start You On Your Financial Freedom Journey?
So, the question is, which book should you read if you are just starting out on your journey towards financial freedom?
I’ll recommend reading Rich Dad Poor Dad by Robert Kiyosaki, as it contains so many core financial and mindset principles.
In the words of Ryan Holiday, one of my favorite authors, it’s a “quake book” in that is shakes you to your core and makes you think about things in a completely different way.
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