Getting started in the journey of achieving financial freedom? Managing your money is one of the most critical skills you can have. No matter whether you are wealthy or trying to earn more money, using certain techniques can significantly add more abundance in your bank account and happiness in your life.
Money is a tool essential for our survival. Learning how to manage money is a life skill nobody teaches us in school, but thankfully we have a variety of personal finance books in the market today at our disposal.
In this post, we will be sharing five of our favourite personal finance books that can transform the way you approach money. We will start with creating financial freedom, transforming your relationship with money, managing budget, and delve into accelerating your savings. Because let’s be honest, not everyone is good with numbers, but once you get acquainted with the simple concepts, you can master the money habits and build a happy life.
Best personal finance book on achieving financial freedom
Rich Dad’s Cashflow Quadrant by Robert Kiyosaki
In this sequel to the best-selling book, “Rich Dad, Poor Dad”, Robert Kiyosaki guides readers on how one can move from financial security to embracing financial freedom. Kiyosaki highlights the fact that the way we seek our source of income and create wealth, actually depends on the core individualistic psychology. We hold various beliefs around money that directs how we earn, how we save and how we manage our finances.
According to the author, each one of us is a part of the “Cashflow Quadrant” that can be divided into four categories E, S , B , I. Each quadrant has advantages and disadvantages.
E stands for Employee
Most of the people come under this quadrant. This is a default way of earning a living. Most of us are programmed to go the “employee” route to provide for ourselves and our families.
S stands for Self-employed
Small business owners or solo people who create wealth by working on their own. They are similar to being employees and actively depends on clients.
B stands for Business Owners
People running businesses with 500 or more employees come under this quadrant.
I stands for Investor
People like Warren buffet who know how to multiply their wealth by investing.
Employee and Self-employed are the left quadrants as they have active income sources and business owner and Investor are the right quadrants with passive income. Understanding and learning in which quadrant you fall can invoke a few questions such as:
- What are my core beliefs are around money?
- Am I afraid to take risks?
- Are my expenses more than my income? Etc.
The Big Lesson
The big lesson that you can take away from this book is that if you want to get rich and attain financial freedom in all aspects of life, then you need to move from the left side of the quadrant to the right side. Meaning, if you are an employee and solo entrepreneur; you need to start moving towards creating a path that can lead to becoming a prominent business owner and an Investor.
Nevertheless, you need not to shift completely, you can start by jumping from one quadrant to the other. You can learn new skills and new mindset approaches to change your source of active income to passive income. So, if you are an employee, begin by providing your services online as a solo entrepreneur or start investing. Once you transform your core values and look at money from logic than emotion, you can create a path for financial freedom.
Best personal finance book on transforming your relationship with money
Your Money or Your Life by Vicki Robin
“Your money or Your Life” is a book to re-define your relationship with money and take control of your finances to make a life and not just living. This book is filled with experiences, stories, and examples that can set you up for creating a successful and happier life. “Your money or your life” lays down a nine-step program which can change the nature of your interaction with money. It will help you create financial integrity, intelligence, and independence in a very holistic way.
The Big Lesson
Elaborating on the concept of “Enough”, the word we use very often, the author helps readers understand what they are getting every time they trade of their time.
The book gives you a new lens to look at money, the author wants you to approach money as something you receive when you trade off your time and energy. You start changing your attitude towards your finances and start valuing your life energy more. Because once you understand that your financial freedom is in your control. You begin to minimize spending and maximize earnings. Your ambition is to invest in things worth your time, and you apply the laws of leading a successful life in a real sense. This book is a beginner’s guide to enriching your life with meaning, purpose and control your finances in such a way that they don’t control your life.
Best personal finance book on investment
The Intelligent Investor by Benjamin Graham
Warren Buffet has called “The intelligent Investor” as the best book on investing ever written. This book lays out the foundation of value investing, covering topics such as portfolio policy, asset allocation, inflation, and market fluctuation, etc. If you are looking for lessons that a real investor needs to know, then this is what you need to pick.
Graham provides the foundation for taking business-like decisions, based on the fundamental principles to become a successful investor.
The Big Lesson
To practice investing intelligently, Graham emphasises on the concept of “Margin of Safety”. The margin of safety is a simple principle in investing to minimise risks and prevent yourself from making financial mistakes. When you apply the principle to generate profits, you buy stocks/bonds at deep discounts to their intrinsic value. It does help in providing a cushion against biases, judgments, and miscalculations. Buffett, who is a staunch believer of this principle has declared it as one of his “cornerstones of investing”.
Best personal finance book on savings and debt
The one week budget by Tiffany Aliche, The budgetista
Aliche wrote “The one week budget” for beginners who hate going through the hassle of mundane day-to-day tasks. This guide presents you with seven simple chapters along with action plans and steps you can follow to create your own financial system. Besides being very straightforward in the approach, Aliche shares personal anecdotes and talks about various clients who have transformed their bad money habits. It’s a fun book on money management for anyone starting to take control of their finances.
The big lesson
Systematically manage your everyday expenses with “The one week budget” by Aliche. Using the step-by-step action plan as you read the chapters, you can create a financial system that works for you in just seven days. Nobody likes to do their taxes, create daily budgets, but with this book, you can ease out the way you handle the tasks you enjoy the least. It also teaches you how to track and record your money.
Best personal finance book on Savings
The millionaire next door by Thomas J Stanley and William D Danko
The millionaire next door is an ultimate personal finance textbook for anyone looking to be wealthy. You will learn behavioural attributes of “PAW’s”, a term used to describe Prodigious accumulator of wealth in the book. PAW’s are the ones who efficiently build wealth to become millionaires. The book is a classic which represents data and research from the millionaires interviewed. You learn many attributes of millionaires.
The big lesson
The one fascinating thing about millionaires mentioned in the book is that they live below their means. Only 1% of millionaires have vehicles that are 2 years old. 75% of millionaires never pay more than $199 for shoes. They put financial independence above social status which is an excellent lesson in savings. You can become wealthy once you understand how you allocate your time, money and energy.
You have to focus on creating financial freedom than temporary social approval. “The millionaire next door” teaches you the practical method of creating wealth by what you already have.
It’s never too late to start investing in your financial freedom. Whether you are just starting out or you have some fair knowledge on the subjects of savings, managing debt, risk and investing. You can gain a lot of knowledge through the array of personal finance books available today. You might even surprise yourself by the wealth of information you may access and start creating an abundant and meaningful life. Learning to take financial decisions that support your life goals and understanding the impact of your attitude towards money can change the way you live. Nobody is born rich, one can learn how to maximize wealth by following strategies laid out by the millionaires and track every step in the action plan.
Here’s to your abundant life!
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