Disclosure: Please note that some of the links below are affiliate links and at no additional cost to you, I’ll earn a small commission from any purchase made, which helps keep this blog active. I only recommend products I have used personally or books I have read and enjoyed.
Building wealth and financial independence is a common goal for many people trying to craft their dolce vita. If you’re seeking practical advice and strategies to achieve this dream, look no further! I am obsessed with non-fiction books (I guess there are worse things to be obsessed about), so this post will explore some of the best books I’ve read that provide valuable insights on how to build wealth and attain financial freedom. These authors can help transform your mindset, teach you essential money management skills, and guide you on your journey towards a prosperous future. So, grab a cup of tea (or espresso – I’m in Italy now after all), settle in, and let’s dive into these life-changing reads that’ll put you on the path to financial success.
Best Books For Practical Advice
The Simple Path to Wealth
The Simple Path to Wealth is a classic, often-cited book written by JL Collins that provides readers with a simple, yet effective strategy for building wealth and achieving financial independence. The book is based on the author’s personal experience and focuses on investing in low-cost index funds, which he believes is the key to long-term wealth building.
Pro Tips: Collins’ book advocates for the use of low-cost index funds, which provide broad exposure to the stock market and have consistently outperformed actively managed funds over the long term. He argues that actively managed funds and individual stock picking are not only unnecessary but can actually be detrimental to long-term wealth building. Collins has been able to take time away from active employment withdrawing from his investments using a safe withdrawal rate and ensuring his family lives below their means.
Quit Like a Millionaire: No Gimmicks, Luck or Trust Fund Required
Kristy Shen and Bryce Leung are Canadian financial independence gurus who saved aggressively, lived below their means and employed Collins’ strategy of investing in low-cost index funds to build a sizeable investment portfolio. And get this, they retired at 31 and have been travelling the world ever since (minus the pandemic) living only on their investment portfolio withdrawals. If they can make this work, so can you! As a young child in China, Kristy talks about making toys from garbage, so at a minimum, you should read this book for an impressive story of how to make smart financial decisions to achieve a life of financial freedom (and keep living it)!
Pro Tips: Shen and Leung are all about “mathing that shit up” which means they use math to analyze investment decisions. Their book talks at length about strategies for investment in low-cost index funds, safe withdrawal rates and critical investment tools (using their own mathematical calculations) to keep you safe if the market takes a downturn. They’ve lived through several market downturns since they retired and their portfolio grew, so even if your reaction is “eww, gross, math” you can use their great advice to build yourself a solid retirement plan.
Money Honey: A Simple 7-Step Guide for Getting Your Financial $hit Together
Rachel Richards is a hilarious former financial advisor who retired in her 30s using some basic financial advice – basic but not often followed. Her book is the most fun, readable and easy-to-employ guidebook for anyone who needs to get their financial house in order to start the path to early retirement and/or financial freedom. I’d say it’s geared more towards younger people who may not have great financial knowledge and it’s written for an American audience, but still has a number of excellent examples and real-world stories providing super practical advice.
Pro Tips: Oh boy, there are too many to list, but Richards is big on setting a budget, cutting back on unnecessary spending and getting into investment, with a diversified portfolio sooner rather than later. Richards also promotes having a side hustle to build wealth you can invest (her second book – see below – gets into this aspect in detail). She’s also all about building your confidence and keeping you motivated so you can succeed to get on track to financial freedom.
I have read a LOT of personal finance books, including many focused on building passive income, but this one is my favourite by far. While there are a ton of sources out there for building passive income (blogs, podcasts, etc) this book is the one-stop-shopping you need to figure out what works for you. Rachel Richards (of Money Honey, above) again uses a hilarious, conversational style to go through almost every area of passive income generation known and uses personal or real-world examples to tell you exactly what you need to do.
Pro Tips: Richards has built an impressive real estate rental income portfolio so her tips on investing in real estate and making passive income through rents are awesome. She also has great tips for what to invest in (ETFs and index funds) to build an investment portfolio, which is the ultimate passive income source.
Scott Trench’s book Set for Life is a must-read in terms of practical advice for how to save for your future. This book could straddle “practical tips” and “mindset shift” very easily as Trench emphasizes the importance of adopting a specific mindset to achieve financial freedom. This mindset entails a long-term outlook on finances and prioritizing financial independence over material possessions in the short term (“delayed gratification”). Trench is a big promoter of being mindful about your spending habits, being frugal and accelerating wealth.
Pro Tips: Trench focuses on high-savings rates, utilising the power of compounding, investing in income-generating assets, and embracing frugality. His advice is based on saving a significant portion of one’s income but he also provides great guidance on investing in assets such as real estate or stocks to accelerate passive income.
The Automatic Millionaire
David Bach’s book is another classic personal finance book based on the premise that anyone can become a millionaire by making a few simple changes to their daily habits, such as automating their savings and investing. Bach has adapted the book to tailor to particular audiences. Like Chilton (of the Wealthy Barber, below), Bach’s main cry is to pay yourself first. Bach uses motivational stories and anecdotes, providing readers with specific steps and strategies for automating their finances and building wealth.
Pro Tips: Paying yourself first means setting up automatic savings and investment plans before paying any bills or expenses. This way, you ensure that your future financial goals are a priority and you don’t run out of money at the end of the month. Bach also uses simple compound interest to explain how you can grow small savings (a latte a day – what he calls “the latte factor”) into significant wealth over time.
The Wealthy Barber and The Wealthy Barber Returns
Canadian financial advisor David Chilton (of Dragon’s Den fame) wrote a series of great books beginning in 1989 with The Wealthy Barber and adding The Wealthy Barber Returns in 2011. Chilton’s approach to financial planning is based on common sense and simplicity. He believes that anyone can achieve financial independence if they follow a few basic principles, such as saving regularly and living below their means. The books cover topics from budgeting, saving, investment tools, retirement planning, insurance and estate planning and are quite practical.
Pro Tips: While you’ll get lots of tips from Chilton’s books, the biggest takeaways from the Wealthy Barber series are to pay yourself first, live below your means and to create a financial plan for success.
Best Books to Inspire A Mindset Shift
Another best-selling personal finance book Robert Kiyosaki’s Rich Dad, Poor Dad tells the story of the author’s two fathers. Through their different approaches to money management, Kiyosaki shares valuable insights and lessons for building wealth and achieving financial independence. I put this one under “Books to Inspire a Mindset Shift” as while Kiyosaki’s book has some practical tips, it’s really more useful to offer general guidance on how the uber wealthy get to that point. One potential drawback to the book is that some of Kiyosaki’s advice may not be applicable to everyone. For example, not everyone may have the resources to invest in real estate or start their own business. However, the principles and lessons he shares can still be valuable for anyone looking to improve their financial situation.
Pro Tips: Regardless of where you are at in your financial journey, this book will get you thinking about how to accelerate your path to financial freedom, which Kiyosaki achieved himself at 47. His main argument is one should move away from traditional employment or self-employment (both are heavily taxed), and instead look to build a business or become a sophisticated investor (both allow significant tax advantages). He emphasizes the necessity of understanding financial statements and appreciating the difference between assets that are income-generating (like real estate investments) vs liabilities (like your personal home or vehicle).
The Millionaire Next Door
The Millionaire Next Door by Thomas J. Stanley and William D. Danko presents a comprehensive analysis of the habits and behaviours of millionaires in the United States. The authors conducted extensive research and interviewed thousands of millionaires to understand their wealth-building strategies. If you are a research aficionado, then this book is for you. The lessons derived from this read aren’t life-changing by any means, but it challenges common misconceptions about the wealthy and leaves you with the well-researched message that anyone can achieve financial freedom and build wealth – anyone.
Pro Tips: Some lessons learned from studying a slew of American millionaires are to live below your means, invest wisely in appreciating assets, consider entrepreneurship (build a business or be self-employed), don’t dismiss education and possess a solid work ethic.
Think and Grow Rich
Napoleon Hill’s timeless classic was first published in 1937 and has since become one of the most influential personal development books of all time. The book teaches readers how to achieve financial success and independence by following the principles of successful people. This is a mindset shift book for sure, I wouldn’t say it offers a ton of put-into-practice advice. I’m sure many will find Think and Grow Rich to be a bit of useless “positive thinking” crap, but I do believe there is great inspirational value from all the real-world stories in this book, even if visualization isn’t your thing.
Pro Tips: The critical thing to take away from this book is that success starts with a clear and definite purpose. Successful people have a burning desire to achieve their goals and are willing to do whatever it takes to make them a reality. The book also emphasizes the importance of persistence and resilience in the face of failure and adversity. And my personal favourite which is often a forgotten step – you need a plan! Don’t just throw money into the stock market and pray the riches will flow – research, plan accordingly and execute. Then adjust, plan again and re-execute.
Conclusion
You’ve heard it before but it’s worth repeating – knowledge is power. If you are seeking financial independence and are in the early stages of building your wealth, you won’t achieve your goals in a knowledge vacuum. From mastering the principles of personal finance to devising investment strategies and understanding the psychology of money, these books offer invaluable guidance. By learning from authors with real-world experience and applying their insights, the path to financial success will become clearer.
I’ll also stress that while you’ll hear some common themes amongst all personal finance books (invest money to make it work for you, live below your means, pay yourself first automatically), you’ll also hear quite conflicting views on how to achieve financial freedom. At the end of the day, you need to parse through all this information and create a financial plan that will work for you. It’s your life, once you are informed about the impact of your financial decisions, it’s up to you to decide how to make your dolce vita happen.
Enjoy reading and let me know about other books you’ve found which have shaped your path to financial freedom.