Financial Literacy Books that Guided me to Financial Freedom

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My Library of Financial Literacy Books

Learning and improving your financial literacy can be a long process. Financial literacy books are a good source of financial advice and a way to improve your financial education. I was reading financial literacy books well before 2015 when I had my financial freedom realisations. The internet, blogs and platforms like twitter have meant a rapid explosion of this awareness.

Discovering Financial Literacy

Before this I had to rely on financial literacy books alone. I first started to think about retirement when I was about 35. I had just left my corporate job to start up my own business. This process forced me to deal with retirement planning because suddenly I no longer had a pension fund.  I assumed this responsibility myself and I also had to manage the preservation of my existing pension contributions.

I never did accounting at school and I studied and worked in the sciences fields. This meant that my financial literacy was very low. I had a good savings habit and an aversion for debt but that was it. I didn’t understand financial calculation and markets at all.

During my early working career, I was fortunate to do a finance for non financial managers course. This was the first time that I started to understand the future value of money and how to evaluate investment returns. However this was more from a business view point and I never really drew the connection to personal finance and wealth properly.

I recall always enjoying reading the personal finance columns in news papers and the odd email newsletter that you could subscribe to. Problem with most of these is that they are written by journalists without first hand knowledge. At best they have done some research but at worst they are just writing sponsored articles for a financial services provider.

First Financial Literacy Books

One of the first financial literacy books that I got was a basic book on  retirement called Retire Right, published in 2004 I don’t recall much from this book. That’s no surprise looking back at this book. I think I read the first part which was the build up to retirement. It had a few pages on planning and how to start.

Alarmingly it had one paragraph of 7 lines on “A share portfolio” and another paragraph on exchange traded funds. The rest was all about endowment policies, unit trusts, multi-manager products etc. No surprise that this book was sponsored by an FSP.

The other book that I had was called “Making Money out of Property in South Africa” published in 2008. This was at the height of the property bubble, there is a warning sign if you ever needed one. This book covered property investment as a whole and did have some decent advice in it. Probably because it was written by a property developer and investor.

Eventually I came across some really powerful books.

Rich Dad Poor Dad

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Rich Dad Poor Dad by Robert Kiyosaki was one of the first books that I read. It made me realise how poor my financial literacy was and how little I knew about creating wealth. It is a clever little story with the rich Dad engaging with the son of a poor Dad and teaching him lessons that he had learned.

In total there are six lessons learned. The first lesson was around learning how to make money rather than just working for money. The second is basic financial literacy understanding the difference between assets vs liabilities. But more importantly, the fact that liabilities will cost you money but assets must make you money.

The next two lessons  are about managing your own business and minimisng exposure to taxes. The last two lessons we about using assets and money to create more money and working to learn rather than working to earn.

The Millionaire Next Door

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The Milionaire Next Door is by far the most fascinating and influential book that I read on my path to financial freedom. It completely changed the way I viewed wealth and how the wealthy get there. The book is based on decades of research done by the author into how millionaires are created and how they live.

The title gives it away in that the research proves that the majority of millionaires are ordinary people like you and I. Not the rich and famous mansion living sports car driving clichés we see. This book unpacks the details of the how and why and the behaviors, financial decisions and strategies to become a millionaire.

Surprise surprise it is not rocket science. It is essentially the principles now known as financial freedom and financial independence. These people lived below their means, worked hard, persevered, planned and had the dicipline to achieve financial independence. They also made their own investment decisions and invested a significant amount themselves. It made me realise that I can do this.

The Rules of Wealth

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These are a 107 rules of wealth each with an explanation. I liked this book because it was holistic in that it was not just the money part but it covered everything that you need to think about. The main sections are thinking wealthy, getting wealthy, getting even wealthier, stating wealthy and sharing your wealth.

Many of the rules covered mindset, responsibility and perceptions of wealth. Not all of the rules resonate but that is fine because we are all different and there is no one path. You will find that the majority of the rules resonate and many will make you think differently about what wealth means. It is so much more than just making a lot of money.

The Four Hour Work Week

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The Four Hour Work Week helped to reframe my view on what the value of work was. It has some of the ideas of financial freedom and explained the value of time relative to earning money. As someone who had only ever had one income and worked 9-5 it was an eye opener. It gave me a different view about how to use your time and how to make money on the internet.

It was a revolution at its time and many comments were that this book is not relevant for the normal working person but the lessons definitely were. I read it at the time that I was starting my own business so it helped me there with the concepts of time management and outsourcing.

The Simple Path to Wealth – Your Road Map to Financial Independence and a Rich, Free Life.

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The Simple Path to Wealth is a really refreshing book about investing and achieving financial independence. I really like this book because it comes from a personal experience of someone who has actually achieved this. He discusses some of the very basics of achieving financial freedom like saving 50% of your salary, avoiding debt and using index funds as the main investment vehicle. Each of these concepts are discussed in detail along with his own experiences.

It was also refreshing in that the author enjoyed his job and wasn’t particularly obsessed with retirement. Instead the objective was to have F-You money, the concept where you were free to choose what to do without being reliant on a particular job salary.

The book was a result of his blog and series of investment letters that he was writing on the blog. There are many useful links to other resources and calculators in the book to work out the details and numbers for achieving financial independence.

‘JL Collins takes this old style of investment book writing and disregards it completely. He creates the stuff that your mind wants to run to when it is tired of reading about stocks.” – Mr Money Mustache

Stock Market Investment Books

Three of the best investment books to buy are Learn to earn and One up on wall street by Peter Lynch and The intelligent investor by Benjamin Graham. I have these books on my book shelf and they are great references for more detailed investment information.

I tried reading them but didn’t even get close to finishing them. They are really heavy going and technical about investing. They are still some of the most popular investment books that you can find. I can recommend them if you are really focused on trading and individual stock investing. Or if you want to understand the market better and how it works.

Work the System – Sam Carpenter

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The tag line of this book is “The simple mechanics of making more and working less.” This was a great book to understand how everything that we do is linked and connected. It also appealed to my desire for following the path of least resistance which must have been what attracted me to the book. It is a “systems mindset” that had been created by the author. So much of what we do is inefficient and time wasting.

By fixing these systems you are able to simplify things and improve efficiency and reduce time. The concept seems abstract but it is actually quite simple. The idea is to take the complexity and simplify it, a great skill for anyone to have. It is applicable to all situations personal and business although most of the focus in the book is on business.

What is on the Reading List

There are still many books that I want to read. At the beginning of the year I set myself the goal of reading one book a month. I even bought a Kindle to speed up the process. Here are some of the books that I have on my reading list. Can’t tell you if they are good or bad for now, but I sure will in future.

I will teach you to be rich – Ramit Sethi

The Richest Man in Babylon – George S Clason

Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence – Vicki Robin

The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich – David Bach

South African Financial Literacy Books

How to Make Your First Million – Warren Ingram

Become Your Own Financial Advisor: The real secrets to becoming financially independent – Warren Ingram

What are the financial literacy books that have changed your financial life? Leave a comment below to share.