If you’re a regular reader of this blog, you know that Mr. Everyday Dollar recommends leading a life of both minimalism and frugalism, which in combination with investing saved money, will lead to financial independence and the potential to retire early.
By consciously making the choice to embrace this lifestyle, you should find life less stressful, be less anxiety-prone, find more day-to-day happiness, gain more inner peace, and establish deeper connections with the people and places that your everyday life is intertwined with. That’s why we do this.
If you’re new here, you’ll want to have a solid understanding of minimalism, frugalism, investing, and financial independence. While I exclusively blog about those things, I want to share a handful of books that have helped me in my quest to learn and shape my lifestyle. By reading the following books in a sequential manner, you’ll be way ahead of the pack (of rats, in the rat race).
If you’ve been around the personal finance block, you may have already read the following books, and that’s great. Please share with us in the comments any additional books you have found helpful.
1. The Millionaire Next Door
The Millionaire Next Door is the best overall personal finance book.
Not a how-to book, it’s a data-driven look into the rich people that live in the U.S. While many folks are quick to think that the affluent work on Wall Street or are doctors, they might be surprised to find it’s your neighbor in that modest house who drives a 10 year old economy sedan, doesn’t take many vacations, and owns a car wash.
This book provides awesome commentary around ignoring consumerism, the value of frugality, and choosing the right occupation.
Becker, along with his family, made the transition to living with less by getting rid of 70% of their possessions. Through his personal stories he offers tips to start decluttering your home and your life and (most important) the inspiration to free yourself from the burden of a life spent accumulating more and more.
3. Your Money or Your Life
Fundamentally a money management book, Your Money or Your Life (YMOYL) will change your relationship with money by making you realize it’s something you choose to trade your life energy for.
Sharpen your pencil, because YMOYL contains a nine step program that will have you calculating your real net worth, calculating your real hourly wage, tracking your spending, and graphing your cross-over point (that’s when you reach financial independence!). It’s the book that changed my life.
Note: In Chapter 9 / Managing Your Finances, the authors recommend investing only in long-term U.S. treasury bonds. I don’t think this is sound advice, instead check out this post on building a retirement portfolio.
4. One Up On Wall Street
One Up On Wall Street is the one investing book that you should read, even if you decide to invest in index funds and forego stocks.
Peter Lynch, a former Fidelity fund manager, does an excellent job describing how to use the power of what you already know in order to invest. You might think that the individual investor is at a disadvantage to institutional investors, but Lynch explains that you don’t need to be a Wall Street analyst to find good opportunities.
Note: If you are interested in stock investing, I recommend the community at Motley Fool Stock Advisor.
5. Early Retirement Extreme
This book is not about cutting out Starbucks and paying off your credit cards (see Dave Ramsey or Suze Orman for that). It’s about creating a framework of systems, models, and principles to attain self sufficiency and early retirement.
While the author covers the financial impacts and choices of everyday things like housing, transportation, and eating, what you’ll learn is a philosophy for sustaining your life while completely detaching from the economy. While dense, it serves well as the capstone of these five books.