Since I discovered the concept of financial independence and early retirement (FIRE) in the beginning of 2016, I have done quite a bit of reading on the subject.
I have found that one of the best ways to introduce people to financial independence and early retirement is through books.
My girlfriend used to only get bits and pieces of information about financial independence from me, but I really wanted her to thoroughly understand the rationale behind why I want to retire early and the dynamics of how I am going to become financially independent.
I compiled a list of books for her to read whenever she felt like it. Even though she is not as interested in the subject as me, it has definitely made her more aware of what I am doing – and she is increasingly focused on her own finances too.
Recently, quite a few of my friends have asked for a similar list. If you are also interested in financial independence and early retirement, I thought this list of my favorite FIRE books might also be for you. If you are a FIRE veteran, you have probably already read them all, but it never huts to read them again 🙂
What makes a personal finance book good?
The way I chose my favorite financial independence books was to define a few criteria for what a good financial independence book is.
- Theoretical and practical: I like books that offer both theory and practical examples of how to apply the theory to your own life.
- Well-written: This one goes without saying. The book should be written in an interesting way. I like books that use humor and use real-life examples.
- Tested and tried: I prefer books where the author has actually walked the talk and tried the methods he/she speaks about.
All the books below have all three elements. On top of this, I also wanted to compile a list with books that in combination highlight different elements of financial independence such as saving, investing and thinking.
My favorite financial independence and early retirement books
I have read a lot of books on financial independence and early retirement – and on personal finance in general – but these five books in connection come out on top:
- Your Money or Your Life by Vicki Robin, Joe Dominguez & Monique Tilford
- Early Retirement Extreme by Jacob Lund Fisker
- The Intelligent Investor by Benjamin Graham
- The Millionaire Next Door by Thomas J. Stanley & William D. Danko
- The Richest Man in Babylon by George S. Clason
Your Money or Your Life
This is my favorite book about financial independence. It is usually the first book I give to anyone who wants to learn what financial independence (and early retirement) is all about.
The book starts outlining what might be wrong with our consumerism society and our traditional way of looking at work. It then becomes very practical in terms of 9 steps to achieve financial independence such as getting out of debt, spending less, saving more, documenting your spending behavior, living frugally etc.
I like that the book both focus on the bigger picture of saving the planet for everyone and on improving lives at an individual level through living better for less.
Early Retirement Extreme
This was actually the first book I read about financial independence. It is written by a Dane, Jacob Lund Fisker, whose story was featured in a large Danish newspaper. This is actually how I started learning about FIRE.
The book is very different from other personal finance books I have read. The reading difficulty is relatively high, and it is not written with simplicity in mind. The first half of the book is very theoretical and philosophical, which I found very exciting. It explains financial independence from a philosophical point of view.
The second half of the book is very practical. The “extreme” part of the book comes from the fact he lives very frugally. I got a lot of practical tips from the second part of the book – including how to think about things. While I have not applied all of his ideas to my own life (such as making my own laundry detergent), I believe it was a great insight into an alternative way to live.
The Intelligent Investor
I always debate whether to recommend this book or a shorter, more simple book about investing. I definitely believe that there should be a book about investing on the list, since investing is such a big part of achieving financial independence and early retirement.
I also believe that if you want to understand financial markets and learn how to invest, there is simply no way around this book. It is an old classic, but it is as relevant as ever. Benjamin Graham used to be Warren Buffett’s teacher and mentor.
The book’s focus is on value investing which historically has been a very solid way of investing and reaching your financial goals.
The Millionaire Next Door
I like this book because it highlights the fact that wealthy people are not necessarily the ones we see on TV or on Instagram. It is normal people who have certain traits that have enabled them to become rich.
The book focus on seven traits that are similar for all the people who have generated large amounts of wealth. It shows that if you live below your means and invest well, you will be able to become a millionaire.
The Richest Man in Babylon
I included this last book because of its simplicity and the few very important points it makes about financial independence.
The book is rather short, but it gives very concrete advice on how you can change your financial situation with a few simple adjustments. It shows the importance of saving and how compound interest and investing can lead to a wealthy life.
The only thing I don’t really like about the book is that it continuously recommend saving 10% of your salary. I believe you should save much more if you can.
Those were my five favorite financial independence and early retirement books.
Your turn: Did I forget any good financial independence books on the list?