Financial freedom is the dream of an individual. But it is quite a hard task to perform. You need to understand the basics of personal finance i.e. how to handle money apart from income. You need not have to be an MBA in finance to understand the basics of personal finance to make the most out of one’s income. If you are confused about how to manage, spend, and save the hard-earned money, here are the top 21 best personal finance books India that you must read. These books will help you to achieve financial freedom.
Book #1. ‘Rich Dad Poor Dad’ by Robert Kiyosaki
Are you wealthy? If not, do you want to become wealthy in the future? If you want to become wealthy, learn how to manage the money. This is the must-read book for you to gain knowledge. Many a person has a common perception that their primary residence is an asset, but this isn’t true. Your primary residence is not an asset unless you give a part of the house on rent and earn passive income. In this book, the author emphasizes the following points,
- How to think about work and money.
- Many a person has a common perception that to get rich one needs to earn a high income. But this is not true. You need to learn how to manage your money.
- The present flawed education system creates only employees and puts adverse effect for an entrepreneur. In this book, the author describes that a higher education degree does not mean you are intelligent than the person with no degree.
- It is riskier to be an employee than being an entrepreneur. The common belief is that owning a business is riskier than being an employee. But by acquiring self-reliance skill an ordinary person can set up a successful venture which gives more independence and paves to achieve financial goals easily.
- The difference between assets and liabilities. The author describes rich people acquire assets, but the middle and the poor class people acquire liabilities. Even the poor don’t know the fact that they are acquiring liabilities, not assets.
- How Fear and Greed dominate our money-related decisions. Suppose, you want to invest in any specific stock or a fund. You find a good stock with a 70% chance to double your money within one or two years, but a 30% chance of losing it all. A majority of investors will not invest the money in it owing to the fear of losing the money.
Book #2. ‘The Millionaire Next Door: The surprising secrets of America’s Wealthy’ by Thomas J Stanley
This book was compiled based on the statistical study of 1000 actual millionaires over 20 year periods who are not millionaires by inheritance property. They made this achievement by own efforts. The author discussed the following points in this book,
- The difference between an ordinary mindset and the millionaire mindset.
- What millionaires think with real-life examples.
- People who earn high incomes are not rich due to failing to accumulate wealth. On the flip side, wealthy people lead a normal lifestyle instead of spendthrift shopping and frugal habits.
- The author advises that you need to live below your means. You need not spend lavishly to buy luxury items, and take extraordinary steps to save money.
- The millionaires follow a budget. They start investing from the first day of earning.
- Most millennials think that financial independence is more important rather than displaying high social status by show off.
- Choose the right occupation, because there is no magic list of occupation where there is a high possibility to become a millionaire easily. You can be successful with any type of business. You should start a venture because there are 4 times more chances to become a millionaire than being an employee.
Book #3. ‘I Will Teach You to be Rich’ by Ramit Sethi
Personal finance expert Ramit Sethi emphasizes that one common individual need not be a financial expert. But how the person leads the life matters the most. The book emphasizes the following points,
- Bursting various myths about credit cards i.e. how to choose and tips to use credit cards correctly.
- How to manage your debt and repayment of student loans faster than you think.
- How to maintain a budget so that it does not leave your pocket penny less. Here he recommends ‘conscious spending plan’. How to divide your spending into various categories and set limits for each of them.
- Stocks, Mutual funds, and how to maintain your portfolio rebalancing. How to manage the desired corpus to buy a house or daughter’s wedding.
- Rash on useless spending and ‘focus on the big wins’ so that you can afford to spend the rest of your money on your wish and want guilt-free.
Book #4. ‘Why didn’t they Teach Me This in School: 99 Personal Money Management Principles to Live By’ by Cary Siegel
Unlike Math, Physics, History no school/college offers courses on personal finance to the students. By reading this book you will learn various money management skills from various fields namely,
Life lesson Principles – After getting your first paycheque you need to start managing your finances for long term financial goals and short term financial goals.
Budgeting and Spending Techniques – Here you will learn how to prepare a budget and make various heads of spending, various saving technique i.e. by cutting expenses. Here the author has advised,
- You should invest 50% of an increased salary,
- Save 90% of unexpected income,
- Prepare an emergency fund.
Investing – Before you start investing you should read various investment books at least one hour a day. After reading various books you will learn about balanced funds, index funds, growth/value funds. Then you should start investment across various asset classes in accordance with your risk profile and time horizon.
Insurance – Home and automobile insurance, Term insurance, etc.
Mortgages – Definition, Meaning, types, etc.
Book #5. ‘The Automatic Millionaire’ by David Bach
Do you dream about retire rich or have a goal to become a millionaire? ‘The Automatic Millionaire’ has two steps process to be rich. First of all concentrate on yourself. It means irrespective of your income just pay a regular investment of at least 20% of your income. For example, let’s consider you earn Rs. 25,000/- per month. Now if you pay Rs. 2000/- per month for the upcoming 25 years then you will have a corpus of Rs. 1 crore assuming 15% return.
- Use the Latte Factor to save money. This means you need to save small expenses such as going to outside dinner at restaurants or changing the bike every three years with a new one. You need to consider your needs only. Rs. 100/- a day i.e. Rs. 3000/- per month can add up drastically when saved over 30years for your retirement.
- You need to automate your budget to all of your expenses, payments, bills, investment, etc. to reach automatically.
Book #6. ‘The Money Book for the Young, Fabulous, & Broke’ by Suze Orman
This book is for the attempt to give general personal finance ideas to generation Y i.e. who are in their 20’s. The author covers the following points,
- If you are not happy with your job, find some other job where you may see fit.
- Students’ loans are a quite handy investment because a college degree increases your earning potential substantially. You should try to repay the student loan if any as early as possible.
- The credit score i.e. what it means, how to get it, how to improve credit score, how to use a credit card in a sensible and sane manner.
- How to build and manage the emergency fund.
- Make a retirement plan.
- How to make investment across various asset class i.e. stocks, Mutual funds, Index funds, etc.
- Big-ticket purchases such as a home, car, etc.
- How to manage love and money.
Book #7. ‘The Investment Answer’ by Daniel C. Goldie and Gordon S. Murray
Sometimes it is seen that many fund managers fail to deliver better returns whereas many individuals earn a steady return over the long term. This book is ideal for young investors to mitigate or cut losses. According to the author, one common individual need to address some common questions before investing,
- Should an investor invest money self or get help from an investment professional,
- What should be the ideal asset allocation strategy among various asset classes i.e. stocks, bonds, gold, etc?
- How to diversify the portfolio within the above mentioned broad asset classes.
- What is the perfect or ideal time to sell assets and when you should invest more?
Book #8. ‘The Science of Getting Rich’ by Wallace Wattles
“Give a man a fish to feed him for a day. Teach him how to fish, feed him for a lifetime.” So concentrate on creating something new or realize your true potential before you offer a helping hand to others. According to the author to become a wealthy does not mean becoming wealthy in terms of money but also living a fulfilled life and tapping into your true potential. Since it was written in 1910 wattles focuses on the following topics,
- Visualization of what you want and take personal action to fulfill your desires,
- You are capable enough to execute the original thought you think about,
- You can do the best in a business that you like and have the necessary skills. Anyone can get rich irrespective of a particular business.
- There are full of opportunity you have. You need to go with the tide instead of swimming against it.
- Focus on creation rather than competition.
- Think big and go for it.
- Surround yourself with the best to become the best.
Book #9. ‘Secrets of Millionaire Mind’ by T Harv Eker
Have you noticed that some people are getting rich easily while a larger portion of the population is destined for a life of financial struggle? Is the difference owing to the education, intelligence, caste, skills, luck or choice of business or jobs or investments?
The shocking answer is none of the above. In this book, the author affirms the following points how any individual can become rich,
- Need to prepare personal money management blueprint which will determine your financial lives.
- Wealth files i.e. a comprehensive guide to how rich people think and act apart from most of the poor and middle-class people. If the mentality is like that of a rich person any middle-class person can be rich too. If you follow the wealth files in the real world it can drastically accumulate wealth.
Book #10. ‘Money: Master the Game’ by Toni Robbins
After the 2008 global financial crisis, the author Tony Robbins distilled the very best knowledge and wisdom following research and interview wrote a nearly 700-page classic. Here are the points the author emphasized in the book,
- The exponential power of compound interest.
- Pick the correct financial goals which help to attain financial freedom.
- All seasons portfolio allocation.
- How to avoid losses from investments.
- How to diversify the investment. Here the author mentions three categories namely Security bucket, Growth bucket, and Dream bucket. You should manage your finance in such a way that the income derives from the security bucket and growth bucket help you to fulfill your dream bucket in order to live the life you want.
The author advised the common people to start investing even if the investment money is as small as Rs. 1000/-. You should keep calm and need to be patient while investing for a fruitful outcome.
Book #11. ‘Your Money or Your Life’ by Vicki Robin & Joe Dominguez
By reading the book I assure you that any individual starts thinking twice before the purchase of any stuff or services. Actually the writers emphasize financial independence by making use of common sense. By following the exact 9 step approach you can transform your relationship with money and consequently achieve financial freedom.
- Write down your entire credit card loan, EMI’s, student loan or house loan. After that write down your assets, prepare a balance sheet to derive your net worth.
- Keep track of every penny that comes and go out of your life. In this way, you can make peace with past loans and consequently start saving for your life goals. After doing this you have a clear idea of how much you spend on near and tear of the car, eating outside with your family, entertainment cost, etc.
- After sorting out the expenses and income you need to figure out your real hourly wage. By doing this you are able to calculate how many additional hours to work in order to buy or afford the expenses such as buying a Smartphone or washing machine or LED TV.
- In the fourth step, you will realize whether you are earning enough in exchange for your life energy and time.
- In the fifth step, you need to create a line graph that compares your income and expenses over time.
- The sixth step you need to minimize spending and maximizing the value of income of your time and effort. In this section you will learn frugal living and how to live debt-free.
- Re-evaluate your job and income. If the job does not fit then you can switch jobs by acquiring new skills that will enhance your income potential.
- Start investing the money saved by frugal living. You will have to increase the investment amount in which you will cover your living expenses from the income from the investment.
- In the final step split the money into three parts namely Capital [invested amount], Cusion [the income derived from the investment i.e. dividend, capital gains], and Cache [the income derived from the investment which is spent on dreams]
Book #12. ‘You’re So Money’ by Farnoosh Torabi
If you belong to those people who buy a handbag that costs more than $1000 then you must read this book repeatedly. In this book, the author Farnoosh Torabi emphasizes the consumeristic lifestyle and judging others with respect to lifestyle and show off. The book deals with the following points,
- The individuals should take care of need at first such as retirement, insurance, an emergency fund, and housing before anything else.
- Divide debt into two categories namely good debt [student loan, automobile debt] and bad debt [credit card debt, consumer loans].
- Practical advice on debt reduction plan, how to make use of credit cards to our advantage.
- 4 specific options have been described in an easy to read and applicable way on ‘how to buy stocks’ for the people who are in their twenties.
- How to save to tackle unexpected events in life, because they are bound to happen.
Book #13. ‘The Behaviour Gap’ by Carl Richards
Are you from those kinds of investors who buy stocks at a higher level and sell stocks at much lower than the buying price? Then you must read the book where the author describes various aspects of investing in an easy-to-read manner.
Like any other novice investor, the author made mistakes while investing too. The author advised that mistakes play the most important role in our life. But after making a mistake you should review your mistake and avoid the mistake in life further. The author emphasizes that ‘the perfect decision’ about money is not possible every time. Do the best option you have, because most of the time that’s enough. In addition, the author describes how our behaviour negatively affects our investment portfolio in lieu of financial analysts buy/sell advice or 24-hour financial news channel with suggestions for the stocks to purchase or dump. The author explains how to analyze any information and suggests why we might ignore the information sometimes.
- You need to learn when you should buy or sell any specific stock.
- Invest all of your asset i.e. time and energy as well as save more wisely.
- Avoid lavish spending on unnecessary things that don’t matter.
- Identify financial goals and invest in accordance with your risk profile and time horizon.
Book #14. ‘Total Money Makeover’ by Dave Ramsey
If you have a solid middle-class salary but have a living paycheque-to-paycheque and have debt also this book is a must-read. If you want to achieve the financial goals you need to sacrifice some things, work hard and focus. The author suggests the seven baby steps to lead a tension free life,
- Save $1000 as an emergency fund.
- After you achieve that target you should prepare a plan to get rid of the small amount of debt.
- After you are debt-free you need to create an emergency fund that will easily carry out your 6 months expenses.
- Invest 15% to retirement funds.
- Save for education cost of children.
- Pay off big-ticket loans i.e. home loan, car loan, etc.
- Invest the rest of the money after paying all the debts.
There are various hurdles in the way of financial independence,
- Denial – many people deny that they have a problem with their own finances.
- Debt myths – all the debts are always not healthy when you don’t have a plan to reduce the debt i.e. eliminate quickly.
- Ignorance – what everyone does consider that to be right.
Book #15. ‘Debt Free by 30’ by Jason Anthony & Karl Cluck
Are you a working professional but you are still asking your parents for cash to make both ends meet? Are you young, smart and drowning in debt? If you are any one of the above then you must read the book. In this book, the authors offer a practical step by step plan to repay your debt and enhance your financial health. The author points out the following points to lead a debt-free living,
- The seven mistakes you should avoid.
- Make a financial roadmap and budget to track expenses and savings. You should write down in black and white that in which head all of your earnings are gone.
- How to save thousands of money in lieu of credit cards.
- How to spend less and various savings advice.
- Take informative decisions on credit cards, health insurance, finding a car, etc.
Top 6 Best Personal Finance Books India by Indian authors
Needless to say that ‘Rich Dad Poor Dad’, ‘The Millionaire Next Door’, ‘I Will Teach You to be Rich’, ‘Secrets of Millionaire Mind’, etc. are the most popular books all over the world. Apart from the above-mentioned books there are various eye-popping books written by the Indian writers for the Indians. Here are the top 6 personal finance books written by Indian authors. These books will help you to manage your finance better.
Book #16. ‘16 Personal Finance Principles Every Investor Should Know’ by Manish Chouhan
The 7 chapter classic written by Manish Chouhan aware investors by making use of numerous examples and images/tables to convey the core concept which really matters. The author focuses on the following points,
- In the first chapter, the author describes the secrets of wealth creation by starting investment as early as possible.
- The second chapter consists of reasons to buy term insurance, how to calculate the term insurance amount.
- The step by step guide on how to set a goal has been described in the third chapter.
- Chapter 4 – It is about the myths about the stock market, what will be proper Asset Allocation Strategy at different ages.
- In chapter 5 the author describes what to do with your hard-earned money, how to use money in order to attain financial freedom, what sacrifices you should do.
- The author advises how to make use of technology to keep your investment portfolio simple not complicated in chapter 6.
In the seventh chapter, the author focuses on various points which will help a retail investor to attain financial freedom,
- Start living with 90% of your salary.
- Make a budget and carry forward the budget.
- Control excessive loans and careless spending.
- Make an investment portfolio and keep a sharp eye on performance.
- Don’t invest to attain instant gratification.
- Don’t invest to minimize the tax burden.
- Teach spouse and children about financial literacy.
- Calculate the real return on investment once in a year.
Book #17. ‘Retire, Rich, Invest – Rs. 40/- a Day’ by PV Subramanian
Do you have any idea if you start earning at 24 and want to retire by 50 and live till 80 years of age then how much you need to invest? According to the author you need to invest just Rs. 40 a day as early as possible. This magic will be accomplished by making use of a proper asset allocation strategy. If you increase the amount i.e. Rs. 40 a day [1200 by month] by 10%, the total investment value will be Rs. 13.5 crore assuming 10% CAGR.
In this 29 chapter classic insights and gems are hidden,
- The need of retirement,
- What lifestyle you should carry out,
- How to plan your retirement to lead a stress-free life post-retirement,
- Common mistakes you should avoid,
- Current financial status i.e. assets, liabilities you have and at what age you want to retire,
- Whom to support other than your spouse,
- The cash flow post-retirement i.e. how you will manage your expenses post-retirement,
- Will the money which you have at the retirement age last longer than you and your spouse,
- How much retirement corpus you need.
Book #18. ‘You can be Rich too’ by PV Subramanian and M Pattabiraman
This book aims at making investment simple and logical for common retail investors. In this book, the common retail investors will learn,
- How to calculate the net worth i.e. the current financial status at any certain time. The book will force the reader to think where he wants to see in the upcoming 20 or 30 years. After setting a reasonable goal you will learn how to prepare an income and expenditure i.e. cash flow stamen to reach the desired goal,
- After selecting the desired goal the author has discussed the proper asset allocation strategy to reach out the desired goals,
- How to invest in stocks to squeeze out the maximum returns from the portfolio,
- How to choose best mutual funds according to fund house, index funds,
- The insured amount of life insurance one needs to attain financial freedom.
- How to avoid mistakes that a common retail investor makes while investing. By reading this book a rookie can benefit immensely and kick start in the world of investing.
Book #19. ‘From the Rat Race to Financial Freedom’ by Manoj Arora
This book is not just a book. It is a journey of the author to attain financial freedom. With real-life examples and elusive examples, the author mentors and guides common men to attain financial independence. The book comprises 8 sections where the author emphasizes the following points,
- An MBA degree is not necessary to get financial freedom. All you need is to visualize your financial goal, and have the passion and a roadmap to achieve the goal.
- Basic financial calculations such as Dollar-cost averaging and Rule of 72, how to manage investment portfolio across various asset classes.
- There are various investment options such as PPF, VPF, Gold, Stocks, Mutual Funds, Real estate, etc. You need to consider the time horizon and risk profile of the asset class before investment.
- Principles of wealth accumulation i.e. the power of compounding, how the power of compounding benefit if you start early, invest regularly or increase your investment regularly with respect to your income.
- The author emphasizes to take action. If you just read the book and no action is taken, this will lead nothing and the entire knowledge will end in smoke. If you do not start investment early and increase your investment amount regularly you will be far away from your desired corpus after retirement.
- By reading this book you will learn how you will make use of various tax deductions and exemptions to escape a fruitful tax burden.
- When to say goodbye to your 9 to 5 job schedule after you attain financial freedom.
- The feeling of an individual attaining financial freedom.
Book #20. ‘Moneywise – The Aam Aadmi’s Guide to Wealth & Financial Freedom’ by Sharath Komarraju
Are you from those people who obsess about money and yet do not discuss money matters with your family or friends without hesitation? Do you know inflation is just a tool on the poor in favour of the rich? If you are not aware you must read the book repeatedly. Then this book just brings a breath of fresh air about how much you have, how much you need etc. The author of the book has given the answer to the following questions,
- Where does the money come from
- Why do prices go up on a yearly basis
- How to get rid of the vicious circle of debt
- Should you start investing in the stock market
- What is the value of gold in the financial system or market
- How to make an ideal portfolio across various asset classes i.e. asset diversification.
The author of the book explains the above-mentioned topics in such an easy-to-read manner that hardcore finance professional or a complete newbie will understand easily and attain something positive to take away from the book.
Book #21. ‘The Richest Engineer’ by Abhishek Kumar
In his maiden novel the author, Abhishek Kumar first asks few questions namely,
- Why some portion of people are financially stable i.e., accumulate wealth easily?
- Is it a big salary job or their good luck or higher qualifications or brilliance that makes this happen?
Here the author says the above are not the reasons behind their financial independence. In this book, the author explains the timeless wisdom of wealth creation and accumulation. Here the author describes how any individual can become a millionaire irrespective of where they are in life right now. The author has cited some real-life examples to describe the same.
How Capitalante can help you
Are you confused about how to prepare a stock portfolio to achieve financial freedom? If yes, learn how to pick the best stocks to buy for the long run.
- Read also: Top 21 Stock Market Books Must Read Right Now in India
- Read also: Top 25 Stock Market Books Every Investor Must Read
These are the some best personal finance books in India for beginners. Feel free to suggest any other personal finance books India which I missed in this column.