I began my journey to financial independence when I was 21 years old.
Despite having a bachelors degree in Finance, that didn’t make managing my personal finances any less scary when I first started adulting.
I am now 27 and am happy to report that I am 15% financially independent.
One of the most important things I did to get to this point was immersing myself in personal finance books that taught me practical financial principles.
As a result, I thought that I’d share my top 4 best personal finance books for 20 somethings.
Let’s dive in.
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#1 The Millionaire Next Door
One of the first personal finance books that I read out of college was The Millionaire Next Door by Thomas J. Stanley & William D. Danko.
The main objective of The Millionaire Next Door is to answer one question: Who are America’s Millionaires?
Growing up, I always thought America’s millionaires were Hollywood actors, doctors, lawyers, etc… it turns out that couldn’t be farther from the truth.
The book is a culmination of Stanley & Danko’s 20+ years of research of America’s millionaire class. They describe the common traits, behaviors and demographics of individuals who were able to accumulate a +$1,000,000 net worth.
What I found particularly helpful were the formulas they derived from their data that we can leverage to objectively measure our financial health. These formulas allow us to compare our unique financial situation relative to what is commonly seen with those who end up becoming millionaires.
If you are like me and grew up being taught that material success = 100% financial success, I encourage you to give this book a read.
#2 The Psychology of Investing
The Psychology of Investing by John R. Nofsinger is perhaps my favorite personal finance book.
As the name implies, Psychology of Investing examines key psychological principles that make up the field of Behavioral Finance or the study of why we make certain decisions with our money.
This book was given to me by a financial advisor that I shadowed who taught me that the majority of his job was being an emotional coach for his clients.
By better understanding why his clients felt the way they did, he could be a better financial & emotional coach to ensure his clients were not making irrational decisions that could jeopardize their long-term goals.
While reading this book, I was completely surprised by how many biases there are that affect our decision-making. I actually wrote a post ‘10 Behavioral Finance Concepts + Examples‘ covering a few principles that are in Nofsinger’s book.
If you are interested in more information on how to strip emotions out of our decision-making, then this book is worth your time.
#3 The Simple Path to Wealth
If you are looking for a crash course of the ins and outs of financial independence, a great place to begin is reading The Simple Path to Wealth by J. L. Collins.
When first starting our path to financial independence, things can be intimidating and overwhelming.
As Collins puts it in the book’s introduction:
Here’s an important truth: Complex investments exist only to profit those who create and sell them.
J. L. Collins
However, The Simple Path to Wealth does a fantastic job with explaining the core concepts of financial independence in a straightforward and easy-to-understand manner.
Whether you are wanting to learn more about asset allocation, withdrawal rates, simplified investment options, investments accounts or F-You Money (my favorite)… Collins doesn’t over complicate things.
Upon finishing the book, you’ll have a clearer understanding of the most important principles that set the foundation for becoming financially independent.
#4 Your Money Your Life
The spark that started the modern day Finance Independence Retire Early (FIRE) Movement can be traced back to 1992 when Vicki Robin & Joseph R. Dominguez published Your Money Your Life.
That is because this was one of the first books that challenged us to evaluate our relationship with money.Your Money Your Life has us reflect and answer difficult questions such as:
- What is important to us?
- What are our values?
- How much is enough?
Relative to the other personal finance books in this list, Your Money Your Life is less about hard financial principles than it is having us reflect on money’s role in our lives.
When I first began my journey to financial independence, I was blindly saving and investing for no reason other then “I don’t want to work.” However, reading Your Money Your Life helped me reevaluate some of financial habits as well as establish my “Why for FI.”
Final Thoughts
Only 11 states require high school students to take a personal finance course in order to graduate.
And with a lot of terrible financial advice going viral on platforms like TikTok, we need to make sure we are doing our due diligence when it comes to learning personal finance principles.
Do you think these are the best personal finance books for 20 somethings? Was there a book that you read that transformed your relationship with money that isn’t on this list?
Thank you for reading 🙂
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RE@54 says
I have read #1, 3, 4 that you listed above. The Millionaire Next Door is my favorite of the three.
I recommend adding two more books to your list. One is called “The Richest Man in Babylon” and the other is called “The Wealthy Gardener”. The books are not numbers driven, but more on principles of personal finance and life.
I hope you enjoy them as I did.
Time Value Millionaire says
“The Millionaire Next Door” is a total classic.
I actually give that book specifically to younger members of my family when they graduate. It’s important for the younger generations (at 27 I sound like an old man) to know the difference between rich and wealthy.
I’ve heard of “Babylon” but not “Gardener.” I’ll download both and give them a read, thank you for the recommendation!