Much of the other content on this site focuses on the specific tactics you can use to achieve financial independence (FI). These FI Mindset resources are every bit as important because they will encourage you to take action instead of sit on the sidelines.
Brad and Jonathan at ChooseFI have done a phenomenal job interviewing experts in various aspects of FI on their podcast. They also have review episodes for every interview where they clarify and expand the content. It has a nice balance of bigger picture thinking and smaller actionable advice, and I have listened to all of their episodes because they keep me motivated, even if the main topic of a given episode is not directly applicable to my situation. This is the first podcast that really stuck with me and made me take action, which is why I am compelled to put it at the top of my list.
This book makes a compelling case that success is built by consistently making small positive choices and compounding them over a long period of time (the slight edge). The positive choices are generally not difficult; they are just slightly more difficult than the negative choices. This book sums up what it takes to secure financial independence, although the benefits can (and should) also spill over into health, happiness, and other aspects of your life. This is a must read.
Understanding your relationship with money is the biggest step you can take to secure your financial independence. You pose the single biggest risk to your personal finances; the government may take around 30% of your income through taxes, but you are responsible for managing the other 70% (or more). This book will teach you to recognize and overcome “money disorders” and keep you from sabotaging your future. Couples will get extra benefit from this book, since they carry two sets of money disorders into the relationship, but still need to construct a single cohesive financial plan.
4. Set For Life
Scott Trench lays out one of the most practical and actionable paths for financial independence. He encourages readers to focus on minimizing their biggest three expenses: housing, transportation, and food. Smart choices in these three categories will almost guarantee you a high savings rate, which can be funneled into investments. I like Scott’s aggressive approach toward investing (including investing in yourself). My only real deviation from Scott’s advice is that I am a huge fan of tax minimization using tax-advantaged accounts. But that is not a fundamental disagreement–it just reflects my stage in life. I look back at our past financial choices and have to resist kicking myself for not being as clever or aggressive as Scott was. Anyways, we all have something to learn from his example.
This classic book uses data to characterize the traits common to most self-made millionaires. The message is clear and irrefutable: consistently living below your means is one of the surest ways to achieve financial independence. I recommend the audio version because I don’t find myself needing to revisit specific details in this book, but do enjoy listening to it to confirm my biases.
This is a great book that I somewhat lump together (although slightly above) Dave Ramsey’s Total Money Makeover (below).
What I liked about this book:
- A focus on automated saving and investing. I agree it is crucial eliminate the hassle–and excuses–of paying yourself first.
- Lack of focus (and even discouragement) on budgeting. Once you have automated your saving and investing, there is diminishing return on budgeting. We prefer to weigh all optional purchases against our long term goals rather than budgeting.
What I didn’t like:
- The focus on the small expenses (the “latte factor”). OK maybe I don’t disagree with his take on this, since we make our own coffee and brown bag our lunches, but I wish he would have emphasized larger expenses, such as housing and transportation, instead of the small expenses. I think Scott Trench (see #3 above) makes a convincing case that these large fixed expenses dwarf the small expenses and dictate your financial situation, especially when you are just starting to accumulate positive net worth.
- The universal advice to buy a home. I agree that for many people, the forced saving through home equity gain is better than wasting the money on lifestyle creep. But in the FI community, people are more savvy and already looking for ways to save money. FI-minded folks should really analyze home purchases–including their personal residence–as if it were a rental property. This analysis tells you whether you are in a buyer’s market or renter’s market. If it is a renter’s market, you are probably better off renting until the market turns.
This classic book is perfect if you are just getting started or have a low (or negative!) net worth. Dave is uniquely blunt, encouraging, and practical. I love his intensity when it comes to paying off consumer debt and establishing an emergency fund (baby steps 1-3). I just wish he would maintain that intensity for the entire FI journey. Baby step 4–save 15% in retirement accounts–is not enough to substantially move up your retirement date. Dave also famously anti-credit card, and for his followers who haven’t yet developed financial responsibility, this position is appropriate. But once you have learned how to diligently save and invest, there is no reason to forego credit card points.
8. FI Blogs
There are tons of great FI blogs. The following are some of my favorites, although I have to admit, I have more time to listen to podcasts than read blogs. Anyways, you can’t go wrong with these: