If there’s one thing I’ll always spend money on without hesitation, it’s personal finance books. I’ve learned more about money, investing and achieving financial freedom from books than I ever did in college as a finance major – and it was all at a fraction of the cost.

In this comprehensive guide, I’m going to share the five personal finance books that have had the biggest impact on my life and financial journey. I’ll break down the key takeaways from each book and explain why I consider them essential reading, especially for beginners.

These books cover a wide range of topics – from the fundamentals of building wealth to changing your money mindset. Each one represents a different milestone in my path to financial independence, and I honestly don’t know where I’d be without them. Probably broke, in debt, and barely scraping by.

The order I’ve listed them in is more or less chronological, as they came into my life at different stages. But they’re all equally impactful and life-changing in their own way. So get ready to take some serious notes – these personal finance books have the power to transform your financial future.

1. Rich Dad Poor Dad by Robert Kiyosaki

The first personal finance book I ever read was Rich Dad Poor Dad by Robert Kiyosaki. This book completely shifted my understanding of money and wealth-building.

In “Rich Dad Poor Dad”, Kiyosaki shares the contrasting money lessons he learned from his two “dads” – his real father, who was his “poor dad,” and his best friend’s father, who was his “rich dad.” Despite being highly educated, Kiyosaki’s poor dad never got ahead financially, while his rich dad, who didn’t even finish high school, became one of the wealthiest businessmen in Hawaii.

Key Takeaways:

• Understanding the Difference Between Assets and Liabilities: Kiyosaki explains that assets put money in your pocket, while liabilities take money out. The wealthy buy assets, while the poor and middle class buy liabilities.
• The Importance of Financial Literacy: Financially literate people make rational, informed choices, while the financially ignorant act based on fear and greed.
• Minimizing Taxes: Kiyosaki reveals how the wealthy use the tax code to their advantage and become even richer.

2. The Cashflow Quadrant by Robert Kiyosaki

The Cashflow Quadrant is Kiyosaki’s follow-up to Rich Dad Poor Dad, diving deeper into the specific strategies and mindset shifts needed to achieve financial freedom.

In this book, Kiyosaki introduces the four cashflow quadrants: Employee (E), Self-Employed (S), Business Owner (B), and Investor (I). He argues that true wealth comes from the B and I quadrants, where you can generate passive income streams.

Key Takeaways:

• The different mindsets, skillsets and opportunities available in each cashflow quadrant
• How business owners and investors can take advantage of more tax deductions and loopholes
• Why the B and I quadrants offer a path to time and financial freedom beyond just trading time for money

3. The 4-Hour Workweek by Tim Ferriss

The next book that transformed my life is The 4-Hour Workweek by Tim Ferriss. I discovered this gem in my freshman year of college, and it was exactly what I needed at the time. It’s one of the top personal finance books for rethinking traditional work-life balance

I had taken a gap year before starting college to backpack around the world, and I was deeply missing that lifestyle of freedom and adventure. Reading The 4-Hour Workweek inspired me to think beyond the traditional 9-to-5 career path and explore alternative ways of living and working.

The biggest takeaway is the concept of “time and location freedom” – automating your income so you can work from anywhere, only as much as you want. Ferriss provides a step-by-step blueprint for creating passive income sources and becoming hyper-efficient with your time.

4. I Will Teach You to Be Rich by Ramit Sethi

I Will Teach You to Be Rich by Ramit Sethi is a standout in the realm of personal finance books, offering a refreshing and enjoyable approach to financial adulting.

Sethi gives some pretty unconventional advice like “don’t keep a budget” and “buy all the lattes you want.” His approach is all about automating your finances and making your money work for you rather than stressing over every dollar.

Additionally, understanding these 7 beginner investing mistakes can further help you avoid pitfalls and make smarter financial decisions.

Key Takeaways:

• Sethi’s specific recommendations on the best bank accounts, credit cards, and retirement accounts to use
• His “buckets” system for managing spending, savings and investments with automation
• The importance of giving your different savings goals distinct names to make them more motivating

5. Think and Grow Rich by Napoleon Hill

The final book on my list is Think and Grow Rich by Napoleon Hill. This is considered the granddaddy of all personal finance and wealth-building books.

Over the course of 20 years, Napoleon Hill interviewed dozens of the most successful people of his time, including Andrew Carnegie and John D. Rockefeller. From these interviews, he distilled the common principles and mindset shifts that enabled them to build massive fortunes from scratch.

The main premise of the book is that getting rich starts in the mind, not the wallet.

Key Takeaways include:

• The power of desire and intention in attracting wealth
• Overcoming the limiting beliefs that hold you back financially
• How the “law of attraction” can work in your favor to build wealth

The Transformative Power of Self-Directed Learning

What’s most remarkable is that I was able to completely transform my financial life and trajectory just by reading and implementing the lessons in these books. I didn’t need a college degree in finance or a high-powered Wall Street job – all the knowledge I required was available in these personal finance books, which I was able to acquire for a fraction of the cost of a traditional education.

This has really driven home the power of self-directed learning for me. The school system simply doesn’t teach the essential skills and mindsets needed to build true, long-lasting wealth. It’s up to each of us to take responsibility for our own financial education.

I hope that by sharing these five life-changing books with you, I’ve inspired you to start your own journey of financial transformation. Whether you’re just starting out or have been working for years, these timeless principles have the power to change the entire trajectory of your life. Plus, incorporating some millionaire habits into your routine can give you that extra boost towards financial success.

So what are you waiting for? Grab one of these books, start reading, and get ready to level up your money game. Your future self will thank you. Download my Financial Freedom Reading List to get started on your path to wealth and abundance.

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I don’t wake up at the crack of dawn. I don’t have a strict journaling routine. And I certainly don’t work out every single day. Yet, I was able to climb my way out of six-figure debt and build a seven-figure net worth by age 32.

The key wasn’t found in generic productivity hacks or morning routines. Instead, it came down to developing the right mindset and daily habits. In this guide, I’ll share the 7 essential millionaire habits that can transform your finances, no matter where you’re starting from.

Habit #1: Treat Failure as Feedback

The most successful people in the world don’t see failure as the end – they view it as essential feedback on the path to progress. As Ray Dalio, the founder of the world’s largest hedge fund, says: “Pain + Reflection = Progress.”

When I was interviewing for competitive Wall Street jobs in college, I’d get constant rejections. But instead of getting discouraged, I’d email the interviewers and ask for feedback on why I didn’t make it to the next round. Their honest critiques – whether it was smiling too much or sounding immature – allowed me to improve for the next interview.

Eventually, this process of failing forward led me to land my dream job. The key is to stop seeing failure as a reflection of your worth, and instead, use it as invaluable data to fine-tune your approach.

Habit #2: Set Goals, Plan Your Days

While I may not wake up at the crack of dawn, I do make sure that each day advances my long-term goals. At the start of every year, I create a curated list of the 2-3 goals I’m most committed to achieving that quarter.

Resources that have helped me learn these habits include Michael Hyatt’s “Your Best Year Ever” book and Marie Forleo’s “Time Genius” course.

I then break these down into specific daily actions, which I track in a productivity tool like Asana. This allows me to stay laser-focused on the tasks that directly move me closer to my objectives, rather than getting sidetracked by busywork.

Habit #3: Learn Insatiably

When it comes to building wealth, the single most important skill is the ability to learn and grow. Whether it’s devouring books, taking courses, or finding mentors, continuously expanding your knowledge is key.

In my mid-20s, I even offered to work for a real estate developer for free, just to learn from his expertise. While the pay was minimal, the experience and wisdom I gained were invaluable. It wasn’t about the money – it was about positioning myself to succeed.

I highly recommend adding the book Think and Grow Rich to your reading list as it is considered the ultimate resource on developing the right money mindset and consciousness for building true wealth. 

Habit #4: Make Your Own Luck

Successful people don’t sit around waiting for luck to find them – they create their own. When I was unhappy with my corporate career, I didn’t just complain; I started teaching free personal finance classes in a coworking space to build my first audience.

Instead of making excuses about why your dream can’t happen, start taking action to make it a reality. Carve your own path, even if it’s uncomfortable at first. The results may surprise you.

Habit #5: Say No A Lot

Millionaires understand that time, energy, and money are limited resources. Saying “yes” to one thing often means saying “no” to something else that’s important.

When I was getting out of debt, I had to say no to a lot of discretionary spending. And even now, as I’ve built wealth, I’m very selective about where I allocate my time and resources. I’d rather invest in my long-term goals than indulge in short-term luxuries.

Learn to set firm boundaries and prioritize ruthlessly. Your future self will thank you.

Habit #6: Take Care of Your Health

You can’t do anything without your health, no matter how much money you have. I make sure to prioritize my physical and mental wellbeing, whether that’s taking daily walks, doing dance breaks, or getting regular checkups.

Neglecting your health will inevitably impact your productivity and energy levels. Start small, like drinking a glass of lemon water each morning, and build from there. Your wealth-building journey depends on you being in peak condition.

Habit #7: Your Word is Everything

The final habit that’s been transformative for me is treating my word as sacred. I used to be the biggest flake – constantly making promises I didn’t keep, whether it was showing up late or never following through at all.

This eroded my self-esteem and credibility with others. But once I made a commitment to always follow through on my word, it was a game-changer. I became more reliable, accountable, and confident in myself.

Now, I’m very careful about the commitments I make. And if I can’t deliver, I’m quick to communicate, apologize, and clean up the mess. Keeping your word isn’t just good for your relationships – it’s essential for your own self-respect and growth.

Start Building Wealth Today

The habits and mindset shifts I’ve shared aren’t complicated, but they do require consistency and commitment. Rome wasn’t built in a day, and the journey to becoming a millionaire is no different.

Remember, it’s not about perfection – it’s about progress. Focus on improving just 1% each day, and you’ll be amazed at where you end up. Sign up for my “Call to Freedom” email list to get exclusive insights on creating financial freedom. I’m here to be the friend a few steps ahead, showing you the way.

The post The 7 Millionaire Habits That Will Transform Your Finances appeared first on Rose Han.

Unfortunately, his fund Pabrai Funds is closed to new investors, but the next best thing to having him manage your money is to learn how to invest the way he does. And he shares his entire methodology in this book, The Dhando Investor. So if you want to learn some valuable tips and tricks that will help you turn a small amount of money into a fortune, with low risk, then keep reading!

What is Dhandho Investor?

It is based on one key premise: that the key to generating high returns with low risk is by taking asymmetrical bets  – in other words – making investments that have a high potential for major upside, and also have a very limited downside.

Another way of thinking about asymmetrical risk is: “Heads I win, tails I don’t lose much”

This low-risk, high-return approach to investing is what Mohnish calls the Dhando method. And in the book, he shows plenty of real-life examples that prove that the Dhando method works. One of the most remarkable examples he gives of the Dhando method in action is the story of the Patels. The Patels are a small ethnic Indian group that came to the U.S. in the 1970s with nothing and using Dhando investing principles, the Patels went on to become the largest owner of motels in the entire country. How does a penniless family of immigrants go from $0 to $40b in motel assets in the span of 35 years? The answer is – the Dhando method!

The book synthesizes the Dhando method into 9 key principles. So let’s go over each of these 9 principles:

Principle #1 – Focus on buying existing businesses

• Remember that the whole Dhando investing framework can be summarized into this one tagline: “Heads I win, tail I don’t lose much”.
• And since existing businesses are much less riskier than startups, Mohnish recommends investing only in companies that have a proven business model and a long, stable history of operations.
• And the best way to do that is via stocks of publicly traded companies. If you examine the performance of various asset classes over the past 100 years, you’ll see that stocks do better than all the other main asset classes. Not only that, but it’s the easiest way to become a business owner. When you buy a stock, you get an ownership stake in the business, but you don’t have to actually run the business yourself. The business already has a CEO and it’s fully operational, so you get to reap the rewards of business ownership without doing any of the heavy liftings yourself.
• Plus, you can do this with whatever cash you have in your wallet. As long as you have enough money to buy one share of the company you want to invest in, you can afford an ownership stake in any publicly traded company. This is way more accessible than buying an entire business like Papa Patel did when he bought his motel. So to summarize the 1st principle of Dhando investing: focus on buying existing businesses, and do this via the stock market.

Principle #2 – Invest in simple businesses

• The Dhando investor avoids investing in complicated companies. Why? There’s actually a very numbers-driven reason for this.
• In order to assess whether an investment is a good deal or not, you need to first know the intrinsic value of a business. If you can buy the business for less than what it’s worth, it’s a good deal. If you have to pay more for the business than what it’s worth, it’s not a good deal.
• The general formula for estimating what a business is worth – or its intrinsic value – is by adding up all the cash flows (discounted at an appropriate interest rate) that will occur during the life of the business. That’s pretty reasonable, right? A business’s worth is derived from the cash flows that it will generate in the future. This is called a discounted cash flow analysis. In the book, Mohnish explains this with the example of the neighborhood gas station: let’s say that the owner of the gas station puts it up for sale at a price of $500k. You know that after 10 years, the gas station can be sold for $400k, and meanwhile, the gas station will put $100k in your pocket every year for the next 10 years. That gives an estimated timeline of cashflows that looks like this: $100k every year for 10 years, plus a lump sum of $400k in the 10th year. And because these cashflows are future cash flows, they have to be converted into present-day dollars. If interest rates are 10% right now, then the present value of these cash flows look like this. Comparing future cashflows in present-day terms ensures that we’re comparing apples to apples since the purchase price is also in present-day terms.
• The sum of the cash flows – in present value terms – is $768k. This is what the business is really worth. So is it a good deal? Well considering that you can buy the gas station for $500k, it’s a great deal, because you’re paying a lot less for the business relative to its intrinsic value.
• DCF analysis is hands down the best way to assess investment opportunities, but you can see that estimating future cash flows is not an easy task. Even with the gas station business, which is a really simple, stable, and predictable business, the cash flow estimates we used aren’t 100% certain. When it comes to predicting the future, nobody has a crystal ball.
• That’s why the Dhando way to deal with this uncertainty is to invest only in simple businesses where the future cash flows can be estimated with relative confidence. The cash flows of a gas station are a lot more estimable (is that even a word?) than the cashflows of, say, a biotech company that’s still in the research phase.
• So rather than try to predict the future of complicated companies, the Dhando method wants you to simply avoid those kinds of companies and stick with the ones with relatively predictable, stable cash flows. As Warren Buffett says, “change [is] the enemy of investments… we look for mundane products that everybody needs”. Examples of businesses like this are motels – as in the Patel story, Coca-Cola – which was Warren Buffett’s most successful investments, or Bed Bath & Beyond – which Mohnish uses in the book to walk us through a DCF analysis.

Principle #3 – Invest in distressed businesses in distressed industries

• Now that you understand how to calculate the intrinsic value of a business, you now have a powerful tool for finding great investment opportunities. Just like with the gas station example, where you could buy something worth $768k for only $500k, you want to buy stocks at less than their intrinsic value.
• The best way to do this, according to Dhando, is to look for distressed companies. Going back to the story of Papa Patel and his motel investment – he bought the motel in the 1970s during a very troubled time in the economy. The country was in a deep recession and you could pick up motels at fire-sale prices.
• You can also do this in the stock market. Because stock prices are so volatile and driven by news headlines, the market can be very emotional. This often creates huge dislocations between a stock’s price and its underlying value. So what you’re looking to do, is buy a stock when it’s trading at a distressed price.
• The 3rd principle of the Dhando investing framework is perfectly summed up by this quote from Warren Buffett: “I will tell you how to become rich… Be fearful when others are greedy. Be greedy when others are fearful.”

Principle #4 – of the Dhando investing method is to Buy businesses with durable moats

• A moat is a protection from enemies. In medieval times, a castle needed to have a moat in order to keep out its enemies. The wider and deeper the moat, the greater the protection. It’s the same for businesses.
• Thanks to free-market capitalism, competition in any industry can be brutal. If a business doesn’t have some sort of competitive advantage, they’ll get wiped out pretty quickly.
• How do we know for sure if a business has a moat? You can look at the financial statements. A business with a strong moat will have a high return on capital. This is a metric that tells us how much income business is generating with the capital deployed in the business. I have a free download for you called the Stock Investing Checklist, and in it, I go over in detail how to calculate these numbers.
• Examples of companies with moats are American Express, Coca-Cola, Harley Davidson, and Google. Moats can come from having a brand name, a cost advantage, economies of scale, and so much more. Again, I go over moats in more detail in my Stock Investing Checklist.

Principle #5 of the Dhando method – Bet heavily when the odds are overwhelmingly in your favor

• In investing, there’s no such thing as a sure bet. But as a Dhando investor, when you come across a high-probability bet, you want to bet heavily.
• With the Patel motel example, the Patels saw an opportunity with a huge upside and very limited downside, and they jumped on it. They had an opportunity to buy a motel with only $5k of their own money, borrow the rest, and potentially make huge profits. Even though $5k was their entire life savings, the odds were so good that they went all in.
• If you find a company that has a simple business model with a strong moat, it’s under temporary distress, and the stock price has collapsed so much that you can buy it for less than half of the intrinsic value, then Mohnish recommends that you bet HEAVILY! Because with a setup like that, you have a high probability of huge success and a very low probability of moderate failure. The Dhando framework is all about examining the odds. As Charlie Munger once said, “The wise ones… bet big when they have the odds. And the rest of the time, they don’t. It’s just that simple.”
• In the book, Mohnish also explains something called the Kelly Formula, which is a simple mathematical formula that tells you exactly HOW MUCH of your money to bet on anyone investment opportunity. The formula is based on calculating the odds, and it was made infamous by Ed Thorpe, an MIT math professor who used it to make a killing playing blackjack in Las Vegas casinos. Although investing is not the same as playing blackjack, thinking probabilistically and betting big in high-probability situations is the main takeaway of this fifth Dhando investing principle.

Principle #6 – is to Focus on arbitrage

• Arbitrage is a fancy term for riskless profit. An example of arbitrage is if gold is trading at $600 per oz in London and $610 per oz in NYC, so you buy it in London and sell it in NY for a profit.
• And then there’s Dhando-style arbitrage. The Patel motel is a perfect example. Because the whole family lived and worked in the motel, the Patels had virtually no overhead. There were no salaries to pay, so they were able to offer rooms at the cheapest prices, while still maintaining good profits. They had an arbitrage spread over all their competitors. Other examples of Dhando arbitrage spread in action are category killers like Wal-Mart, Home Depot, and GEICO. Each of these companies has a unique situation that allows them to make more money than all of their competitors.
• The arbitrage spread is essentially another way of describing a moat. And Mohnish teaches that if you find a Dhando-style arbitrage spread like the Patel motel, or Wal-Mart, or GEICO, then you should milk it for all it’s worth.

Principle #7- is to Buy businesses at big discounts to their intrinsic value

• This is also called investing with a margin of safety. Remember the gas station example? After estimating the cash flows and the gas station’s intrinsic value, you realized that you could buy it for a lot less than what it’s worth: a price of $500k vs the intrinsic value of $768k. The difference between the price and the value is your margin of safety.
• Because the future is full of uncertainty, and even the best estimates of cashflow can turn out to be wrong, Dhando investing teaches you to only buy companies at a steep discount to underlying value. This gives you a margin of safety.
• As Benjamin Graham said, “The function of the margin of safety is [to render] unnecessary an accurate estimate of the future”. In other words, investing with a margin of safety protects you from the unknown, because no one – not even the best investor – can predict the future with 100% certainty.

Principle #8 – Look for low-risk, high uncertainty businesses

• The best Dhando-style opportunities have a combination of low-risk, high-uncertainty. The low-risk component makes it a conservative bet to take, and the high-uncertainty component allows for a big potential payoff.
• Other combos are high-risk, high-uncertainty, or low-risk, low-uncertainty. You don’t want to invest in high-risk, high-uncertainty businesses, because that’s just gambling. You also don’t want low-risk, low-uncertainty, because there’s no potential for high gains there. So you want that ideal combo of low-risk, high-uncertainty.
• The Patel motel was the perfect low-risk, high-uncertainty business because all that was at risk was the $5k down payment. So even in the worst-case scenario, there wasn’t that much to lose, yet there was huge potential for upside. Low-risk and high-uncertainty is the ideal combination for the Dhando investing framework.

Principle #9! Invest in the copycats rather than the innovators

• The Dhando framework recognizes that innovation is a crapshoot, whereas taking an already proven idea and scaling it is much more reliable.
• When the first Patel bought a small motel and found some success, other Patel relatives copied him and bought their own motels. Pretty soon, Patels copied this model all over the United States, because it was a proven idea, and thus very little risk.
• The proof that the copycat strategy works is in the numbers: 1 out of every 5 motels in the United States is owned by a Patel. If this worked for a small group of refugees who came to the U.S. with nothing, then I’d say it’s a pretty good strategy!
• Other examples of hugely successful companies that were copycats rather than innovators are: McDonald’s and Microsoft.
• Both of these companies actually did not have any original ideas, but they were successful because they were good at executing and scaling. The founder of McDonald’s, Ray Kroc, modeled his restaurants after an extremely successful hamburger stand in California. Microsoft licensed their flagship product from a company called Seattle Computer, they didn’t actually invent it on their own.
• Since the Dhando tagline is “Heads I win, Tails I don’t lose much”, Mohnish recommends investing in the companies that know how to be good copycats of a proven idea.

MY FINAL THOUGHTS

This book packs in an MBA-level investing education in less than 200 pages. It’s a quick, easy read that simplifies some very advanced investing concepts into a simple, powerful framework that anyone can profit from. It’s my 3rd time reading it and I’m getting even more gems each time.

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