As a fiction writer, you need a few reference books to help smooth your writing into its most accessible finished state. The more polished your writing, the more willing an agent or editor will be work with you. This is because you have just made their jobs much easier by bringing your manuscript as close as possible to a publishable state -- resulting in less work for them.
But do you need to buy any paper books when you can find equivalent resources for free online? Not at all. Please check the Offsite Resources section (see Related Links below) to find free online reference materials. Meanwhile, here are three reasons that I would buy the books. First, the free online sites are packed with ads, and the Merriam-Webster dictionary site is probably the worst offender. I know these sites must generate ad revenue to keep their content free to us visitors. Even so, there is only so much I can take from ads popping up over content or moving and flashing in the sidebars. Worst of all are the ads jammed into the center of the page and layered like lasagna ingredients between paragraphs of valid information that I must pick out from amidst all the clutter.
Second, I can grab a paper book and look things up in it much faster than I can online where I must locate the website (either with a search engine or by clicking a shortcut link), sift through the ads for the search box, and type in a term. Maybe this is me still retaining a few Luddite preferences in the age of technology, but Iíd rather open a book to the index or table of contents, and go to the pertinent page.
Third, some of these online resources, such as The Chicago Manual of Style, are not free. You need to buy a yearly subscription to access the site. But is the information really going to change that much year to year? This is the English language we're talking about, not something that changes rapidly like computer software. You might as well buy the big orange hardback for the same price as a yearly subscription to the site, but use the hardback for the next five years.
Here are my recommendations (in order of importance) for the bare minimum of reference books that a fiction writer needs.
Dictionary: I use two dictionaries, the Merriam-Websterís Collegiate Dictionary and the American Heritage Dictionary. Merriam-Webster seems to have more words, including slang. However, the American Heritage Dictionary features great word usage notes. If you can only afford one dictionary, go with the Merriam-Webster. I believe that more editors use it than any other dictionary.
Grammar and Punctuation Manual: I vary in what I use and often I just check the internet, but I have enjoyed The Deluxe Transitive Vampire by Karen Elizabeth Gordon.
Thesaurus: I use Rogetís Thesaurus.
Style Guide: If you can only get one, you should make it The Chicago Manual of Style. Every fiction editor I have worked with has used this book like a Bible. Other classic style guides include The Elements of Style by William Strunk Jr. & E.B. White, and The Associated Press Stylebook (for a journalistic approach).
Buy The Merriam-Webster Dictionary at Amazon.com.
Buy The Elements of Style, Fourth Edition at Amazon.com