For financial advice, it’s hard to find a more timeless and universally applicable book than “The Richest Man in Babylon” by George Clason. Originally published in 1926, this book is still relevant today, and its timeless lessons are just as valuable now as they were almost a century ago.
They set the book in ancient Babylon and tells the story of Arkad, a man who started out as a humble scribe but eventually became the richest man in the city. Through his story and the stories of other successful Babylonians, the book teaches the principles of personal finance and wealth creation.
Key Point #1: Pay Yourself First
One of the most important lessons in “The Richest Man in Babylon” is the idea of paying yourself first. Before you pay anyone else, save a portion of your income for yourself. This is a timeless concept that is still used by successful people today.
As the book puts it, “The first sound principle of investment is security for your principal. Is it not wise to invest your money under the advice of men who know how to safeguard it?”. Arkad and other successful Babylonians advise to put aside 10% of your income for savings and investment. This may seem like a small amount, but over time, it can grow into a substantial sum.
Key Point #2: Live Within Your Means
Another important lesson from the book is the idea of living within your means. Don’t spend more than you earn. This is a concept that is often overlooked in today’s world of easy credit and instant gratification, but it is essential for long-term financial success.
As the book puts it, “Budget thy expenses that thou mayest have coins to pay for thy necessities, to pay for thy enjoyments and to gratify thy worthwhile desires without spending more than nine-tenths of thy earnings.” This means that you should create a budget and stick to it, making sure that you’re not spending more than you’re earning. This may require some sacrifices in the short-term, but it will pay off in the long run.
Key Point #3: Invest Wisely
Besides saving money, the book emphasizes the importance of investing wisely. This means putting your money into assets that will appreciate in value over time, such as real estate or stocks.
As the book puts it, “Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.” This means that you should put aside a portion of your income for long-term investments that will grow.
Key Point #4: Seek Advice from Experts
Finally, the book emphasizes the importance of seeking advice from experts. This means finding people who are knowledgeable about personal finance and investing and learning from them.
As the book puts it, “Advice is one thing that is freely given away, but watch that you take only what is worth having.” This means that you should be careful about where you get your financial advice from and make sure that it is from a reputable source.
“The Richest Man in Babylon” is a timeless classic that offers valuable lessons in personal finance and wealth creation. By paying yourself first, living within your means, investing wisely, and seeking advice from experts, you can build a strong financial foundation that will serve you well for years to come.