The Richest Man In Babylon may not be the easiest book to read – but it is certainly one of the best!
I truly believe that it should be prescribed text at every high school in the world. We would all have a bit more to show for our years of hard work if we followed these simple principles.
The Richest Man In Babylon by George S. Clason was first released in 1926 and is still a best seller in many countries. It is written in “Babylonian” language, so it may be a bit challenging for a younger reader, but if you can get the gist of each of the seven principles put forward by Clason then you will benefit enormously. The Richest Man In Babylon provides seven lessons, simple steps that we can all apply to our own finances.
A summary of the seven lessons in The Richest Man In Babylon:
Start Thy Purse To Fattening: For every 10 coins you earn, save 9. Apply this to your own income – save 10% of everything you earn and you have yourself a very sustainable savings plan. Imagine if you had done that since you earned your first pay cheque?
Control Thy Expenditures: Be realistic about our “wants” compared to our “needs”. If you’re to save money, then you need to carefully consider what you are spending your money on – think twice before you make a purchase. If you’re buying coffee everyday, work that out over a year – gets you thinking doesn’t it?
Make Thy Gold Multiply: Your savings will not be used wisely if it’s sitting under your mattress. Invest it wisely, so that it can make more money itself. Education is the key here – you must be able to choose the best investments for your situation.
Guard Thy Treasures From Loss: This is a warning – and it reminds me of the saying “If it sounds too good to be true, then it probably is”. Don’t put your investment into high risk ventures expecting a get rich quick return. Don’t be too conservative, but aim for a variety of investment returns.
Make of Thy Dwelling a Profitable Investment: For most people, the family home IS the biggest investment they will make, so buy in the best area you can afford, protect it, look after it. When and if you sell, you will want to make a good profit.
Insure A Future Income: Provide for the future. Invest in superannuation, save for your retirement. Don’t rely on the government to provide for your retirement income – it probably will be reduced over the years and it definitely won’t be enough. If applicable, take out the relevant insurances – life and income protection. Your investments should provide an ongoing income after you finish paid work.
Increase Thy Ability to Earn: This is not just about being ambitious (although that is part of it), it’s about having a plan, setting goals for your future. How are you going to increase your income? Have goals set for paying off your mortgage, or a specific amount of savings or investment.
This summary by no means replaces reading the book! You should read The Richest Man In Babylon to get a complete understanding of these lessons. There is a story for each step which explains what it is all about. I can highly recommend The Richest Man In Babylon and if you have teenagers, please pass this knowledge onto them.
As with most things – the value isn’t in the knowing, it is in the doing. So learn but then make sure you take action after reading The Richest Man In Babylon.