5 Tips from The Richest Man in Babylon
Okay, okay I hear you guys, maybe not your purse but your wallet or bank account. Wherever you keep your money the classic book by George S. Clason, entitled, The Richest Man in Babylon, will give you practical and simple steps to fatten your fortune with gold. This is a book I did not stumble on. As a certified credit counselor, I like to keep adding to my financial knowledge. Countless of business experts, financial experts, and motivational speakers have recommended this book the names of Jim Rohn and Robert T. Kiyosaki comes to mind. I finally gave it a read. I am so glad I did (quick word of advice if you keep hearing a book recommendation it’s a sign you should read it).
It was written like no other personal finance book I have read so far. The book is styled in story form. It’s a collection of stories that dish out valuable financial stewardship lessons. The stories are entertaining and easy to follow. It’s a quick read consisting of only 99 pages. I highly recommend this book to everyone that is on the path of personal finance stewardship. Add it to your library and lend it to friends/family. In this post, I will share five main points from the book to help you fatten your purse with gold.
Five Tips to Fatten Your Purse
1) Pay Yourself First: In the words of the wise money lender Algamish, “I found a rode to wealth when I decided that a part of all I earned was mine to keep”(17). According to the book, you are to keep at the very least 10% of what you earn for yourself (I say start where you can to develop the habit). This 10% can go into a savings account and only be used to make more money. Imagine, how quickly your purse will fatten with gold if you took 10% from every paycheck, sale, commission or wherever your income comes from and saved it, within ten years you would have a year salary.
2) Get Advice from Financial Experts: A lesson depicted throughout the book. When you need advice, seek out someone who already accomplished what you are working on not someone that has no experience or who only failed. In the words of the wise Algamish, “…but why trust the brickmaker about jewels?….if you would need advice about jewels, go to the jewel merchant”(18). Today, we have a good amount of financial experts to turn to for advice. When it is time to invest your gold seek out their wisdom, study finances and make your decisions with confidence.
3) Invest/Put Your Gold to Work: According to the book, once you have a year worth of gold in your purse start looking for ways to make money work for you. This is when you start seeking the advice of experts, or come up with creative ways to partake in capitalism. I remember when I was a kid and I use to buy a box of 8 little Debbie Snack Cakes for $1 and take them to school and sell them for .25 cents each. Use your imagination and figure out ways to put that money to work. You could be a lender of money and lend the bank some money via CDs. If you don’t come up with anything keep saving it unit you do. If you save enough you could get into real estate investing. Whatever you do, don’t, in the words of Algamish, “eat the children of your savings”, by spending it on non-investments(19).
4) Own Your Dweling/Own Your Home: This tip comes from Arkad aka the richest man in Babylon and former pupil of Algamish. According to Arkad, it is better to get a loan from the moneylender get your own house and pay the moneylender than to pay a landlord for property that is not yours. In the end, you have, “…a plot of ground wherein children can play in the clean earth and where the wife may raise not only blossoms but good rich herbs to feed her family….thy heart be glad because thou wilt own in thy own right a valuable property” (32–33).
5) Debt Repayment Plan: This plan comes from Dabasir a former slave who became a wealthy camel trader (Please read chapter 8 it was a great story). The plan is simple and effective. According to Dabasir, 10% of your income is yours to keep, 70% is yours to live on (mortgage, food, clothes, entertainment), 20% to pay on debts. The 20% is to be, “divided honorably and fairly among those who have trusted me and to whom I am indebted”(80). Dabasir advises that we contact all our debtors and let them know how much of that 20% we will send them each month. This is good advice because it is always better to communicate with your lenders and talk to them then to avoid them it shows that you are serious about paying them back. When you contact them let them know about all your other debt obligations and the payment you can afford to send them. Lastly, send the payment regularly.
I selected the above five principles because I believed they would make a great start for anyone. In no means, were they the entire book. I mean there was an entire chapter on lending money that was very insightful. I recommend while reading this book you take the time to see how you currently allocate your money. I myself found that I was only keeping 6% of my income for myself, 8% to my company’s full match 401(k), 24% for my debts, and living on 62% of my income. Putting it down on paper really helped me see where I am at financially and shown me where I need to work on.
I recommend this book to everyone, especially people with kids because the story style is highly entertaining and educational at the same time. Parents, this can be a tool that gives your kids a head start to their financial freedom. Parents as you put the principles into practice you will be a role model for your kids. The role model some of us never had concerning finances.In conclusion, if you are looking for a quick read, with good financial principals, written in an entertaining fashion, that can easily reach your children then I recommend, George S. Clason’s, The Richest Man in Babylon.
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