The Richest Man in Babylon by George S. Clason
I’ve read this book once before, and decide to revisit the wealth of knowledge inside.
Money is power, it amplifies who you are. That is why most lottery winners end up going bankrupt because the habits of wealth have not been created. Just like getting lean and in shape takes a mixture of habits and time, so does wealth.
The Richest Man in Babylon states 7 simple rules to acquire great wealth that will exceed one’s life and provide security for the family.
THE FIRST RULE IS TO START THY PURSE TO FATTENING.
“A part of all you earn is your to keep.” (page 21)
Upon receiving ‘gold’ at least 1/10th of the earnings should be payed to yourself and placed in savings. After paying yourself the rest will be used for living expenses and debts.
THE SECOND RULE IS TO CONTROL THY EXPENDITURES.
Budget. Do not touch the 1/10th. We are tempted by many desires, instead create a desire to fatten thy purse. Although I had an amazing experience traveling I didn’t have a budget. Before I left I was saying “I wanted to see how long my money would last me,” no real plan. I kept track of what I was spending and how much, but there was no limit. I have a video of my travel expenses during 24 days away and 3 different states. For my next travel I plan to budget. Also, having a better plan on where I will be going, and having a side fund not to be touched so that when I return my purse is still fat and working for me.
THE THIRD RULE IS TO MAKE THY GOLD MULTIPLY.
“The gold we may retain from our earnings is but the start. The earnings it will make shall build our fortunes.” (page 31)
Have you ever heard of the compound effect?
As the chart shows, the sooner someone starts investing and saving, the quicker the growth due to compounding. A Google search can come up with an endless amount of ways to make money and invest.
THE FOURTH RULE IS TO GUARD THY TREASURE FROM LOSS.
Focus on what you know. ‘Do not invest in a brickmaker to buy you jewels.’ Seek out the people who have expertise in the field. Similar to getting in shape, seek out people that are already in shape and copy what they do.
THE FIFTH RULE IS TO MAKE THY DWELLING A PROFITABLE INVESTMENT.
“Own thy own home.” (page 36)
Work towards paying off debt then work on becoming an owner. When we own our home we don’t have bills to pay besides taxes. Freeing up more wealth to be working for us and multiplying.
THE SIXTH RULE IS TO INSURE A FUTURE INCOME.
Having money make money is a concept that all legacies have. Having enough wealth to keep in good health as we grow old and provide for the family once we pass from this life. “Do not put all your eggs in one basket” Diversify. To be prepared for every situation, create multiple sources of income. Do not try everything at once. Remember to start with what you know.
THE SEVENTH RULE IS TO INCREASE THY ABILITY TO EARN.
Continue to learn, “To cultivate thy own powers, to study and become wiser, to become more skillful, to so act as to respect thyself.” (page 42)
Ask questions and seek mentorship from people you want to be like. If it’s difficult to find people, start with books, podcasts, videos. One of the reasons I started this site was to keep a record for myself, share what I learn, and my experiences as a student of life.
The Richest Man in Babylon metaphorically connects wealth to a seed. Plant a seed (bring in income), keep nourishing the seed by paying yourself first (1/10th), budget so you don’t dig up the tree and have to plant a new seed (make 1/10th new desire), the fruits the tree provide use to plant more trees (make money work for money), guard the tree from thieves or uneducated people (invest in what you know or seek people who do), plant more seeds to insure the health and well being for old age and your family, Lastly, use the leftover fruits to expand your worldview (travel, exercise, nutrition, read, connect).
Financial habits are something I would always disregard. I make money and spend it all leaving me with nothing continuing a cycle of having nothing. One of the first steps i’m taking to get a better grip on my finances is to become aware of how much I spend vs. how much I am bringing in. Just like any habit you have to recognize what needs to be fixed. I have been keeping a spreadsheet of everything since the beginning of this year and I can already see patterns. From there I can create a budget.
One last topic I want to touch on in The Richest Man in Babylon is opportunity.
“…Opportunity waits for no man. Today it is here; Soon it is gone. Therefore, delay not!” (page 51)
Create luck by taking action. Luck is just when action meets opportunity. Start taking action where you are at and with the resources you have.
What finance habits do you have? I’d be interested to hear.
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Today is a Good Day to #ImproveYourHabits