Lessons from the Richest Man In Babylon
In 1926, George Samuel Clason published a series of pamphlets written in parables that was set in the ancient city of Babylon. The book became known as
The Richest Man In Babylon and has become a classic in financial literature. This book is full of tried-and-true lessons for accumulating wealth for people of all ages. The story in the book sprang from the characters Bansir who was a chariot builder and Kobbi who was a musician. The two had no money and were poor. They went out to seek the advice of their childhood friend Arkad, who in contrast had grown rich and amassed fortunes. The lessons that Arkad provided for his friends are lessons of wealth building habits. Habits that I would like to see our youth learn in school. These habits, once formed, lay the foundation for all to accumulate wealth during their lifetimes. Below are some lessons from this book. Lessons that can help us to change old habits and create new habits, on our way to becoming the richest person we can become.
1. Pay Ourselves And Save
"Start thy purse to fattening"
One of the greatest lessons the book has taught is the first lesson. According to Arkad, he found his road to wealth when he decided that a part of all he had earned was his to keep. Although a very subtle message, it is very powerful in accumulating wealth. We cannot accumulate wealth if we don not save what we have earned. We can do that by paying ourselves before we spend any of the money we have earned.
2. Live Below Our Means
"Control thy expenditures"
Bottom line, spend less than we earn. A simple budget will allow us to know how much money we have left after we pay ourselves first. Discipline combined with our budget, helps to create the necessary habits to live below our means.
3. Our Home Is Our Biggest Expense
"Make thy dwelling a profitable investment"
Nothing has the potential to keep us from creating wealth more than purchasing more home than we can afford. A home with a mortgage is a liability. Any expense that keeps us from consistently paying our savings and retirement is a liability, not an asset. Therefore, when purchasing a home, always revert back to #2.
4. Make Our Money Work For Us
"Make thy gold multiply"
This lesson is about investing our money and letting it work for us. I personally believe that everyone should begin investing after they have built their savings and a 6-8 month emergency fund. There are many ways we can invest our money such as stocks, bonds, real estate, businesses and so on. We must do our diligent effort to find great investments so we ensure our money will multiply and work for us.
5. Insurance Protects Our Wealth
"Guard thy treasures from loss"
We are forced to own Auto and Homeowners insurance to protect our lenders and even ourselves in the event of loss. But do you own and Umbrella policy and do you have adequate life insurance or long term care insurance to protect the wealth you have created? Nobody likes buying insurance, but having the proper coverage can insure that your financial legacy is in tact for your children and grandchildren.
6. Have A Retirement Plan
"Ensure A Future Income"
Compounding interest is known as the eighth wonder of the would. In order to have a comfortable retirement plan, one needs to begin saving as young as possible, put away a minimum of 10% of their income and allow compound interest and growth to take care of the rest.
Make today a GREAT day by sharing the wealth building lessons discussed in this little book of wisdom.