The book The Richest Man in Babylon by George S. Clason was published in 1926. It is one of the best books on personal finance. Even though it has been almost a century since the book was first published, the lessons shared in it are timeless. The book offers financial advice through a series of parables set in ancient Babylon.
Here are some of the important points I learnt from this book:
Pay Yourself First
Save at least 10% of what you earn, no matter how little. When we start putting aside 10% of our earnings, we find that we are still able to manage with the remaining 90% of our income without any major problems.
Live Below Your Means
Control your expenditures. We all have many desires, much more than we will ever be able to gratify. Make a list of all the things you want to buy. Then, among those, prioritise the items you can buy using no more than 90% of your income. Consider the remaining things as part of a long list of desires that will remain unsatisfied.
Make Your Money Work for You
It is not enough to save money; you need to make it grow by investing wisely. Put your money in investments that can generate passive income.
Protect Your Wealth
Protect your principal at all costs. Before parting with your money, be very sure of the ability to get it back. When investing, seek advice only from experts in that field.
Ensure a Future Income
Plan for your old age when you will no longer be able to work and earn. Make small, regular contributions towards this goal.
Increase Your Ability to Earn
Increase your earning potential by studying, improving your skills, and learning new trades. Focus on continuous self-improvement.
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