Monday, March 1, 2010

The Richest Man in Babylon by George S. Clason

The Richest Man in Babylon by George S. Clason, 1926.

A friend of mine and wise money handler recommended The Richest Man in Babylon to me a while back. A divorce and homelessness forced me to focus more on survival than flourishing, so I didn't read it until now.

And I'm really glad I did.

George S. Clason was born in Louisiana, MO, in November 1874. An alum of the University of Nebraska, Army veteran of the Spanish-American War and successful business man, Clason wrote a series of pamphlets that drew parallels to his current day United States to the ancient city of Babylon.

He surmised that the lessons the ancient Babylonians learned about money could be applied to his day and any day.

And after reading his book, I don't disagree.

The theorems he postulates are pretty simple, but easy to lose track of. Basically, The Richest Man in Babylon is a series of loosely connected, fictional tales of men learning how to gain and maintain gold. The tales reinforce seven rules.
  1. Start thy purse to fattening. That is, no matter what happens, save at least one-tenth of your earnings for yourself. Do that first.
  2. Control thy expenditures. This is synonymous for budgeting. If you don't have it, don't spend it.
  3. Make thy gold multiply. Don't horde your money. Invest it in something. People, stocks, bonds, make your money work for you.
  4. Guard they treasures from loss. This ties into #3. While you should invest your money, do so wisely. Listen to experts. Don't invest in something you don't understand. And don't listen to people who give you advice in matters they aren't an expert it.
  5. Make of thy dwelling a profitable investment. Basically, buy a house. Don't rent. This is basically paying yourself.
  6. Insure a future income. Through insurance, investment or automated income, make sure you have sources of income in the case of long-term or short-term emergencies and for retirement.
  7. Increase thy ability to earn. Don't stop learning. Diversify and research. Do the leg work. This will open new investment avenues to you.
The book is very short and the stories are interesting, but, if you're pressed for time, skip to the end of the chapters and just read the lessons.

I'll be examining myself in each of these seven areas in posts to come, so stay tuned.

Any of you read this book? What did you think? Have you implemented any of the rules?

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