'The Richest Man in Babylon'
by andrew@JijniMarkets - Fri 02 May 2008
I have just finished reading 'The Richest Man in Babylon' by George Samuel Clason which imparts financial advice through short tales based in ancient Bablylon. The book is also a historical picture into the ancient city that was once the wealthiest in the World and reasons for its success. I'm not generally a fan of How-To-Get-Rich books but this book has some simple, common sense home truths that have made it classic since 1926 when it was first published.
There are many snippets of good advice in the book but I'll highlight a few that stood out for me. First amongst this was:
"Start thy purse to fattening
"For every ten coins thou placest within thy purse take out for use but nine. Thy purse will start to fatten at once and its increasing weight will feel good in thy hand and bring satisfaction to thy soul."
The message is: save, save, save. The joy of watching your savings grow will encourage you to spend less and save more. Ironically, saving 10% of your income should have limited impact on your lifestyle. I suspect the author was aware that most people easily squander this 10% on unnecessary expenses which would not have been missed if this money wasn't available to begin with.
The next two are linked and effectively say: Invest your savings and invest cautiously and wisely.
"Make thy gold multiply
"Put each coin to laboring that it may reproduce its kind even as flocks of the field and help to bring to thee income, a stream of wealth that shall flow constantly into thy purse."
"Gold clingeth to the protection of the cautious owner who invests it under the advice of wise men in its handling."
I also liked the emphasis in the book that the amount of luck one has is linked to how hard one works and his/her willingness to seize opportunities.
"To attract good luck to oneself, it is necessary to take advantage of opportunities. Men of action are favored by the Goddess of Good Luck."
The book relies on anecdotal examples to convey its message. One of these was of a modern day professor heavily in debt who happened to find ancient tablets from Babylon with some of the advice inscribed. He follows the advice and decides to save 10% of all his income (despite being in debt), spend 20% on paying his debts (after explaining his situation and plan to his creditors) and the other 70% fulfilling his daily needs by cutting down all expenses to only equal this amount. His creditors end up happy he is repaying them (albeit slowly) and not borrowing more; he and his wife are happy watching their savings grow and knowing they are saving for the future and finally they have managed to cut down their expenses to be able to live below their means.
It took some getting used to but I liked the biblical nature of the language used in the book which gives it a religious aura of wisdom. The book is a short and interesting read that I highly recommend.
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