Let me start of by saying that I read this book so you don’t have to. If you were thinking of purchasing it, save yourself some time by reading the main 5 things to take away from it here:
- Save 10% of everything you make.
- Live below your means.
- Invest wisely and carefully
- Invest in yourself.
- Don’t believe get rich quick scams.
I purchased a copy of “The Richest Man In Babylon”at the suggestion of many websites dedicated to first time investors. It is regarded as one of the classics of money management and a good place to start if you want to develop financial literacy. The book itself was written a long time ago, hence it has a lot of arguably dated language and is written in a narrative style, which can be quite confusing at times.
I ended up skipping a bit of text as it was more the development of the story and I really just wanted the author to get to the point. Sometimes the book just dragged, however it is not to be written off as a good read as it does provide some fundamentals one should learn. The number one thing this book keeps reminding its reader is to pay oneself first.
“I found the road to wealth when I decided that a part of all I earn was mine to keep. And so will you (Clason, 2000).”
The author suggests putting away a percentage of your wealth each month, as little as 10%, although if you are really struggling like I was I’d suggest just start with 5%. He strongly reinforces the importance of developing a habit of saving and sacrificing a bit of comfort in order to grow your tree of wealth later.
“Wealth, like a tree, grows from a tiny seed. The first copper you save is the seed from which your tree of wealth hall grow (Clason, 2000).”
“That of what each of us calls our necessary expenses will always grow to equal or incomes unless we protest otherwise (Clason, 2000)”.
Unless we truly commit to forming excellent money habits, we will never get rich nor break the cycle of living pay-check to pay-check. Budgeting is also highlighted as another important skill to develop if one is to be finically literate.
“Like a bright light in a dark cave, thy budget shows up the leaks from thy purse and enables thee to stop them (Clason, 2000)”.
Although the book is dated, the advice still resonates in today’s world by recognising that human beings are heavily driven by consumerism (hint hint minimalism). Each of us has hundredths of desires each day, whether it is a candy bar or a new BMW, a promotion or to tour the world with our imaginary hippie band. However, the author recognises that it is impossible for us to give into all of one’s desire and therefore encourages selective thinking. Ask yourself, “Is this desire helping me achieve my long-term goal?”
“The Richest Man in Babylon” suggests that you invest whatever you save into something you are familiar with. There is no greater loss than seeing your hard earned money crumble into a shabby investment. Your money can only work as hard as you enable it to.
Lastly, the book highlights the importance of investing in oneself, which is something that cannot be stressed enough.
“Cultivate thy own powers, to study and become wiser, to become more skilful (Clason, 2000)”.
As far as practical advice on what you can do in your life now, the books lacks quite a bit. It is all nice and metaphorical like, but I feel like this could’ve been achieved with a similar effect in half the pages. I’d suggest you give it a read only if you absolutely want to cover all your bases and tick one of the classics of your lists. If not, I’d spare myself the time and just search a summary of the main points.
Remember, being broke is temporary, being rich is a journey.