I stumbled upon “The Richest Man in Babylon” by George Clason more than a decade ago. It was one of the first books I read in my pursuit of financial literacy and empowerment.
Reading through the many parables contained within the book, the writing style reminded me of the Bible. It’s a classic, littered with nuggets of wisdom on financial planning, thrift, wealth acquisition, wealth maintenance, and wealth multiplication.
This book has impacted millions of people, including myself, for 90 years. The simplicity of Clason in narrating great financial truths in parable format make this a timeless piece – for the newbie as well as the experienced investor.
Some of Clason’s basic principles for acquiring money include:
1. Start thy purse to fattening: Pay yourself first! Try and set aside 10% of your income for savings and investment.
2. Control thy expenditures: Live below your means! This is crucial advice to a society so in love with debt so much so that consumer debt has reached levels never seen before.
3. Make thy gold multiply: Put your money to work and earn returns! After you have put that emergency fund aside, the next step is to research and plan your investing strategy. Put your money to work in a well defined and diversified portfolio.
4. Guard thy treasures against loss: Diversify your investment portfolio to drastically reduce the probability of total loss. Where appropriate, use insurance for additional protection from loss.
5. Make of thy dwelling a profitable investment: A home is easily one of the bigger investments of the average investor/homeowner. Before you commit to buying a home, do your homework well and ensure you take care of your investment afterward.
6. Ensure a future income: Let the power of compounding interest work for you. Start planning for retirement early. Maximize your RRSP.
7. Increase thy ability to earn: Invest in your self! Increase your knowledge and sphere of influence. Expand your horizons. I believe that the greatest investment you can ever make is an investment in yourself. When you have something worthwhile to give to others, wealth will seek you out.