The Richest Man in Babylon (1926) by George Clason is one of the best personal finance books on the market, easy to read, and just over one-hundred pages. I got my copy on Amazon for $7. This fictional book is set in the ancient city of Babylon where Bansir, a chariot builder, is discouraged by his lack of wealth. He goes to Arkad, the richest man in Babylon, for wisdom. Here are five insights I gained from this book:
Pay yourself first: Paying yourself the first 10% of your income is the most important principle when it comes to creating wealth. My line of thought growing up was: "Pay my expenses, then save the rest." The problem was that I didn't have anything left to save. So now I pay myself first, and then pay my expenses.
Put your money to work: One must treat every dollar he saves like an employee that works for him by investing, and he will be well on his way to wealth-building.
Invest wisely: When he was young, Arkad invested his money with a shield maker who promised to purchase precious gems. However, the shield maker knew nothing about gems, so he ended up purchasing worthless counterfeits. Arkad learned that when it comes to putting one's savings to work, he ought to invest it with those who are knowledgeable.
Guard your money from loss: "The first sound principle of investment is security for thy principal" (Clason, 39). Arkad's advice is to place one's money in an investment where one's principal (the initial investment) is safe from loss. Warren Buffett agrees. His number one rule for investing is, "Never lose money." And the good news is that there are accounts and products out there where that is possible!
Plan for your financial future: It is essential to begin saving for retirement and planning for one's death as early as possible, as the earlier one begins, the more time his money will have to grow.
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