The 7 Most Important Money Lessons. The Richest Man in Babylon.
by Lindsay McGrail
The Riches of Babylon Were the Results of the Wisdom of Its People.
“We must teach all the people how to acquire riches.” King of Babylon
The Richest Man in Babylon is a 1926 book by George S. Clason that dispenses financial advice through a collection of parables set 4,000 years ago in ancient Babylon. The book remains in print almost a century after the parables were originally published and is regarded as a classic of personal financial advice.
This lovely book lays out the basics of personal finance — spend less than you earn, save 10% of your income, and invest wisely.
Here is a summary of the main lessons from The Richest Man in Babylon:
Pay Yourself First
Live Within Your Means
Put Your Money to Work
Keep Your Money Safe
Be a Homeowner
Insure Your Future Income
Improve Your Skills to Earn More Income
“Which desirest thou the most? Is it the gratification of thy desires of each day, a jewel, a bit of finery, better raiment, more food; things quickly gone and forgotten? Or is it substantial belongings, gold, lands, herds, merchandise, income-bringing investments? The coins thou takest from thy purse
bring the first. The coins thou leavest within it will bring the latter.”
1. Pay Yourself First. A part of all you earn is yours to keep.
This is simply, the most profound fundamental necessity of how to become wealthy — to save a certain percentage of your income before you budget for your monthly expenses. Instead of savingwhat is leftover, you are spending what is leftover.
2. Live Within Your Means. Control thy expenditures.
“Study thoughtfully thy accustomed habits of living. Herein may be most often found certain accepted expenses that may wisely be reduced or eliminated. Let thy motto be one hundred percent of appreciated value demanded for each coin spent.”
Now that you have mastered your spending and are consistently saving money every month, the next exciting step is to put your savings to work earning their keep.
3. Put Your Money to Work. The earnings it will make shall build your fortunes.
“I tell you, my students, a man’s wealth is not in the coins he carries in his purse; it is the income he buildeth, the golden stream that continually floweth into his purse and keepeth it always bulging. That is what every man desireth. That is what thou, each one of thee desireth; an income that
continueth to come whether thou work or travel.”
Instead of spending your money on things that lose value like cars, electronics, designer clothing, invest your money in things that will earn you money like stocks, real estate, and businesses.
Real Estate Investing vs. Stocks and Bonds
When comparing real estate to other forms of investment, some really smart researchers at Harvard put out a study called The Rate of Return on Everything 1870–2015. In it, they compared the return of stocks, bonds, and real estate across multiple countries and time periods.
4. Keep Your Money Safe. Ensure a future income.
“The man who, because of his understanding of the laws of wealth, acquireth a growing surplus, should give thought to those future days. He should plan certain investments or provision that may endure safely for many years, yet will be available when the time arrives which he has so wisely anticipated.”
5. Be a Homeowner. Thus come many blessings to the man who owneth his own house.
Thus come many blessings to the man who owneth his own house. And
greatly will it reduce his cost of living, making available more of his earnings for pleasures and the gratification of his desires.
This next paragraph is such a beautiful demonstration of homeownership. As a Realtor®, it is an immense honor and privilege to be part of this journey with my clients.
“To a man’s heart it brings gladness to eat the figs from his own trees and the grapes of his own vines. To own his own domicile and to have it a place he is proud to care for, putteth confidence in his heart and greater effort behind all his endeavors. Therefore, do I recommend that every man own the roof that sheltereth him and his.”
Marina del Rey harbor view.
6. Insure Your Future Income. Be prepared for the unexpected.
“A man may buy houses or lands for this purpose. If wisely chosen as to their usefulness and value in the future, they are permanent in their value and their earnings or their sale will provide well for his purpose.”
This lesson can be summarized as this: be prepared for the unexpected. You may be making a good income now, and even saving for the future. But if you were to get sick and could no longer work, how would you care for yourself and your family?
7. Improve Your Skills to Earn More Income. The most vital step.
“The more of wisdom we know, the more we may earn. That man who seeks to learn more of his craft shall be richly rewarded.”
In the personal finance equation, there are two ways to come out ahead — spend less or earn more. If you don’t learn the basics of how to control your spending, live within your means, and invest wisely, then earning more income will do you no good. You will just adjust your desires to match your new, higher income and still be stuck in the paycheck-to-paycheck cycle.
“Thus the seventh and last remedy for a lean purse is to cultivate thy own powers, to study and become wiser, to become more skillful, to so act as to respect thyself. Thereby shalt thou acquire confidence in thy self to achieve thy carefully considered desires.”
Good Luck Favors Those Who Take Action.
Whatever stage of homeownership you are in, new adventures and new memories wait to be made in a new home that better fits the stage of life you are in or are coming into. I am here to help you or your loved ones through the process.
Coldwell Banker Realty is worldwide, and I am happy to connect you with an agent in your area.
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