The Richest Man in Babylon by George Clason
Once upon a time, in Babylon, there was a man called Arkad. This man was the richest in the land, and when two of his childhood friends approached him and asked him the secret to wealth – as they too were hardworking individuals, only they could barely feed their families – Arkad let them know that a rich man had given him the secret years ago in exchange for his services as a scribe.
The secret was: “A part of all you earn is yours to keep”. The principle is simple: as long as you save and invest a portion of the money you earn; you will be safe and sound.
In order to begin saving money, you must cut back on the costs of your “wants”. This can be done through the creation of an effective budget, something I have covered in one of my previous articles so make sure to check it out:
Besides saving money, you must invest wisely. This means, you should not put your money into high-risk investments, you should be wise about it. The author, George Clason, says you should not give your money to a lumberjack because he says he is going to setup a business buying and selling diamonds. On the other hand, hiring an experienced CFA to manage your finances could prove to be helpful.
Sometimes, having someone helping you manage your wealth is the best and smartest thing you can do. By humbling yourself, and admitting to the little knowledge you have, you can improve yourself and gather more knowledge. Most adults do not know how to work out even the simplest financial formulas, how to structure budgets, and what laws and regulations are in place that can protect them or doom them based on what they are currently doing.
As such, it is important to acknowledge that you know little, and try to learn more. That can be done by subscribing to F.S. Finance! We cover a lot of topics weekly so make sure you check us out!
It is important to remember that wealth is a long journey. You can never get rich quick, unless you win the lottery. It is a laborious task, one that has lots of steps and major setbacks. However, if you stick to it, keep working hard, and never give up, it is possible to attain wealth.
Clason claims that attaining wealth is the process by which you make money work for you; rather than making money, in where you work for the money.
The Richest Man in Babylon
Countless readers have been helped by the famous "Babylonian parables," hailed as the greatest of all inspirational works on the subject of thrift, financial planning, and personal wealth. In language as simple as that found in the Bible, these fascinating and informative stories set you on a sure path to prosperity and its accompanying joys. Acclaimed as a modern-day classic, this celebrated bestseller offers an understanding of--and a solution to--your personal financial problems that will guide you through a lifetime.
This is the business book that holds the secrets to keeping your money--and making more. May they prove for you, as they have proven for millions of others, a sure key to gratifying financial progress.
The key distinction as well is that wealth is concerned with long-term objectives, a strategy. It involves investing your money through the purchase of securities, real estate, or alternative investments. On the other hand, making money is focused on the short-term objectives, such as the things you can buy with your next paycheck – branded clothes, maybe a new car?
By being continuously focused on the long-term, consistently reinvesting, you can make exponential gains through compound interest – and this is the true power of attaining wealth.
The author makes a fun distinction between luck and chance, stating that luck is earned through hard-work, and chance is simply what most people consider to be luck, such as winning the lottery or being struck by lightning.
A stroke of luck can be achieved through hard work. This means being on the constant look out for new opportunities to build and increase your economic capital. Vigilance and research can pay off by allowing you to spot events and trends that can lead you to make millions.
Nonetheless, this means being able to take a leap of faith and not procrastinate. If you procrastinate and do not take any risks, then you will not be successful. Even if you spot and an event or a trend that could generate huge returns, if afterwards you decide not to act on it you will miss that opportunity. “If only I had…”
Trial and error in this situation can truly pay off, and this is something the author also claims. It is, really, just a matter of trial and error until you get lucky one time and become rich.
The final piece of advice from the book is how to avoid financial ruin. If you take on bad debt, which I covered in another week; and you do not control your expenses rationally, then you are on the right path to dooming yourself financially.
As such, the real conclusion of this book is that in order to become the Richest Man in Babylon, or wherever it is you live, you must live below your means, and invest your money wisely to make it work for you and generate returns. Keep an eye out for opportunities, and seize the gold when it arises!