The Richest Man in Babylon by George Clason | Book Review

Richest-Man-in-BabylonI loved this book, it’s a must read for anyone who is interested in building wealth and managing their finances well.

Simple lessons in financial wisdom are given through a number of short parables, all set in ancient Babylon – each one a gem for the mission of acquiring wealth.

If you’re in debt or want to build some savings, this book will be one of the wisest investments you can make right now. And even if your financial situation is good, it’s a great reminder of the basics and may even spark an idea or two for how to take things to the next level.

Lastly, it’s perfect for those with a short attention span – not only is it a relatively short read but it’s concise and an enaging read.

You can grab the book here and below are a few of my notes / key take aways:

  • Good luck is often about seizing opportunities quickly when they present themselves – delay or procrastinate and you’ll likely lose out. Of course, never be rash – but sometimes you need to act decisively and take a chance.
  • Everyone should save at least 10% of what they earn. Do whatever it takes to be able to do this, it’s probably the most important habit to develop when it comes to financial success. Even when in debt, it can be a good idea to do this because a) it will establish a lifelong habit, b) it will be motivation to see a pot grow and c) when the debt has been paid off there will be a lump sum to build upon.
  • A good formula for getting out of debt is 10 /20/ 70 – save 10%, use 20% to pay off debts and live on 70%. Obviously if you can get into a situation where it is 10 / 30 / 60 or even 10 / 40 / 50 – even better. But, be careful not to be so aggressive and end up being totally miserable.
  • Making savings work and seeing them multiply is very important. There are many ways to do this. On the risk adverse side – get them into an ISA, bank account at 3% interest or a reasonably risk adverse investment portfolio – it goes without saying always trust your money with someone competent. On the risker side – invest in businesses, lend money at good rates and consider the stock market etc. However you go about it, the climb will be slow if all you do is save and be incredibly risk adverse (I wrote a bit about this here).
  • At times you’ll stray from the key principles of wealth, in fact I have done so in the last few months. As with most things – the difference between 90% and 100% is negligible. If you do stray, don’t beat yourself up, but do notice it and take action to knuckle down and tighten things up.

You can also get a lot of good info from the wikipedia page for the book.

Reading the book was a great reminder for me to work harder at living below my means (I’ve been a bit lax on outgoings lately) and to also think about ways to grow savings at a quicker rate.

Lastly, I’ve said it a ton of times, everyone should be responsible for being proactive in building wealth. Far too many people just move through life with bad financial habits and allow their income to slip through their fingers as the norm and as a result never build any serious savings or wealth.

Now that I think about it, there has to be more that can be done to teach the younger generation this stuff at an early age in order to prepare them for managing their personal finances – it’d make a big difference. Perhaps things have changed since I was a kid, but there was no education on managing personal finances when I was at school.

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