The book The Richest Man in Babylon was written by George S. Clason in 1926. George S. Clason shares here great wisdom on going from rags to riches through parables of ancient Babylon. The book is a great read for anyone who wants to lead a successful life.
No matter what your current circumstances are, you have everything with you that can change your life for the better if you fully utilize it.
The book shares practical tips to change your life.
Book Review of The Richest Man of Babylon
Here is my review of the book" The Richest Man in Babylon" along with key points from the book that worth mentioning here.
1. If you take care of your finances and do what is necessary to stay financially independent, you not only help yourself but also contribute to the prosperity of your nation.
2. Practicing personal finance teaches you how to earn more money, how to keep it, and how to avoid losses. You don’t need to work hard to learn these principles because they are simple, though challenging to implement. However, by practicing these principles, you can live a life of abundance, happiness, and prosperity.
3. The laws of making money, keeping it, and earning more from it will never be old. Money is essential for acquiring earthly possessions because it can provide all of the earthly joys.
4. You must have sources of income that keep earning even when you’re sleeping, traveling, or doing anything else. You should always remember the famous quote from Warren Buffet “If you don’t earn money when you sleep, you need to work till you die”.
5. Money is a very powerful thing and it can help you build better facilities for yourself and people you care about. If you have money, you can help others. You can build hospitals. You can do charities. You can help the needy. You can bring smiles to people’s faces. It is a wonderful resource, and you must learn the basic principles to acquire it in abundance.
6. Pay yourself first. The book recommends saving at least one-tenth of what we earn—and if we can save more, that’s even better. Don’t spend more than you earn.
7. Don't take financial advice from everybody. You can't expect good advice from someone who is broke and living paycheck to paycheck. If you want to learn the art of making money then you must follow and learn from people who're honest, rich, and successful not from the people who are cunning or poor. Advice can make or break your financial future, so always get it from the wisest and most proven experts in the field.
8. You can't get rich if the money does not work for you. And to achieve this, you need to invest your earned money on assets and things which appreciate with time. If you fail to invest, you fail to realize the full potential of your money.
9. And once you master the process of making money, keeping it, and using it then you need to follow this rigorously without fail. Don’t delay applying any of the outlined steps.
10. If you are earning, you can save a portion of it. But, if you're not earning anything, you need to start earning as soon as possible. Save at least one-tenth of what you earn; This is the first cure to lean purse.
11. What you save, invest that wisely after thorough research and advice from knowledgeable people. Have a budget and stick to it. Your budget is a great tool to find out where your money is going. Never withdraw from your investments to satisfy your short-term gratifications or unwanted needs which are limitless. This is a simple way to experience an abundance of money in the long run. Never spend more than you earn; Control your expenditures: This is the 2nd cure to lean purse.
12. Invest your savings in appreciating assets. Keeping your money in idle bank accounts is going to depreciate its value to inflation. Don't withdraw from your investments but give them time to multiply. The power of compounding will surprise you in the long run. Let your investment multiply; This is the third cure for a lean purse.
13. Don't invest in risky assets where you can lose your savings. Always do a thorough study and consult wise people before making any investments. You can hire an IFA, read books on investing, and follow the principles of successful investors to make informed decisions about your investments. Protect your investments from loss; This is the fourth cure for a lean purse.
14. Don't rush to buy a house until you have made enough chunk of money. This is the fifth cure for a lean purse
15. Invest for your retirement so that you could have a steady source of income when you're no more able to earn. And this is the sixth cure for a lean purse.
16. Always strive to increase your income by skilling up yourself. Once you have developed demanding skills, you become more valuable to the marketplaces and can earn more. This is the 7th cure to lean purse.
17. If you have thoroughly checked all the details of any asset where you are interested in investing and you're convinced that it will give you good returns then you should invest without wasting time. Take action immediately and don't procrastinate on good things. You can only enjoy the fruits of success if you take action and don't procrastinate when you're confident in your knowledge.
18. Five laws of gold; save one-tenth of what you earn; whatever you save, invest it wisely; always seek expert advice before investing; invest in assets you know well about; avoid investing based on some luring tips or expect the returns which are unrealistic.
19. Don't lend money to people who have no idea of how they will return it. So, enquire thoroughly before lending to anyone and learn how they will return. Ensure they are trustworthy and know how to invest money wisely and get expected returns. If you're unsure about then just don't lend.
20. Avoid the debt trap but if you have gotten into it then you should pay it back at the earliest. You can't live a peaceful life being in debt. So, make a solid plan to repay the debt. Always strive to live a good life. If we try it we can have it. Household debts in India are in increasing trend, as per this report by Statista, in 2024, Indians owe $617 billion in household debts which is 27% up from 2023. We surrender our peace to short term gratifications.
21. There is a very simple plan to pay off debt and live a life of richness and respect: Save one-tenth of all your income; spend no more than seven-tenths of your earnings on essentials like clothes, food, housing, and other necessities; and use two-tenths to repay your debt.
So if you make $1000 a month:
Set aside $100 for yourself (invest it in assets that appreciate with time, like mutual funds, bonds, stocks, real estate).
Use $700 for your monthly expenditures (such as housing, clothing, education, or dining out).
Allocate $200 to pay off your debt.
Isn't this a simple way to get out of debt and live a life of abundance?
So, what do you learn from the summary of The Richest Man in Babylon?
Which learning do you like the most? Will you apply it in your life?
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Thanks, Mickie Bussau for mrmoneyfrugal.com
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