Develop Financial Literacy
The Richest Man In Babylon, George S. Clason
“Learning was of two kinds: the one being the things we learned and knew, and the other being the training that taught us how to find out what we did not know?” ~ George S. Clason, The Richest Man In Babylon
Babylon was a city near the Euphrates River in the state of Babylonia in ancient Mesopotamia. Located in what is now known as Iraq, Babylon grew to become a gem of a town rich in trade, commerce, architecture, had many learned and skilled tradespeople and rich soil.
According to Clason, “Babylon became the wealthiest city in the ancient world because its citizens were the richest people of their time. They appreciated the value of money. They practiced sound financial principles in acquiring money, keeping money, and making their money earn more money. They provided themselves what we all desire, incomes for the future.”
In Clason’s story, two friends, Bansir (a chariot builder), and Kobbi (a musician), are chatting about how skilled workers live in the wealthiest city in the known world but have little to no money to their name. They wonder how they have found themselves in this predicament and seek out the guidance of Arkad, someone they have known of throughout their lives, which is no more skilled than them, yet has become the wealthiest man in Babylon.
Below is some of what they learned.
1. Start Thy Purse To Fattening: You should save at least 10% of your earned income. “For every ten coins, thou places within thy purse take out the use for but nine.”
2. Control Thy Expenditures: Avoid and eliminate unnecessary expenditures. “What each of us calls our ‘necessary expenses’ will always grow to equal our incomes unless we protest the contrary.”
3. Make They Gold Multiply: Invest and compound the returns. “Learn to make your treasure work for you. Make it your slave. Make its children and its children’s children work for you.”
4. Guard Thy Treasures From Loss: Be cautious of get-rich schemes and risky investments. “Study carefully, before parting with thy treasure, each assurance that it may be safely reclaimed. Be not misled by thine own romantic desires to make wealth rapidly.”
5. Make Thy Dwelling a Profitable Investment: Buy your principal residence rather than rent it. “I recommend that every man own the roof that shelters him.”
6. Ensure a Future Investment: Have a pension/future retirement income. “Therefore do I say that it behooves a man to make preparations for a suitable income in the days to come when he is no longer young.”
7. Increase Thy Ability To Earn: Develop your skills to increase your investing wisdom and increase your earning power. “The more wisdom we know, the more we may earn.”
Practical application:
Do you believe you can apply The Seven Cures For A Lean Purse and The Five Laws of Gold?
The Richest Man In Babylon is such an excellent book, and I highly recommend that you check it out for yourself if you haven’t already done so.