The Richest Man in Babylon is wonderful personal finance book with very important lessons for anyone who wants to build wealth. I have culled the 9 big ideas from the book so that you can benefit from its wisdom.
1. Money is the medium by which earthly success is measured. Money makes possible the enjoyment of the best the earth affords. Money is plentiful for those who understand the simple laws that govern its acquisition. Money is governed today by the same laws that governed it six thousand years ago, when Babylon was a rich and prosperous city.
2. A part of all you earn is yours to keep. It should be at least 10% of your earnings and can be more if that is possible.
3. Control your expenditures. Differentiate between needs and desires. Spend for necessities, enjoyments and worthwhile desires but make sure you save at least 10% of your income. Use 70% of your earnings for home loan/rental, clothes, food and entertainment. Use 20% of your earnings for any other debt you may have.
4. Invest your savings. Make investments carefully so that your principal is safe, you get a rental. Seek wise advice before investing.Do not invest it in businesses or purposes with which you are not familiar or which are not approved by those people who are skilled in investing and growing money. Do not run after impossible earnings in investment.Do not follow the alluring advice of tricksters and schemers.Do not trust your own inexperience and romantic desires in investment.
5. Own your own home. Pay for it from your earnings and not from the 1/10 you are going to save.
6. Man has an inherent need and desire for protection. We cannot afford to be without adequate protection. Behind the impregnable walls of insurance, savings accounts and dependable investments we can guard ourselves against the unexpected tragedies that may enter our lives.Provide for your old age and your family when they are young-stocks, bonds, real estate, saving accounts, insurance, pension plans, etc.
7. Increase your ability to earn. For this you must have desire. Your desire should be strong and definite.
8. Respect yourself by paying your debts promptly, taking care of your family, making a will and contributing to charitable causes within one’s means.
9. Remember also these things-Opportunities come to all. Some grasp them and achieve their goal. Others hesitate, falter and fall behind. Good luck can be enticed by accepting opportunity. Men of action are favoured by the goddess of good luck.Where the determination is, the way can be found.