Introduction
The Richest Man in Babylon is a book on financial literacy written by George S. Clason in 1926. Published by Penguin Books, the book has a total of 191 pages. The edition used for this review is the 1988 edition.
About the book
Arkad, a Babylonian, told the parables in the book. His advice is contained in the five laws of gold and the seven cures for a lean purse. The way the book is written makes one think as though he or she is reading the Bible; it has this ancient and biblical feel. The book is packed with words of wisdom on financial planning and maintenance, as well as ways to acquire wealth and sustain same.
Most of the books on financial literacy I have read hold similar lessons, and those in this book are not so different. Clason presents his principles for making money as follows:
Start your purse to fattening: Clason says, pay yourself first! Make sure to set aside 10% of your income for saving and investing.
Control your expenditures: Don’t live above your means, avoid getting into unnecessary debts. Buy only things that are absolutely important and you can afford.
Make your gold multiply: Invest your money and earn returns on your investments. But first, set emergency funds aside.
Guard your treasures against loss: Diversify your investment to reduce the risk of losing your money. Also, use insurance to cushion the effect of any loss that may arise in the future.
Make of your dwelling a profitable investment: A home can be a big investment for its owner. Be sure you can take care of this investment before buying one.
Insure a future income: Leverage on the power of compounding interest and make plans early for retirement.
Increase your ability to earn: Invest in yourself! Keep acquiring knowledge; the greatest investment you can make is an investment in yourself. If you have value to give, you will make money.
Making the mind connection
One of the principles for acquiring wealth is the need to invest in knowledge. This is a recurring principle with many financial literacy books and that makes me think this is about the only way. Acquiring knowledge is basic and important in almost everything we do.
One can save so much, invest and put in all the hard work at a venture; if he or she lacks knowledge of the workings of the venture, success is not sure.
Opinion
Like many others, Clason’s principles, especially about having different streams of income and acquiring knowledge will stand the test of time. However, the author’s style of writing with words and phrases used can slow down the assimilation rate as I had to stop many times to think about the ideas conveyed.
Regardless of the writing style, one will still be able to understand the messages contained in the story. You may have to read some sentences twice to get the ideas, especially from the parables.
Action points
Since almost all the teachers of financial literacy are in tandem with their principles, it is therefore important to:
- Save more; make sure to save 10% of your earnings. This will help you invest.
- Invest more time and money in acquiring knowledge, your knowledge will earn you money.
- Seek knowledge about a business idea before getting into it.
- Consider investing no matter how small; learn about investment options and choose the most appropriate for you.
- Learn about insurance and secure your future.
Is this a book you have read or would like to read? How useful do you think books on financial literacy are? Share your thoughts with us in the comment section. Feel free to share this post with your friends using the buttons below.
