Lately, I have started to pay much attention and time to my personal development in terms of financial education. Thinking about my school years, I realized that I had never had such an education, and therefore I had no idea how wealth is built. Therefore I started reading a lot of financial education books to understand what I have to do to build myself a considerable personal fortune.
One of the first and best books I've read on this theme was the "The richest man in Babylon". The book was written in 1926 by George Samuel Clason and is a series of parables set in ancient Babylon. The book is easy to read even if it uses archaic language and manages to capture your attention very easily from the first chapters. Without losing my speech, here are the 7 lessons on getting rich from the "The richest man in Babylon":
Pay yourself first (“Start thy purse to fattening”)
The idea here is to set aside 10% of your earnings as soon as the money come into your possession. The author explains very well that you can live just as easily with 90% of the money you earned instead of 100%. The remaining 10% will be used to build personal wealth.
"Now I will tell a strange truth, the reason for which I know not. When I ceased to pay out more than nine-tenths of my earnings, I managed to get along just as well. I was not shorter than before. Also, ere long, did coins come to me more easily than before. Surely it is a law of the Gods that unto him who keepeth and spendeth not a certain part of all his earnings, shall gold come more easily."
Live below your means (“Control thy expenditures”)
This is one of my favorite piece of advice. The richest man in Babylon explains that no matter how much money you make you will always increase your expenditures to equal your income:
“It is this; That what each of us calls our 'necessary expenses' will always grow to equal our incomes unless we protest to the contrary.”
"Confuse not the necessary expenses with thy desires. Each of you, together with your good families, have more desires than your earnings can gratify.”
I think these statements, even if they were written in 1926, are as real as they are today. We all have the desires, we all want new and expensive things and we buy them even when we do not afford them.
Make the money work for you (“Make thy gold multiply”)
The easiest way to make money work for you is definitely investing it. When you have managed to raise enough money to survive a good period of time without having any income streams, then you are ready to invest the money you saved.
” …put each coin to work so that it may reproduce its kind even as the flocks of the field and help bring to you more income, a stream of wealth that will flow constantly into your purse.”
From my personal experience, I advise you: Never invest in something you do not fully understand. Otherwise, you risk losing your money and you will have to go back to saving.
Protect you wealth (“Guard they treasures from loss”)
"The first sound principle of investment is security for thy principal. Is it wise to be intrigued by larger earnings when thy principal may be lost? I say not. The penalty of risk is probable loss. 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.”
The idea here is to be very well informed about the risks that you assume when you make an investment. The author also advises us to consult with people who have extensive experience in the field to be sure that we do not throw money out of the window.
Your home is your biggest expense(“Make of they dwelling a profitable investment”)
Most people want to buy a big house and live happily ever after. The problem is that in order to buy their dream home, most of us take huge mortgages that they can not pay anymore, or worse, homes are losing an important part of their value during financial crises. I think the lesson we need to learn here is live below your means or buy or rent a house that you can afford.
Have a retirement plan (“Insure a future income”)
"But because we live in our own day and not in the days which are to come, must we take advantage of those means and ways of accomplishing our purposes. Therefore do I recommend to all men, that they, by wise and well thought out methods, do provide against a lean purse in their mature years. For a lean purse to a man no longer able to earn or to a family without its head is a sore tragedy."
The lesson here is have a retirement plan. Start saving and invest money in time for old age. Only this way you can lead a life without problems and enjoy it.
Invest in yourself (“Increase thy ability to earn”)
This is my favorite piece of advice in this book. If you want to grow rich and powerful you should first study and invest in yourself. You can do this by reading, learning, and always trying to develop yourself. We live in the technology age, and information has never been so accessible. I believe we are the only ones responsible for our material well-being and only we can take steps to reach our financial goals.
“Those eager to grasp opportunities for their betterment, do attract the interest of the goddess of fortune. She is ever anxious to help those who please her. And who is she pleased with? She is pleased with those who do – rather than those who merely talk and engage in wishful thinking. Action will lead you forth to the successes you desire.”
I really recommend this book to anyone who wants to take the matter of their personal financial education into their own hands. You really should want this. If you have any questions please leave them in comments. If you liked this post please upvote and tell me in comments so I can create more of these. You can always find me on steemit chat too (