Recently I got an email from one of our readers appreciating our articles on investing. However, he also mentioned that despite being convinced so much about the merits of investing, he was facing a bigger problem – a problem of not being able to set aside money for investing on a regular basis.
I am sure many of us out there would be experiencing the same issue. The Richest Man in Babylon, a book written by George Samuel Clason in the year 1926 offers few valuable pieces of advice for all those facing this problem.
The book dispenses priceless financial advice through a collection of parables set in the ancient city of Babylon is centred around Bansir, a chariot builder, Kobbi, a musician and their friend Arkad, the richest man in Babylon. While Bansir and Kobbi were experts in their respective fields, they were poor whereas Arkad had amassed a huge fortune.
Seven valuable wealth creation insights, relevant even in today’s world:
# Lesson 1 – Start thy purse to fattening
Most people make the mistake of saving what is left after spending, whereas it should be the other way around. To create wealth, one should save a portion of the income first and then spend the rest for expenses or other needs.
It is important to save at least 10% or more of your income on a regular basis.
# Lesson 2 – Control thy expenditures
Never spend more than what you earn and never consider luxuries as necessities. Many middle-class people in an attempt to imitate the wealthy often end up buying things they don’t really need with the money they don’t really have by taking up loans and end up in a debt-trap.
# Lesson 3 – Make thy gold multiply
Arkad advises his friends, Bansir and Kobbi that to create wealth, one should learn to make their treasures to work for them by making it their slave. In simple words, what it means is that one should put their money at work by investing it in creating more wealth.
In today\’s world, it is equally important to invest in instruments which can multiply your wealth by harnessing the power of compounding.
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# Lesson 4 – Guard thy treasures from loss
Never invest in any investments which claim to make you rich quickly and, in the process, endanger even your capital. Do your homework about the pros and cons of every investment before investing by taking your risk appetite into consideration. Always maintain a fund for emergencies.
# Lesson 5 – Make of thy dwelling a profitable investment
It is better to own your house, rather than living in a rented house. When you are living in a rented house, the monthly rent that you pay makes the landlord rich, whereas when you own your house, you own an asset.
# Lesson 6 – Ensure a future income
Always think about your future and plan well in advance for it. Surprisingly, most people plan well for their vacations but fail to plan for retirement or unforeseen contingencies.
Everyone has to retire at one point or other in life, and it is very important that the flow of money does not stop with your retirement. Hence it is very important to ensure a future income which will take care of your needs even after you retire.
# Lesson 7 – Increase thy ability to earn
It is very important to invest in self-development. A person who constantly keeps upgrading his skills will be more employable and hence will always be in demand.
Though almost a century old, these seven valuable insights for wealth building mentioned in The Richest Man in Babylon are still applicable today. By adopting them in one\’s day to day life, anyone become wealthy with time.