What can possibly be learned about modern finance from a book first published in 1926, you ask? What is so worthwhile about The Richest Man in Babylon that causes it to still be in print today? This week, we’ll look closer at this personal finance classic to see what hidden gems are within.
During the past two days, I covered my favorite two tales from this book, Seven Cures For A Lean Purse and The Five Laws of Gold. The remainder of the book is loaded with similar tales, teaching basic principles of personal finance using stories from Old Babylon. Here are some of the other teachings found in the book:
A Part Of All You Earn Is Yours To Keep This is a hard lesson for many of us to learn, as most of us are ardent consumerists who are trained to spend from earliest childhood. The truth is that we need to learn to always pay ourselves before we pay our debtors – once we do that, we’ll be on the road to financial success.
Men Of Action Are Favored By The Goddess Of Good Luck I found this principle to be quite interesting, but also quite accurate. At first, you might take it to think that people who gamble sometimes end up big winners, but that’s not what this is all about. What the rule is saying is that people who succeed are the ones that do something. Even the most conservative of investments will pay better than cash stuffed in a mattress for a rainy day. If you do something, something will happen.
Better A Little Caution Than A Great Regret On the other hand, if you push too hard, you can get burnt. Highly speculative investments can turn around and bite you hard, leaving you as if you had never invested at all. Respect your principal and it will respect you by earning well; toss it to the wolves and you may get nothing back.
We Cannot Afford To Be Without Adequate Protection Retirement savings and insurance are both vital to ensuring that major accidents don’t derail everything that we do. If you don’t have these tools, a disaster can befall you, leaving you completely helpless.
Where The Determination Is, The Way Can Be Found Don’t give up on investing just because the road is bumpy. If you keep at it, eventually you will find a path to success. This is true no matter what you’re doing – persistence pays off time and time again.
Tomorrow, I’ll give a “buy or don’t buy” recommendation for The Richest Man in Babylon.
The Richest Man in Babylon is the seventh of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.