Told from the perspective of an ancient Babylonian man, George S. Clason’s 1926 classic teaches us the essential basics of how to build and sustain wealth. There are three key takeaways from this book that are absolutely vital to understanding personal finance and they are as follows;
#1 – Pay Yourself First
This goes against our basic instincts because as human beings we are evolutionarily hard-wired to survive. But by neglecting to pay oneself you sacrifice long-term prosperity over short-term gains. To be more precise Clawson teaches that you must set aside at least 10% of what you earn before you pay anybody else.
#2 – Put Your Money To Work
Put that 10% to work right away. Saving has long been heralded as the secret to wealth building and whilst that’s true, that’s only partially correct. The other part is that those savings have to be put to work by way of sound and fruitful investment. Even after investing your 10%, there is yet more to be done in order to truly build sustainable and long-lasting wealth.
#3 – Compound The Interest
The third key takeaway from Clason’s classic is that you must allow that invested 10% to earn interest. The important to do is to then take that interest and reinvest it and so and so forth. Through a little simple process called compound interest, you can grow your investment exponentially over time.
There is, of course, more to be gained from The Richest Man In Babylon but if you were to simply grasp the above three rules and practice them then you’ll be well on your way to starting your saving and investment journey.
Please note that I am not a financial advisor, and the above article is not intended as applicable ‘financial advice.’ Please consult a fully qualified financial advisor before making any financial decision.