How can a book published in 1926 have any meaningful financial advice? Right, I know that’s what you’re thinking! Well, let me tell you, The Richest Man in Babylon really does have some timeless advice that you might find useful. Told in parable form, this short and enjoyable book offers financial lessons and wisdom in an interesting and clearly conveyed manner.
The book begins with Arkad, the richest man in Babylon, sharing his secret to obtaining wealth. As Arkad says, “I found the road to wealth when I decided that a part of all I earned was mine to keep.”1 Simple as that statement may be, its message is very valuable. Arkad also reveals many other useful tips. Here are four of my favorites:
- “Start thy purse to fattening.” As we discussed in our last blog, pay yourself first! Think of saving for retirement as any other vital expense, like rent or a mortgage. In big-picture terms, it will likely be one of the most important and largest expense items of your lifetime.
- “Control thy expenditures.” Live within your means. This simple, sage piece of advice is a standard key to financial success, but is also something lots of people have trouble doing. Start by paying your non-discretionary expenses first. These expenses include the absolute necessities like your mortgage and car payment. Then, keep a firm hold on your discretionary spending, which are the “nice-to have” items. Save any leftover income.
- “Make thy gold multiply.” Once you’ve built a nest egg, put that money to work! Create an investment program that’s right for you and get your savings working for you.
- “Guard thy treasures from loss.” Every one is tempted by that fancy product or quick road to wealth. But in reality, slow and steady wins the race. Consult with professionals to build an investment program that is suited to your risk tolerance and aimed to reach your financial goals. Protect your nest egg.2
I recommend you check out The Richest Man in Babylon for yourself. It provides quite a bit more information than what we’ve shared here that you might find beneficial. This may even be a good book to get the young investors in your life thinking about their own financial futures.