Books on financial independence provide an alternative outlook on traditional forms of investing, saving, and managing money, and there are few better books than ‘The Richest Man in Babylon.’
The book is written by George S. Clason and is considered a timeless classic in the genre. The book follows a wealthy Babylonian, Arkad, who shares his wisdom with his fellow people. Richest Man in Babylon lessons teaches us about various personal finance tips.
Understanding these tips is crucial to get your finances in order. But if you lack time to read the book, which we highly recommend, we’ve compiled the main talking points in a Richest Man in Babylon Lessons series.
So if you’re eager to learn more about these personal finance lessons, stick around until the end. With all that said, let’s start.
4 Richest Man in Babylon Lessons Everyone Should Know
The book explains these tips through a series of parables and anecdotes. Arkad is a wealthy and famous Babylonian that wants to share his knowledge with the rest of his people. Despite the book setting place in Ancient Babylon 4,000 years ago, George Clason outlines the importance of personal finance regardless of age.
Richest Man in Babylon lessons applies to all personal finance forms, including saving, investing, and managing money wisely. So, let’s see these lessons and why they’re crucial for personal finance.
Always Save a Portion of Your Income
The first and most important Richest Man in Babylon Lesson is the importance of saving a portion of your income. Arkad tells his fellow Babylonians to save at least 10% of their income. Why? Well, because he calls this “the first law of gold.”
The first law of gold is crucial for understanding personal finance. In order for other Babylonians to reach the wealth and status of Arkad, they must put aside a portion of their income and build a financial cushion for emergencies. The first law of gold is also crucial for investing in potential opportunities that could, in turn, generate additional income and help Babylonians achieve financial independence.
While Arkad puts the barrier at 10%, it’s important to mention that this can be any percentage we want so long as we put money on the side.
Learning to Invest Wisely
Financial literacy is a crucial skill everyone must possess. And George S. Clason made Arkad in the image of a financially literate person. Therefore, the second Richest Man in Babylon lesson partly deals with financial literacy and investing.
These two are inherently tied together, as people who don’t invest smartly and don’t follow the basics of financial literacy often don’t see a return on their investment.
It’s all good investing in the next best thing, but what if you’re wrong about it? Naturally, you can be one step closer to ensuring your investment sees returns by doing your due diligence.
In the book, Arkad tells his fellow Babylonians to seek out investment opportunities whenever possible. But he emphasizes doing it wisely and not for the sake of making money.
He also emphasizes the golden rule of investing: to diversify your investments to minimize risk.
Learning to Manage Your Money
A particularly underrated personal finance skill is money management. We would be one step closer to bankruptcy without proper money management. Therefore, the third Richest Man in Babylon lesson is to learn how to manage your money.
Arkad explains to his fellow Babylonians to be mindful of their expenses, live within one’s means, and avoid debt. Furthermore, Arkad places particular importance on the last of these three. Namely, he advises his fellow Babylonians to pay off their debts as quickly as possible to free up their income for potential investments and savings.
These personal finance lessons apply to the modern world. Debt isn’t anything new, and most people live with some debt. So we must prioritize paying off debt, as doing that frees up money and improves your credit score.
Hard Work Prevails
Arkad is the richest man in Babylon because he gained wealth through hard work and perseverance. So the final Richest Man in Babylon lesson has to do with Arkad’s core character traits.
Arkad stresses to his fellow Babylonians the importance of hard work and perseverance. He advises his fellow Babylonians to be proactive instead of reactive when it comes to seeking out opportunities for financial gain. In addition, they must never give up when faced with setbacks or challenges. Instead, they must work around them and overcome them.
The Richest Man in Babylon is a timeless classic that everyone must read. The book offers valuable lessons on wealth and financial success and how to acquire and manage it.
Arkad’s teachings on saving, investing, and wisely managing money are as relevant today as they were in ancient Babylon.
Therefore, we can conclude that Richest Man in Babylon is a book on personal finance and wealth that everyone who aims to achieve financial independence must read at least once.