01: The Richest Man in Babylon

The Richest Man in Babylon

George S. Clason

To start the Investing Book Highlights series, I have a classic book that was first published in 1926 called The Richest Man in Babylon. I chose to start with this book because it foretells what can be done to help oneself become financially secure. Storybook like in quality, the reader can learn how having financial wisdom or the lack of it can lead to different outcomes in how one's life turns out.

Richest Man in Babylon via YouTube

TOP TEN JOTS

10. Make of thy dwelling a profitable investment

• Owning a home is perhaps still the American dream. How that becomes a profitable investment is usually in the realm of the real estate experts. For most of us, this dream is a nice way to think that the mortgage payments are a form of monthly investment for our future that'll hopefully appreciate over time. "Own thy home." wrote Clason but in the long run it would be more profitable if you could own two.

9. To attract good luck to oneself, it is necessary to take advantage of opportunities.

• Success from gambling may come to a lucky few but it is impermanent. Looking for profitable transactions through trades and business are a far safer wager. Clason advice is that "Good Luck can be enticed by accepting opportunity."
• When the Goddess of Good Luck presents itself, men of action accept the challenge. "Opportunity waits for no man. Today it is here; soon it is gone. Therefore, delay not!" Clason tells in one of his many stories.

8. Insure a future income

• The present self should look at the future self and reflect if that some things are being done to insure a comfortable life in the future. This is hard to do but it is easy to promise because the present self is usually concentrating on the here and now and often defers the actions that benefit the latter. Clason seems to recognize this and states, "Provide in advance for the needs of thy growing age and the protection of thy family." How one decides to insure a future income is an individual choice but it is something that should be chosen.

7. Work, in the time of my greatest distress, didst prove to be my best friend.

• Clason emphasis on the true key of his successful mentor character in the Richest Man in Babylon was to do enjoyable work. "Many things do I enjoy but nothing takes the place of work." states Sharru, the mentor's grandson, who had been searching for this epiphany throughout his life. Warren Buffet often claims that he enjoys going to work because it is what he likes to do and what he is good at doing.

6. Increase thy ability to earn

• Being aware that self-improvement can be beneficial for oneself is a good first step. Being able to take the next steps require substantially more effort but if the journey is a pleasurable experience then it can make it go by easier. "Cultivate thy own powers, to study and become wiser, to become more skillful, to so act as to respect thyself." says Clason. We've probably heard it before but it's worth repeating, learning is a lifelong experience.

5. Make thy gold multiply

• "Put your savings to work so a stream of wealth can begin and turn to a flood." suggest Clason. Savings are important to have and having an emergency fund is usually a good idea to keep from having to dip into the "stream of wealth". Clason recognizes that money should be used to create more money and in this day and age it should at least be able to increase at par with whatever the inflation rate is otherwise your stream will soon turn into a trickle.

4. Guard thy treasures from loss

• Investing whether it be in stocks, real estate or foreign exchange involves risk. Clason 's warning is that "The penalty of risk is probable loss." Risk cannot usually be avoided but investors should remain prudent in exposing themselves to risk. The "get rich quick scheme" usually involves extreme risk and should raise flags of all colors.
• Fiduciary financial advisers can be helpful for those less inclined to pave the road on their own. "Consult the wisdom of those experienced in handling money for getting profits." states Clason.

3. Control thy expenditures

• "Spend on the necessities but reign in the enjoyment and desires." exclaims Clason. This doesn't mean don't enjoy life but it does mean to put a limit on excessive hedonistic activities. 
• Having a realistic allowance for oneself can be a way to still give life pleasure without putting on to many restrictions. Clason bluntly states, "Stay within a budget." For most of us it would be best to start with a monthly budget and then if so inclined move to a weekly or daily budget.

2. Start thy purse to fattening

• Many stories abound how people decided to cut out their daily "coffee" or "carbonated drink" and ended up with a fair amount saved. The reality is that if one does this to help in achieving a percentage of their savings they would like to reach, it can complement their purse fattening. Clason recommends, "Pay yourself 10% of your income." which is a good first step and for some people who are in a favorable position they might want to contribute a little more each month.

1. Proper preparations is the key to success.

• In investing, one must prepare to spend time in developing sustainable long term goals that help with the vision of an ideal future and enforce present actions. What one does today can build to a financially responsible goal 10, 20 or 30 years later.
• If you play a sport or are developing a skill set then you may already know this tidbit of information. All the years, days and hours spent planning and developing one's ability usually pays off when one is cast in the limelight and is able to produce the desired performance. Having a growth mindset can make one achieve remarkable goals.

What do you think of Clason's ideas? Please comment below. If you have already read it, please let me know which were the most important for you.