Here is a fine book on personal financial planning! it is called the “Richest Man of Babylon” and was suggested to me by the owner of a cute book shop named twistntales - based in Aundh, Pune.
Here is a book review of the same -hopefully it will inspire you to buy the same, and some of you will be inspired to live it!
Many people think “simple” means easy to do. This is wrong. Completely and totally wrong. Look at an example like getting up in the morning and going for a walk every day.
Though it sounds simple, many of us find the “everyday” really difficult, is it not?
Similarly those who know that “I should save 10% of my salary, but do not” are in that category. If you wish to learn about simple things in personal finance, one book you cannot afford to miss is “The Richest Man in Babylon” by George S Calson.
This book is a guide to financial understanding. It offers insights into how to get money, keep money and make your surpluses work for you. The book takes us to Babylon, the place where the basic principles of finance were established. Babylon became the wealthiest city of the ancient world because its citizens were the richest people of their time. They appreciated the value of money. They practiced sound financial principles in acquiring money, keeping money and making their money work harder.
Historically Babylon is a rich place famous for its treasures of gold and jewels. One naturally pictures such a wealthy city as located in a suitable setting of tropical luxury surrounded by rich natural resources of forests and mines. Such was not the case. It was located beside the Euphrates River, in a flat, arid valley. Babylon is an outstanding example of man’s ability to achieve great objectives, using whatever available means at his disposal. All of the resources supporting this large city were man-developed. All of its riches were man-made.
Seven Cures for a Lean Purse:
The book starts as “Lo, money is plentiful for those who understand the simple rules of its acquisition.
1. Start thy purse to fattening
2. Control thy expenditures
3. Make thy gold multiply
4. Guard thy treasures from loss
5. Make of thy dwelling a profitable investment
6. Insure a future income
7. Increase thy ability to earn
The essence of the book is in the first chapter. Kobbi and Bansir two poor people go to meet Arkad. Arkad is a friend of both Kobbi and Bansir – but very rich. It is nice to see George start the book with both these poor men going to Arkad to learn about finance rather than ask him for a loan or a gift. This is akin to Rich Dad Poor Dad – where Robert Kiyosaki starts by saying that it is not about earning money, but about learning money management. Once you learn money management you know how to earn, spend and invest.
Richest Man In Babylon” is a book that was first published way back in 1926. Since then it has sold more than two million copies and has become a financial cult classic. The brevity and simplicity of the book can be deceiving as it is a powerful little book with a powerful message that can change lives. It is only 144 pages but a dynamite of a book and a very well read book. It is arguably the first book on financial planning – for people who bother to read and implement the book.
Richest Man In Babylon Book Quotes
- “Gold cometh gladly and in increasing quantities to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.”
- “Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.”
- “Gold clingeth to the protection of the cautious owner who invest it under the advice of men wise in its handling.”
When you read these quotes you realize that what some of the newer money managers are true. It becomes very difficult for a retail investor to know how to invest – it is easier for him to invest through a mutual fund.
- “Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.”
Does not Warren Buffet say “ Risk is when you do not know what you are doing”? Do we not see incompetent “advisors” ruin their client’s portfolios?
- “Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.”
Momentum investing, Investing in fads, day trading, are all ways for a man to lose money. Only the terminology changes but the world is full of tricksters and schemers, so this advise is also timeless.
Countless readers have been helped by this timeless parables of Babylon. The fact that it has sold 2 million copies (and counting) and the fabulous presentation style in a nice manner has ensured its popularity. We in India are of course going the American way in the way we spend. However, reading this greatest of all inspirational works on the subject of thrift, financial planning and personal wealth will surely inspire you to learn about financial planning (chapter 1), budget for your expenses, guard against lending to friends and relatives, own your home, invest in a pension plan, take term life insurance, keep increasing your ability to earn, create a cash flow independent of your job, and using all these techniques become seriously rich and not live from one EMI to the next.