A very common question asked within the personal finance and FI (Financial Independence) communities is this: Which personal finance book is the best to read?
Let me just start out by saying, I love a good personal finance book. I have read quite a few of them. This entire blog exists due to the education I have gained from reading these books. And I have to admit, it’s difficult for me to say which ones I like the most, or place them in order of recommendation.
However, that might have just changed.
Contents and Quick Links
A Review of The Richest Man In Babylon
After one highly praised recommendation too many, I finally purchased a copy of The Richest Man In Babylon, by George S. Clason.
If you’re in need of a quick read (just 72 pages) and you could benefit from a clear overview of the personal finance gems you need to know to reach success, this book is for you.
First off, although the book was originally published as a pamphlet and written with something similar to Shakespearean English, it is perfectly relevant to today. More importantly, the teachings are perfectly relevant to you.
Born in 1874, George S. Clason attended the University of Nebraska and served in the US Army during the Spanish-American War. In 1926 he issued a number of famous pamphlets on thrift and financial success. These were distributed by banks and insurance companies and became well known to millions of Americans. The Richest Man In Babylon was one of them. It has lived on and arguably provides the secrets to personal wealth.
Through the storytelling of the wealthiest city of the ancient world, and more specifically, the richest man in Babylon, we learn what steps you need to take in order to save, manage your spending, invest your savings, and educate yourself such that you can continue to grow your wealth.
These are the key steps necessary for wealth generation. There are no shortcuts. Overspending and over-borrowing will not get you there. But the simplest of things will, regardless of level of income.
Success means accomplishments as the result of our own efforts and abilities.
While reading this book, I was continually reminded of a fine man, husband and father that I had the great pleasure of meeting last year. I was reminded of him because he was the perfect example of the teachings found within The Richest Man in Babylon. I can’t help but wonder if he read this book when he was younger, took to heart the lessons freely given, and simply put each one to use throughout his life.
Sadly, I only knew him briefly, but I have learned from the legacy he left behind. I see a wife that respected and adored him, kids that are now respectful, kind and hard working adults with families of their own, and an estate that protected his family and provides comfortably for the wife he had to leave behind all too early.
Can we really ask for anything more? A home and family full of love and respect. The pride and reassurance that your family is well provided for. The ultimate comfort that hard and honest work will result in a secure and comfortable estate, one that will outlive you and continue providing for your family.
No man can afford not to insure a treasure for his old age and the protection of his family, no matter how prosperous his business and his investments may be.
The lessons are simple. But for all their simplicity, they provide a complete and time proven wisdom with which to achieve your financial goals.
Truth is always simple.
And somewhat humbling that the core foundations of FI & Wine are so simply summarized.
Almost every post I have written can be tied back to a simple truth provided within this book.
The importance of saving for your retirement, tracking your finances, diligently and methodically paying off your debts, budgeting, teaching your kids about finances and even, enjoying your life while you are at it.
Enjoy life while you are here.
Life is good and life is rich with things worthwhile and things to enjoy.
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The wisdom of wealth in five simple steps
A bag heavy with gold or a clay tablet carved with words of wisdom; if thou hadst thy choice, which wouldst thou choose?
Out of so very many quotes that I want to include in this post, I believe this is one of the essentials. While we have thankfully progressed beyond the use of clay tablets, for the simple price of this short book, we are all given the wisdom with which to achieve our financial dreams.
And the value of this wisdom is far greater than a bag heavy with gold. It’s greater in value than whatever amount we currently have in our savings account. Because with the knowledge of how to manage our earnings, we have the power to grow from nothing, or even debt, to financial independence. With the bare bones of a financial education, we can establish our personal version of freedom.
Be it a well provided family, insurance and protection against unforeseen disasters, freedom from a career we are unhappy in, or freedom to do with our day as we please. It starts here in the lessons provided.
The secret of wealth, carved into a clay tablet for anyone wise enough to abide them, five Laws of Gold.
And no, I’m not going to lay them out for you. The stories and examples told within the pages of this book are well worth the read. They help to visualize the implementation of the steps we must take.
However, I will give an overview of the fundamentals.
Pay Yourself First
A part of all you earn is yours to keep.
Let it be not less than one-tenth and lay it by.
Make it your slave. Make its children and its children’s children work for you.
That’s it. It all boils down to this one simple thing. Save a minimum of 10% of your income. Start as young as possible, but regardless of what age you are when you finally see the light and the importance of building wealth, start now.
Next, invest your savings. Make that money work for you.
If saving a minimum of 10% of your earnings seems impossible, start tracking your expenses. Your spending will adjust to accommodate your need to pay yourself first.
That what each of us calls our “necessary expenses” will always grow to equal our incomes unless we protest to the contrary.
Have you found yourself wondering why you don’t seem to be able to save more money even after a pay raise? There will always be things in life that we want. A new car, trendier clothes, a bigger home.
This is where the importance of tracking finances and budgeting is so important. The importance of having financial goals clearly defined so you know your spending priorities.
The purpose of a budget is to help thy purse to fatten.
We can’t have it all. You know what happened to Veruca Salt in Willy Wonka and the Chocolate Factory. But we can achieve financial independence through hard work and the wisdom of personal finance.
Recap with Financial gems
- The wisdom packed into this short book is enough to find your way to achieving your financial goals and true wealth generation. At under $10, it could be the highest returning investment you ever make.
- The Richest Man in Babylon is a perfect example of all that this blog represents and hopes to teach.
- Pay yourself first by saving a minimum of 10% of all you earn.
- Once you have some savings built up, invest it such that your money begins to work for you.
- Seek the advise of individuals knowledgeable and successful in investing to help you begin.
- Educate yourself in the ways of investing; start small, learn from others, grow over time.
- Track your finances and establish a budget.
- Hard work and dedication will pay off.
- Earnings come more easily to those who are in the habit of saving and tracking their finances.
- Be determined and persistent.
- Luck is simply being open to and prepared for opportunity.
- Don’t overextend yourself by over-spending or over-borrowing.
- Protect your savings, your family and your estate.
- Take action
Action will lead thee forward to the successes thou dost desire.
- Read this book. Your savings account will thank you.
- Review related reading on this topic:
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