The Richest Man In Babylon
One of the all time classic personal finance and investment books, The Richest Man In Babylon is right up there with my favorites.
This is one of the first books I read that really opened my eyes to the power of money and in particular compound interest.
The book gives common sense financial advice which you can apply today, told through tales and parables from the times of ancient Babylon.
1. Pay yourself first
This is probably the most basic concept of the book, ‘pay yourself first’ means setting aside at least 10% of everything you earn before you pay anyone else.
Meaning before the tax man, rent, or any bills.
This enables you to start building up a reserve which you will put to work for you through investments.
2. Control your expenses
Following on nicely from paying yourself first, The Richest Man In Babylon explains that controlling your expenses allows you to put more and more money to work.
Extravagant purchases may feel good at the time.
All they really do is buy a small slice of immediate gratification at the expense of that money compounding and providing an income further down the line.
3. Make your money work for you
Put very nicely in the book as ‘make thy gold multiply’ I think i’m going to use that one more often!
This is the act of investing the cash you have built up from paying yourself first and reducing your expenses.
Invested wisely, each £ becomes a little worker, dedicated to bringing you an income.
The best bit? when you reinvest the income you begin the compound interest snowball rolling and each additional £ made then goes on to create even more income!
4. Invest in what you know
Investments, in order to bring you income, have to be successful.
The book gives a few examples but the main essence is that investing in things you have no knowledge of will leave you at a huge risk of loosing the principle investment.
Instead, you should focus on areas you have an interest and prior knowledge as you will be able to spot opportunities and evaluate investments a lot better.
An example would be investing in shares of a business or sector you don’t understand instead of focusing on companies you already know a lot about.
5. Increase your ability to earn
Saving and investing is a major step towards building lasting wealth, the way to supercharge this is to increase your income.
Increasing your income means more excess money to put to work.
The Richest Man In Babylon was way ahead of its time when it comes to earning more cash.
The book recommends constant learning of new skills in order to provide more and more value.
Today this would be increasing your skills in order to progress at your job and also starting side hustles and businesses to provide multiple streams of income!
The Richest Man In Babylon is great book for anyone trying to grow their wealth, its not too long and gives excellent and actionable advice.
The book completely changed my approach to money and i’m sure you will find value in it too.
Get your copy of the book from amazon
Or get it for free in audio version when signing up to audible’s free 30 day trial through the link below –
If you enjoyed this book and want to learn more about investing, making your money work for you and building lasting wealth then check out some of my blog posts like Stock Market Investing – A Beginners Guide
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