"The Richest Man in Babylon"
This book was written by George Clason in 1926, and it gives out financial advice through a series of stories set in ancient Babylon. Even after almost a century of being written, it continues to be one of the world's most commonly talked about and recommended personal finance books. Read through for major lessons I took out of this book.
Save before spending. While the sum of savings and expenses make (with the hope that you don’t take loans or credit that you can’t actually pay off) your income, the order in which savings and expenses are deducted from the income number is important. There are always things that you could spend more on. So you need to be able to save a certain amount before spending it anywhere.
Improve your skill set. In the world we live in, most things can be taken from us. Inflation can take away your money, a natural disaster could take your house, and so on. The one thing that cannot be taken away is your skills. So you need to improve and expand your skill set so that you can come back from whatever challenges life throws towards you.
Control your expenditure. While better skills can get you more money, there is nothing to stop you from squandering it all if you don’t control your spending. You need to remember to save a certain percentage to have peace of mind, should something happen suddenly to your income sources. I don’t agree with the popular idea that you should not spend on “wants”, only “needs”. I think you should spend on things you want, but with maybe 20% of the money you earn so that you still have 80% of it to work with.
Invest. The 80% you still have, well, 50%, the taxman takes let’s say 30%, you need to divide that up into savings in the bank and assets you can buy. The cash gives you safety in case of sudden requirements and the assets make your wealth grow, both of which are equally important.
Avoid things that seem too good to be true. Most of the time we get to hear about things that “will surely make us a lot of money”, from crypto coins to stocks to virtual land. These things seem good for a little time and then lead to disaster for most people involved. As the saying goes, “When something looks too good to be true, it usually is.”
Take advice from only those who are where you want to be. Everyone likes to give advice to people. It makes us feel important. But it is your choice about whose advice you take in from one ear and let go from the other, and whose advice you pay heed to. And you should definitely listen to those people who have been where you are right now and have now reached where you might want to be.
Fortune favours the bold. Take action. Nothing valuable will ever just drop into your lap if all you do is sit around and watch TV. You need to step up and consistently take the steps necessary for your goals, financially and otherwise.
While it will be good for you if you can implement these points highlighted in the book, these are not all of the ideas that are there. You should read it yourself too, for you could well take something out of the book that I missed.
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