Published in 1926, “The Richest Man in Babylon” is a personal finance classic. The book went to light almost a century ago, yet its teachings are still as relevant as ever. The timeless book follows the journey of Arkad from being a man with a humble background to becoming the richest man in the ancient city of Babylon. Arkad shares his wisdom with his peers, and in this piece, we’re bringing you the success secrets of Arkad on how to build wealth through seven money lessons.
The “seven cures for a lean purse” have fancy old English names, yet the concepts are extremely straightforward. Simply put, they refer to 7 principles to avoid running out of money before the end of every month. Take notes.
Lesson #1: Start thy purse to fattening
“Start thy purse to fattening” (aka pay yourself first) means saving at least 10% of your income every month, no matter how small it may be.
When you buy a new t-shirt, you’re paying the fashion brand. Just like you pay for products and services, you should also make sure to pay yourself. Set aside 10% of your hard-earned money for your dreams. By doing so, you’ll have a cushion to fall back on in case of emergencies, and you can use the savings to invest in your future.
Lesson #2: Control thy expenditure
A famous rule in the world of personal finance is to live below your means and avoid frivolous spending. Keep track of your expenses, and make sure you’re spending your money wisely.
You can use our budgeting tool to track your spending with ease.
Lesson #3: Make thy gold multiply
Saving money every month and controlling your spending will get you halfway there. But let’s not forget something here – inflation. You don’t want to be putting all your efforts into saving your hard-earned money, only to have it lose value over time. The way to grow your money is to make it work for you (aka investing)- more on that here.
Lesson #4: Guard thy treasure against loss
The principle suggests that one should protect their wealth and ensure it is invested in the right option to avoid losing it. This means being mindful of where and how one invests money. How? Be smart by doing your research and understanding the ins and out of your investment choice.
If you want to play it safe, you can consider investing in mutual funds, where an expert is in charge.
“Don’t put all your eggs in one basket,” the old saying states. Another strategy to protect your money is by investing in different investment options and spreading the risk across different assets.
If you’re interested to know more, check out our diversification article.
Lesson #5: Make of thy dwelling a profitable investment
Arkad wasn’t a big fan of renting a house. He preaches buying your own home to
free yourself of paying rent every month. In turn, you will be more in control of your own life and not drown in expenses.
Lesson #6: Ensure a future income
The day will come when you’ll retire, so plan ahead. Look for ways to create passive income streams that will provide a consistent income without requiring constant effort. This can be in the form of rental properties, stocks, or other investments.
There are also some cool ideas in this piece on how you can create a passive income stream.
Lesson #7: Increase thy ability to earn
Invest in yourself and your education. Continuously seek ways to improve your skills and knowledge, so you can earn more and command a higher salary.
Look at you! You’re halfway there by being on the Learn website 🙂
Don’t underestimate these 7 money lessons, they’re simple to implement yet extremely powerful. By following these tips, you can build your wealth and secure a prosperous future. “The Richest Man in Babylon” is a must-read for anyone looking to gain a better understanding of personal finance.