A while back I reviewed several lists of “Billionaires’ Favorite Books” and added a few to my reading list. Among them, The Richest Man in Babylon.
The chapters are written in parable form and worked well as an audio book; the stories provide enough information to be engaging without so much that it is overwhelming to take in all at once. It gives a lot of things to think about when it comes to investing, although it does seem takes some things for granted at times.
One of the primary lessons from the book is to pay yourself first (also part of the Dave Ramsey financial teachings). You work hard for your money, so why give it all away before saving for your own security or investing to grow your wealth. The recommendation within this book suggests saving/investing 10%, using 20% to pay off debts, and living off 70%, which seems like pretty sound advice in general.
There are quite a few good quotes and tid-bits of insight when it comes to general money management, investing, and even work ethic:
“If you desire to help thy friend, do so in a way that will not bring thy friend’s burdens upon thyself… Humans in the throws of great emotion are not safe risks for the gold lender… Better a little caution than a great regret.”
When it comes to investing in the business or venture of someone you know and/or are related to, it recommends to not loan more than what you could personally save up over the course of one year, regardless of how much wealth you may have. If they manage the money well and turn a profit, they are a proven investment. If they loose it entirely, it’s disappointing but doesn’t have as huge of an impact on your finances. It is also more likely an amount they could hope to pay that amount back rather than being such a vast sum that they just write it off as impossible.
“Hopeless debt is like a deep pit into one may descend quickly and struggle vainly for many days. It is a pit of sorrow and regrets where the brightness of the sun is overcast and night is made unhappy by restless sleeping.”
“The soul of a freeman looks at life as a series of problems to be solved and solves them, while the soul of a slave whines ‘but what can I do, who am but a slave’… Work well done does good to the man who does it. It makes him a better man.”
These two quotes were from different chapters, however I feel they dovetail well. Often when things get overwhelming, it seems most logical to stop fighting and fall in line. While there is less struggle going with the flow of things, there is also no innovation or progress in doing things the easy way.
Book Review: “The Richest Man in Babylon” by George S. Clason