8 Lessons You Learn From The Richest Man In Babylon
Do you want to become rich? I’m sure you do. This is a stupid question to ask you or for that matter, anyone. Everybody wants to grow rich. But…how do the rich grow rich? Do they daydream the whole day, hoping that one day when they get up, they are rich? No… Becoming Rich = A lot of hard work. You work hard? You give yourself the best chance of becoming a rich man. There’s no harm in learning some tricks to grow rich, especially if they are from the Richest Man In Babylon.
George Samuel Clanson an American author published a series of pamphlets written in the form of parables. The setting was the ancient city of Babylon, which is the present day Iraq. A book was published in 1926 called the Richest Man In Babylon. This book is a must read if you want to grow rich.
This book has two characters Bansir a chariot builder and Kobbi a musician. Both Bansir and Kobbi were very good in their work, but….no matter how hard they worked, they simply could not grow rich. One day they decided to seek advice from their childhood friend, Arkad. Arkad was very rich and had amassed a great fortune. The lessons taught by Arkad to his friends where made into a book, which is a must read for you and people all over the World, who want to grow rich.
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8 Lessons You Learn From The Richest Man In Babylon
The First Lesson
1. Pay yourself first
The secret to growing rich….Pay yourself first. Arkad actually paid money to a rich man to learn this secret. Arkad was once a poor man. He then made a deal with a rich man to learn the art of growing rich. Arkad would work on a clay inscription for the rich man in exchange for the secret to wealth. This is what the rich man told him, Keep a part of what you earn for yourself.
The first thing you do on getting your salary? Pay yourself first. Keep some money aside for saving and investing and then spend your salary. You cannot become a rich man unless you save what you earn.
The Second Lesson
2. Live below your means
Yes…you have paid yourself the moment you have got your salary. What will you do with the remaining money? Spend it of course…..The secret to growing rich? Control your spending. So how will you control excessive spending? Simple…you make a budget. This budget is a list of all your spends including the small ones. Remember: A small leak can sink a big ship.
To control spending you must first understand the difference between a need and a want. Always spend on a need and not a want. Your budget makes sure you have money to pay for your needs, money for enjoyment and money for desires, without spending much of your salary.
The Third Lesson
3. Make your money work for you
How do you make your money work for you? Simple…you must invest your money so that it grows and gives you great returns. Before investing, you must first save and also create an emergency fund. Your emergency fund is like a raincoat. It protects you on a rainy day.
Before investing your hard earned money you must know what you’re doing. How can you do this? Learn…then invest. Invest your money to enjoy the compounding benefit….(money earns more money) and earn a steady income.
The Fourth Lesson
4. Protect your wealth with insurance
God forbid…you meet with an accident. A van comes out of nowhere and hits your car. Your car is damaged and you have to pay a lot of money in repairs. If you have motor insurance, the insurer pays for the repairs and protects your wealth. What if you fall ill and land in hospitalization? All the money you have saved would disappear in hospital bills. If you have health insurance the insurer pays the bills.
Avail home insurance, car insurance and health insurance to protect your most valuable asset; your home, your costly car and of course pay the hospital bills.
The Fifth Lesson
5. Home is your biggest expense
Your home is the biggest expense. You may own a home or rent it. You might have to avail a home loan to buy a home. Buying a home is a great idea, but you need to make sure you can afford the home loan EMI’s. Buying a 3 BHK apartment can stretch your finances, but you are comfortable availing a home loan to buy a 2 BHK apartment. When you rent a house make sure you don’t pay too much in rent.
Buy or rent a house to stay. But, don’t buy or rent a house you can’t afford.
The Sixth Lesson
6. Make your retirement plan
You need a retirement plan if you want to retire comfortably. How do you do this? Simple…Just invest your money, watch it grow and take it out at retirement. When you invest money for retirement at an early age, you get to enjoy the power of compounding. You get to enjoy the power of a magic wand called compounding interest.
Compounding interest has been called by none other than the great Benjamin Franklin, as the eighth wonder. To enjoy the compounding benefit you need to invest at an early age and have the discipline to stay invested.
The Seventh Lesson
7. You must invest in yourself
Invest in your career. It is the engine of your growth. Knowledge has the power to grow your wealth exponentially. Learn a new work skill or learn how to invest your money. As you become wiser and smarter the ability to grow wealth increases.
Today, you have the power of knowledge at your fingertips. It’s called the Internet. Use the internet and gain vast knowledge and skills on any topic you desire.
The Eighth Lesson
8. You must always track your wealth
You need to track your finances to know where you stand financially. This is a tough exercise but you have to do it. This is an exercise in truth. You must keep a track of how much money you earn and where it is spent. This is the only difference between being a rich man and being a poor man.
Create a spreadsheet of all your earnings and all your expenses. Understand how much you earn and how much you spend. This helps you to understand your position financially.
You must learn the 8 lessons from the richest man in Babylon. Then follow them. You will soon be on the path to riches. Be Wise, Get Rich.