5 Best Lessons That I learned by Reading Personal Finance Books.

Since the past two years, I am infatuated with reading the self-help and personal finance books.

Few of the best books that I read and re-read in this time duration are ‘Think & Grow Rich’ by Napoleon Hill, ‘The Richest man in Babylon’ by George Clason, ‘Rich dad cashflow quadrants’ by Robert Kiyosaki, ‘4-Hour work week’ by Tim Ferris, ‘The millionaire nextdoor’ by Thomas Stanley etc.

There are a number of lessons that I learned after reading these, however, here are 5 best concepts regarding personal finance that are worth highlighting:

1. Pay yourself first: Many people struggle with how to save money. This is one of the simplest yet effective solution for this problem. This concept is beautifully described in the book ‘THE RICHEST MAN IN BABYLON’, where the author suggests to save at least 1/10th of your earnings, exclusively for your self.
2. Don’t just save, INVEST: “How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.”- Robert G Allen. Saving alone won’t make you rich. The next step of saving is to invest wisely.
3. The 3 golden rule of investing: There are three golden rule of investing that every beginner should know: “Invest early, Invest consistently and invest for long term.”
4. Don’t focus just on minimizing the expenditure, increase the income instead: Since childhood, we have been taught that- “Stretch Your Legs According to the Size of Your Quilt”. However this is complete bull-shit!! Get a bigger quilt. This is the only solution.
5. The Power of compounding: “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”- Albert Einstein. I won’t explain power of compounding in this post because I want to leave some mystery (if it’s not already known to you). And believe me, once you understand this concept, your mind will be blown!

Also read: 3 Amazing Books to Read for a Successful Investing Mindset.

(Image source: Money principles from George S Clason “The Richest Man in Babylon” )

That’s all. These are the best 5 lessons that I learnt after reading a number of personal finance books.

I hope these lessons are useful to you too. Cheers!