I love personal finance books. One of my favorites is “The Richest Man in Babylon” by George S. Clason. That’s why I created this blog series about the things that I learned from this great book. Its lessons are simple, concise and clear. In order for us to build wealth, we need common sense and discipline.
Arkad, the richest man in Babylon started as a scribe. One day, a customer named Algamish, the money lender, went to the house of the city master and ordered a copy of the Ninth Law to Arkad. Algamish promised Arkad that if the clay tablet will be finished in two days, he will pay two coppers. Unfortunately, Arkad wasn’t able to finish the said clay tablet. Arkad promised Algamish that he will work all night to finish the clay tablet of the Ninth Law if Algamish will tell him how he can become a rich man as well. Arkad worked all night and he was able to complete the order. Algamish was pleased and told Arkad the secret to building wealth. Algamish told Arkad that he found the road to wealth when he decided that a part of what he earns is his to keep. Algamish told Arkad that in order for him to build wealth, Arkad should pay himself first by saving not less than a tenth (10%) of what he earns. Arkad received a simple, yet effective advice about building wealth.
Here’s what I learned about this great story:
Make Things Simple
Arkad didn’t understand what Algamish told him at first. He thought that Algamish tricked him because of the simple advice that he heard. Like Arkad, we tend to doubt when we hear simple advice like that. I personally agree with Algamish. In building wealth, simplicity is the key. Keeping things simple isn’t that easy. It requires intense focus to eliminate distractions. Focus your attention in saving 10% of your earnings until you can save a decent amount for future investments.
Pay Yourself First
You’ve heard this phrase before, yet many of us still don’t get it. We can’t do anything about the government getting their hands on our money through taxes before we actually receive it. But we can certainly do something before we go to the shopping malls or grocery stores to buy the things that we need. After getting your paycheck, why not save at least 10% first and spend the rest freely? Do this regularly and before you know it, you have a decent estate that you can use to earn more golds as Algamish put it.
Discipline is the Key
We get excited when we get paid. It feels great to see those earnings into our wallets. For the most of us, we are more excited to spend it than saving our hard-earned money. That’s where discipline will come into play. We all have the desire to be rich. What we need is the discipline to pursue it. Saving 10% of your income is easier said than done. It requires dedication and focus to stick to the plan.
Be Wise in Taking Advice
Arkad followed Algamish’s advice. After 12 months, Algamish went back to check Arkad’s progress. Arkad told Algamish that he gave his savings to a brickmaker to buy jewels to trade. Algamish was upset. Algamish said “He who takes advice about his savings from one who is inexperienced in such matters, will pay with his savings for proving the falsity of their opinions.” As Algamish stated, we need to make sure that we are seeking advice from the right source. Follow famous and experienced businessmen and investors if you personally don’t know one. Read their biographies and study how they make investments and business decisions.
If you want to build wealth, start by saving a tenth of your earnings. Every success started from humble beginnings. When you are comfortable to go to the next level, increase the percentage of your savings and invest it wisely. Do your due diligence and don’t get advice from those who doesn’t have experience in handling money.