One of the most essential things in the life of every individual; A proper knowledge of finance is very essential to survive in this world. “The Richest Man in Babylon” by George S. Clason is a book that provides simple yet extremely valuable financial advice that can be useful to everyone. The book’s basic teachings on financial planning and wealth management make it a must-read for young adults, as well as those without adequate knowledge on the subject.
Written in the form of a series of pamphlets in 1926, it rose to fame during the Great Depression period and is today considered a classic. In the book, financial advice is given through a compilation of parables, with the ancient city of Babylon as the backdrop for the stories. Although the parables are set in ancient times, the author presents situations that we can all relate to, giving the book a timeless appeal. The message of the book is that wealth management is quite simple if you follow a few basic principles.
As the book is a compilation of individual booklets, there is a discontinuity in the stories and each chapter is a separate parable. There are ten chapters in the book with an eleventh on the prosperity of the historic city of Babylon. The book begins with a poor car builder and his musician friend reflecting on their lives, that even after working hard they had very little wealth. They decide to ask their childhood friend Arkad, who is the richest man in Babylon, the secret to getting rich. The author then goes on to narrate Arkad’s own story and how he learned the basics of personal wealth management. The lessons he learned were:
– you need to save about a tenth of your earnings,
– you must invest your money, and
– You must receive financial advice from competent people with experience in the area.
The basic idea is that you should keep a part of your income for yourself, for your future.
The story goes on to describe Arkad’s get-rich principles, known as “seven cures for a skinny bag,” which includes teachings such as limiting your spending and saving 10% of your income, spending 20% on paying off debts, and using the rest 70% in their living expenses. He must make a wise investment and do his research carefully before putting any of his money into it. He must work to increase his earning capacity and must plan ahead for his post-retirement income.
Through an entertaining storytelling structure, the author uses characters and their experiences to help readers understand some simple principles on how to manage personal wealth effectively and apply them to their own lives. Overall, the book offers some basic ideas after which we can definitely manage our finances better.