The book report is about a book named _The Richest Man In Babylon. The Richest Man In Babylon,_ written by George Samuel Clason, is a book about management of personal finance through a collection of parables set in ancient Babylon. The stories are laid out like Aesop’s fables: each story has a concrete point or two that becomes apparent from reading and digesting the message. These points are basic tenets of how to get ahead financially in any time, not just in Babylonian times or in the 1920s.
In Babylon there is a man who is wealthier than all and there is another poor man deeply interested in how he has achieved such status so he begins to make daily visits to his house on the hill, bringing others along, to learn the lessons that created such wealth. The wealthy man is open to share his keys to success and the others intently listens as he tells stories and experiences in his life that get across the most fundamental techniques of personal money management, savings and investment.
What the wealthy man shares to the public is collected in different stories. The most popular stories are _Seven Cures for a Lean Purse_ and _The Five Laws of God_. These two stories provide practical points for managing personal finance by seven methods and five laws.
The lessons which the poor man had learned and applied to his life were remarkable, and this slave had managed to turn his life around by applying the principles and lessons he had learned. He had documented everything he had learned and his progress on clay tablets, which were later found in the 1930’s by archaeologists and professors at a university. These professors had then learned of these principles and applied them to their own lives, to also become wealthy and financially abundant.
Feature of the book
This book touches on the fundamentals of personal finance and reminds us of the simplicity and discipline that have proven successful for thousands of years. Clason takes a creative, yet simple story-telling approach to teach the reader the basics and the foundation of how to conservatively build wealth over time and become financially successful.
In comparison with similar books
In fact, many popular finance books such as _The Wealthy Barber_ or _The Automatic Millionaire_ are based on principles from this famous book. In fact, in the _Millionaire Mind Intensive_ they talk about allocating your money in a similar way that George Clason mentions here. Either way, it’s good to hear these methods again and again to remind ourselves of these age-old principles. We may know something intellectually, but practicing it is a whole different story.
Impressive methods of wealth management
What impresses me the most is the story of _Seven Cures for a Lean Purse._ The tale _Seven Cures for a Lean Purse_ relates a story about Arkad, the titular richest man in Babylon. He is requested by the king to teach a class to anyone who wishes to attend on the methods he used to build his wealth. He divides this class across seven days, with each day focusing on a particular method for saving money.
Here are the seven methods in the tale: 1. Start thy purse to fattening; 2. Control thy expenditure; 3. Make thy gold multiply; 4. Guard thy treasures from loss; 5. Make of thy dwelling a profitable investment; 6. Insure a future income; 7. Increase thy ability to earn
Below are the methods that impressed me a lot
Start thy purse to fattening—-Pay Ourselves First
The book recommends that we pay ourselves 10% of all that we earn. We cannot accumulate wealth if we do not save what we earned. We can do that by paying ourselves first and foremost before we spend any of the money we have earned. It is the same as the U.S. government. It takes taxes on our wages before we can get to it. The U.S. government (IRS) knows this law well.
Guard they treasures from loss—-Insurance protects our wealth
Insurance helps safeguard our wealth by absorbing potential loss and mitigating our financial situation. There are many kinds of insurance we can buy and we should do our research on which one and how much we need. A renter’s insurance or a homeowner’s insurance helps protect our homes. Another kind of insurance is long-term insurance which become suitable to help us as we grow older and help protect us from medical expenses and long-term care.
We should all consider buying insurance now in case we need it if something happens. This is a proactive approach and one we should take and not forget. The idea is that we will never have to use the insurance but in case something does happen we are protected financially from the loss it would have caused.
Increase thy ability to earn—-Invest in ourselves
The best way we can increase our earning is by investing in ourselves. We can do that by continually learning and striving to develop ourselves. We are now in a very exciting time: the Information Age where knowledge is literally within our fingertips thanks to the Internet. I really love the OpenCourseware idea where many schools including Ivy Leagues post their whole class courses for free. It’s a great way to learn on our own.
There are many things we can learn on our own and should strive to make ourselves well-rounded. Whether we learn to eat healthier, enhance our current work skills, or learn to make more money, we must take the initiative to invest in ourselves. When we become smarter and wiser, our ability to earn more also increases.
Make of they dwelling a profitable investment—-Our home is our biggest expense
I know that many think their homes are an investment but the truth is it really is not. It is an expense and a very high expense at that and one we must manage carefully. We should learn to manage the largest expense smartly. Many of us have decided to take on a huge mortgage to buy our home and after the real estate bust many were left with homes that lost their value and in many cases were underwater. I believe the lesson we can learn from that was that we needed to ‘live below our means’ and buy or rent a home we can comfortably afford.
More discipline to achieve wealth accumulation
Many people followed the strategies in this book to become wealthy in real life. Take warren Buffett as an example. He has been saving money since he could walk and to this day he controls expenses more stringently than the great majority of the middle class, yet he is worth some $60 billion. And we should all know that he has followed the last three methods of _Seven Cures for a Lean Purse_. That’s what keeps him from investing in so many of the things that lead to ruin.
However, most people around are still overspending despite historical successful examples of wealth accumulation. Even those who make half a million or a million a year still manage to let their expenses run wild and don’t possess the discipline to save. Almost everyone around is in the same rat race-Make money so as to spend more money so you need to make more money. We need more discipline to put ourselves forward to good spending habits and wealth management strategies.
Typical discipline includes: making personal balance sheet and monitor change in monthly amount; communicating with friends around about wealth management methods and encourage each other to develop good spending habits.
_The Richest Man In Babylon_ provides readers with enlightening ideas to manage personal wealth. The author uses creative story-telling approach to indicate management strategies. The story of _Seven Cures for a Lean Purse_ educates us to 7 methods to accumulate our wealth, which is practical and feasible in our life.
At first glace it’s easy to discredit these as simple common sense. But the thing we should all be aware of at this point is that common sense is not common practice. As I reread through some of these key points, I realized that wealthy men, which are minority of the world, have great practice in wealth accumulation.
However, the majority of the society has not developed good habits in accumulating wealth. It is important to take action from now to form the habits and get rid of extravagant behavior. If you have your discipline of what actions accumulate wealth, then behavior of the crowd will not distract you from your own road to achievement.