Recently, I read the Richest Man in Babylon by George S. Clason. It was written in 1922 and although the book did not cover Americana finance, it did cover a number of personal finance concepts that are applicable in contemporary society.
The first takeaway from the book was that a person had to be conscious of paying themselves first and saving money. By not paying oneself and saving money, then there was no way that a person was going to be on the road to becoming wealthy. The book keeps coming back to the theme of saving enough gold so that one will have money to use for investment and home ownership. It should be important to note that Clason recommends paying oneself at least 10%.
The second takeaway from the book was that a person had to be able to control their expenditures and not spend any more money than they needed. This is still a concept that applies in today’s world.
The third takeaway was that one needed to make their money multiply by investing wisely. In the book, the protagonist saved his money and invested with a partner that had no knowledge of the product that he was investing in. The protagonist lost all of his money and had to start saving all over again until he was able to invest with partners that had knowledge and experience making money.
The fourth takeaway was that a person needed to be able to guard their wealth from loss. In other words, it was in a person’s best interest to avoid investments that sound too good to be true. The book focuses on people who spend their money on gambling and usually end up losing their money.
The fifth takeaway was that a person needed to own their own home so that it would become a profitable investment. Today, the concept of home ownership has been paramount to establishing one’s own wealth and it is no surprise that most millionaires own their own homes.
The last takeaway is that one improves their ability to earn by gaining more knowledge and education about growing their wealth.
I thoroughly enjoyed the book and appreciated Clason’s anecdotal approach to the discussion of personal finance. In many cases, I found myself comparing Clason’s knowledge to that of personal financial gurus that emphasize these points. I highly recommend this book to anyone that wants to understand these concepts.