Saturday, October 11, 2008

Recommended Reading: The Richest Man in Babylon

Status: It's cold outside
Today's Song: "Just Dance" by Lady Ga Ga

Many of us have had finances on the brain the last couple weeks as the world's markets take a hit, stocks drop, and we are in the middle of what the media calls a "credit crisis." I think that now may be a good time for individuals, families, businesses, and countries to go back to some sound finance basics. In fact, a year ago would have been a better time to go back to the basics, but until someone figures out how to rewind time, we're stuck with the present. :)

A book that is great at getting down to the basics in an easy-to-read way is the classic book, The Richest man in Babylon by George Samuel Clason. It first appeared in 1926 as a series of informational pamphlets on basic financial management, which were then compiled into a book.

If the idea of reading a book on money and finances makes you break out in a cold sweat and your head spin, don't worry. This is an easy one. The Richest Man in Babylon gives financial advice through a collection of parables, kind of like Aesop's fables, set in ancient Babylon. Each story presents basic tenets of how to get ahead financially in any time. It reads a bit like a collection of short stories.

I liked the tale "Seven Cures for a Lean Purse" where Arkad, the richest man in Babylon gives a class teaching how he rose from an ordinary Joe-Schmoe (not a Babylonian term) to being so wealthy.

The Seven Cures are:
1) Start thy purse to fattening - take 1/10 of what you earn and save it for the future.
2) Control thy expenditures - don't buy frivolous things even if you have the money for them.
3) Make thy gold multiply - once you build up some savings invest it.
4) Guard thy treasure from loss - invest in things where your principal is safe.
5) Make of thy dwelling a profitable investment - own rather than rent (I don't think he means the outrageous home purchases that have us in trouble right now)
6) Insure a future income - Save for retirement and for family after your passing.
7) Increase thy ability to earn - work hard, look for opportunities, and better yourself.

That wasn't so scary, was it?

We could all use some better money sense. I'm not encouraging you to run out and buy a copy of the book (although if you want to you can probably find a copy at any secondhand store), but for sure check it out from your library.

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