George S. Clason’s classic book entitled, The Richest Man in Babylon is one of the personal finance classics recommenced by many financial gurus. Dave Ramsey regularly recommends the book on his radio show.
The book, originally written in the 1920’s, is a collection of financial parables set in ancient Babylon. Each of the seven short stories relates the adventures of the characters as they are taught how to amass wealth.
While the language is strange due to the author’s attempt to make the stories seem like they came from ancient days, the stories repeatedly hammer home the basics of personal finance, although sometimes in an awkward and repetitious manner.
The two main tales that I like best are the "Seven Cures for a Lean Purse," and "The Five Laws of Gold." The rest seem to repeat and reinforce the advice given throughout the book.
Seven Cures for a Lean Purse
The tale, "Seven Cures for a Lean Purse" follows the main character Arkad, who is requested by the king to teach a class to build wealth. The class was seven days long, and each day a topic was taught. They are (translated into modern English and summarized):
- Take one-tenth of what you bring in and save it for the future. This was brought up again and again. Save 10% of your income before you pay your debts or spend. This was repeated throughout the book.
- Don’t buy frivolous things even if you have the money to pay for them and live on less than you make (after saving 10%).
- Once you save, invest to make "your gold multiply." Conversely, if you don’t invest you won’t get wealthy.
- Don’t invest foolishly; you should only invest in things where the principle is safe.
- Own your own home.
- Insure a future income for your family after you pass on.
- Increase you ability to earn by working hard, looking for opportunities, and educating yourself.
The Five Laws of Gold
- You should save at least 10% of your earning to create an estate for his family’s future.
- If you invest well, you will make money.
- Be cautious in investing.
- Only invest in businesses or purposes that you know. If you don’t understand you could loose your money or get swindled.
- Avoid investments that promise absurdly high returns (if it is too good to be true, it probably is).
I thought the audio book was reasonably good and it would be perfect to use to teach children about financial topics.
However, if you easily bored with stilted old English phrases or repetitive teaching methodologies, you might want to pick another book to read.