The Richest Man in Babylon
About Author:
George Samuel Clason (November 7, 1874
– April 7, 1957) was an American author. He is most often associated with his
book The Richest Man in Babylon which was first published in 1926. Clason was
born in Louisiana, Missouri. He attended the University of Nebraska. He served
in the United States Army during the Spanish–American War.
Summary of book:
Takeaway #1: pay
yourself first:
Bansir was one of the chariot maker in
Babylon. One day he was very upset, his friend Coby came near by him and said
Bansir why you are sitting and not doing any work I guess you have earned
enough for the day, I will request you to give me two coins so that I can have
my dinner for today. Bansir replied if I had two coins I would have taken
dinner for my family, by this word Coby got irritated and said if you do not
have money why you are not working if you will be sitting here no one will pay
you for just sitting and not doing anything. Bansir said I was dreaming in
which I am so rich, I had a purse filled with gold and my family is so happy
but when I woke up I remembered by purse is empty and asked Coby emotionally Why
do we have to be so poor? Coby replied yes you are right money disappears as
soon as we earn it. We can do one thing we can ask our school friend Arkat, I
came to know he has become richest man in Babylon. Both of them with some more
friends went to Arkat and asked we studied in same school, lived at same place
then why only you got lucky and became so rich and we are still trying to feed
our family twice daily. Can you teach us how to become rich? Arkat told them
since childhood I realised rich are living the life they can eat what they like
and wear what they want and they have all power and I would also like to be the
part of this community. I was son of a poor man and I did never have inheritance
and as our teacher has said if we have to become rich we should have time and
knowledge both. Everyone has time and also there are two types of knowledge one
which teaches us that we know and second which teach us how to observe. So I
went on the search and I promised myself when I will come to know the secret I
will implement it from the next moment. In his journey he found an Algims and
asked him to teach him how he becomes so rich. Algims replied the road to
wealth when I decided that a part of all I earned was mine to keep.. And so
will you. Arkat replied But all I earn is mine to keep, is it not? Far from it.
Do you not pay the garment maker? Do you not pay the sandal maker? Do you not
pay for the things that you eat? What have you to show for your earnings of the
past month? What for the past year? Fool! You pay to everyone but yourself? As
well be a slave and work for what your master gives you to each and wear. It's
a powerful analogy to see every expense you have as you slaving for someone
else. If your net income is $2,000 per month and you pay, say $1000 bucks in
rent, you're effectively working 20 hours a week for your landlord. Well in
Sweden that is at least where a normal working week is about 40 hours. Think of
it this way and it will be much easier to handle your cravings for spending. In
the book it is suggested that once you get your salary, before any other
expenditures - pay yourself one-tenth of that amount. This way you make sure
that you always earn money for yourself before slaving for others.
Takeaway #2: Men
of action are favored by the goddess of luck
Most people when seeing other
successful persons such as Abba, Zlatan Ibrahimovic or Carl XVI Gustaf,
attribute it all to luck. They come up with all kinds of excuses for why they
are not in the same position as these aforementioned people, such as well they
have talents ... they met the right people at the right time ... or They were
born into it! While this might be the case for some successful people, it's
certainly not for the large majority of them. What just bring them all together
though is that they have been taking action. Picture this: A procrastinator and
a doer are faced with opportunities. Let's say, for simplicity, that they are
faced with the same amount of opportunities. The chance of succeeding when
taking in opportunity can only be manipulated by a small degree, so in this way
the procrastinator and the doer have the same chance to thrive. What separates
them though is the number of opportunities that they try out. The
procrastinator will always come up with excuses. I don't feel good today ... I
actually had a rough day at work.... Nope, the stars are not aligned today!
Meanwhile, the doer tries it out and takes many of the opportunities given to
him. Therefore, the chances that the doer will be lucky and succeed at some
point are way higher than that of the procrastinator. But it has nothing to do
with luck, and everything to do with action.
Takeaway #3:
Wealth is not a matter of income.
Yesterday how many of the carried lean
purses? "All of us", answer the class Yet thou do not all earn the
same. Some earn much more than others. Some have much larger families to
support. Yet, all purses were equally lean. Now I will tell thee an unusual
truth about men, and sons of men. It is this: That what each of us calls our
"necessary expenses" will always grow to equal our income unless we
protest to the contrary. I know a lot of smart people that earn good money, yet
they have nothing to show for in their bank accounts. Every time they get an
increase in salary, they increase their spending with the same amount. They
have more Spotify accounts than they have friends, and piles of furniture from
IKEA that will never be assembled. Always keeping up with the Joneses. This is
foolish in so many ways. Primarily because it's a huge risk taking, which in
turn causes you to be completely handcuffed and tied to your current job. If
you don't gets that salary every month what is then going to happen to your
boat, your house and your car? Now when your boss tells you to go and clean the
toilets for the third time during that afternoon you want to tell him to go
***** himself. But then you think about the boat, the house and the car. And
instead you say: Yes, sir that would be lovely! Right away! No matter whom you
are or what your degrees is, everyone must obey under the law of income minus
expenditures equals savings. No matter if you are an engineer, a Mc Donald's
crew member, or Floyd Mayweather.
Takeaway #4: Act
when the time is right.
If you have done a thorough analysis
and asked your friends and family about possible shortcomings in your research,
don't be afraid to act on it. Great opportunities are rare and should never be
missed out on. For personal finance and investing, such opportunities sometimes
mean that you must cut your expenditures a little more than usual. For
instance, during the financial crisis and the following collapse of the stock
market in 2008 and 2009 such opportunity emerged. For those who were willing to
increase their savings and investing during that time - great profits were to
come.
Takeaway number
five: The power of passive income
Once you start to obey under rule
number one - pay yourself first - you will accumulate a lot of cash over time.
While this will feel good all on its own, there's something even better to
come. As soon as possible you should start to put your hard-earned money to work.
The good thing about money is that unlike you, it never has to rest. Your money
will work for you while you go to class, while you hang out at the gym and even
while you're sleeping. It's modern-day slavery and best of all; it's a hundred per
cent legal. This is what people like to refer to as passive income. If you
decide to keep your slaves, they will breed. Even the kids will breed
eventually. This will cause your money to grow exponentially. The good thing
about exponential is that they multiply over time and earning money becomes
easier ... and easier ... and easier.... and easier.
To sum it all up:
Takeaway number one is to pay yourself
first. Takeaway number two is that men of action are more likely to be lucky in
the long run. Number three is that wealth is a function where expenses are the
most important factor, not income. The fourth advice from the book is to take
action when the time is right, and takeaway number five is the power of passive
and exponential income.
Comments
Post a Comment