It is important to keep educate yourself. Stephen Covey calls it Sharpen the saw.
To do this, I follow seminars and/or webinars, read books and blog posts from fellow DGI’s. This to gain new insights and of course learn something new.
A while ago, I stumbled upon a very nice quote, which sums it up quite nice:
You will be the same person in five years as you are today except for the people you meet and the books you read
I read a lot of books, all kind of books. From biographies, management books to of course financial books. I really enjoy reading. This joy I hope to give to my kids! Reading books opens up a whole new life and you enrich yourself with new knowledge. What a great gift!
In my 2016 goals I wrote that I will read at least one book every quarter. After reading my first financial book of 2016 I was thinking what to do with this knowledge. And then it came to me; I have to share it with you, my readers. This to keep the snowball of knowledge rolling.
So here is my first book review for Polliesdividend.
The Richest man in Babylon – By George S. Clason
This is a real classic, one of the most inspiring books on wealth ever written. I had this book on my bookshelf for really a long time. In my blog post about paying yourself first, I refer to this great book. George S. Clason writes among other things, about paying yourself first.
It is a great book that everybody should read in my opinion. Okay, I know for not native English speaking people it is a little bit hard to read, but once you in it, you cannot lay it down.
The book begins with the characters Bansir (chariot builder) and Kobbi (musician). The two had become the best at their craft but yet had no money and were poor. They went out to seek the advice of their childhood friend Arkad who in contrast had grown very rich. The lessons that Arkad provided for his friends are lessons of wealth building habits that I believe every rich person had followed to accumulate their wealth.
The 7 lessons of Wealth building habits, which I learned from the book:
- Pay yourself First (“Start thy purse to fattening.”)
It is very simple. You cannot accumulate wealth if you do not save what you earned. You can do that by paying yourself first before you spend any of the money you have earned
The book recommends that you pay yourself at least 10% of all that you earn. So 10 dollar of every 100 dollar you earn, should go to pay the person you see in the mirror every morning.
- Live below your means. (“Control thy expenditures”)
If you have acted upon lesson 1 you have 90% or less of your income to live on. This might seem hard at first, but after two or three months you’re used to it and it will go almost automatically. Controlling your expenditures enable you to make good use of your hard earned money that is left over after you have paid yourself.
Controlling your expenditures means living below your means! If you do that, you will accumulate wealth faster.
- Make your money work for you. (“Make thy gold multiply”)
This lesson is about letting your money work for you. Start investing the money you saved. Create passive income. The sooner you start, the better. Let the wonder of compound interest do its magic on your gold.
- Insurance protects your wealth. (“Guard they treasures from loss.”)
Invest wisely. Only invest in companies you know and understand. So know what you are doing.
- Own your own house. (“Make of they dwelling a profitable investment”)
If you pay rent to a landlord all your life, at the end of your life you’ll have nothing to show for it. If you can instead pay a mortgage on a house, at the end of your life you’ll have a house to show for it. However watch out, do not take up a huge mortgage. Only buy a house you can comfortably afford.
- Have a retirement plan. (“Insure a future income.”)
Start thinking about your retirement early. After you made up a plan, start acting upon it. The sooner you start the better! I wrote already about the magic of compound interest. So when you start putting money away for retirement early you will take advantage of a magical thing.
And make sure that your retirement plan is not only suitable for your needs but for you family needs too.
- Invest in yourself. (“Increase thy ability to earn.”)
Work hard, look for opportunities, and educate yourself. Start investing in yourself.
I really enjoyed reading this book. And I embrace these lessons and use them in my life.
The book is full of just common sense that for some reason most people do not follow. Its almost too simple, but I know it works. Just read the many blog posts in our DGI community. It is not a big book; I have read it in just a couple of hours. They were well spend. I definitely will read this book again. It is full of really great wisdom.
It is a timeless book, which I can recommend to everybody. If you have not read a lot of financial books, start with this one!
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Have you read this book? What do you think of the lessons from this book? Do you use them?