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There are some pearls of financial wisdom you see over and over again: Pay yourself first. Build equity in a home. Invest wisely.
But did you know that many of these axioms come from a book published almost 100 years ago? In 1926, an American entrepreneur named George Samuel Clason had gained success by publishing the first road atlas of the United States and Canada. Expanding on his business, Clason began to distribute pamphlets on financial success to banks, investment houses and insurance companies. The pamphlets delivered financial wisdom through parables set in ancient Babylon, which had been the richest city in the world. In 1930, Clason combined the parables in his pamphlets to publish a book called "The Richest Man in Babylon." Today, the book has sold more than 2 million copies in 26 languages.
Much of the personal finance wisdom you hear today comes from this book, and it still applies.
Lessons From the Book
The book centers around the story of Arkad, a poor scribe who eventually builds enough wealth to become the richest man in Babylon. Arkad has several rules that are told through stories in the book. The backbone of these rules are "the seven cures for a lean purse." Read on to find out what they are—and what they mean in modern parlance.
- Start thy purse to fattening. Translation: Pay yourself first.
- Control thy expenditures. Translation: Live within your means.
- Make thy gold multiply. Translation: Invest your money wisely.
- Guard thy treasures from loss. Translation: Avoid investments that sound too good to be true.
- Make thy dwelling a profitable investment. Translation: Own your home and build equity.
- Insure a future income. Translation: Plan ahead for retirement.
- Increase thy ability to earn. Translation: Invest in yourself and your earning power.
Arkad also shares the "five laws of gold," which offer similar wisdom:
- Gold cometh gladly and in increasing quantity to any man who will put by not less than one tenth of his earnings to create an estate for his future and that of his family. Translation: Save a tenth of your income.
- Gold laboreth diligently and contendly for the wise owner who finds for it profitable employment, multiplying even as the flocks of field.
Translation: Savings can grow and compound your wealth. - Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
Translation: Be patient and have a long-term view when investing. - Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.
Translation: Invest in what you know. - Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.
Translation: Skip the get-rich-quick schemes.
It's clear that Arkad's wisdom—or rather Clason's—is timeless. These are the money lessons to still apply to life, even today.