The Richest Man in Babylon by George S. Clason is a classic book on personal finance. I first read this book while in the middle of university, and since graduating, the advice given in this book has proven to be valuable. This book presents timeless personal financial advice in the form of fictional parables that take place in ancient Babylon. It’s a very short read, with much of the advice condensed in the summary below.
In ancient Babylon, a man by the name of Arkad, who was known as the richest man in Babylon, teaches his audiences how he became rich through various parables. They can be organized into roughly three groups, the “Seven Cures For a Lean Purse”, “The Five Laws of Gold”, and last group being a few stand-alone parables in the last few chapters of the book.
Start thy purse to fattening: do not spend everything that you earn, and set aside at least 10% of what you earn into savings.
Control thy expenditures: do not confuse your wants with your needs, create a budget to ensure that you are not wasting money, and do not touch the 10% that you save from your earnings.
Make thy gold multiply: invest your money and make your money work for you while you sleep, taking advantage of compound interest over long periods of time.
Guard thy treasures from loss: do not be reckless with your investments or gamble with your money - ensure that you invest your money where it is safe and will gain you money; consult people smarter than you before making big investments.
Make of thy dwelling a profitable investment: avoid renting if possible and strive to own your home instead - it is better to pay a mortgage than to pay a landlord in the long-term.
Insure a future income: ensure that you are saving, investing, and planning for retirement - plan for the days when you will not be able to earn an income in old age and protect your family.
Increase thy ability to earn: invest in your self-education, gain skills, and work to increase your value to the market and your earning power.
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.
Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
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.
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.
Men of action are favoured by the goddess of good luck.
Better a little caution than a great regret.
We cannot afford to be without adequate protection.
Where the determination is, the way can be found.
The biggest lesson that I learned from these parables was that although you cannot predict when you will be lucky, the more opportunities you take advantage of and the more action you take, the luckier you will be. In general, you should be conservative with what you expect to earn and avoid get-rich-quick schemes.