The Money Muse

I recently read The Richest Man in Babylon by George S. Clason, and while I found it a bit repetitive and overly simple, it still imparts some important and timeless financial lessons. Written as a series of parables set in ancient Babylon, the book delivers core personal finance principles in a short, easily digestible format. While the straightforwardness of the advice may feel basic, the key takeaways are undeniably valuable for anyone looking to begin improving their financial habits.

Here are the main points from the book:

1. Pay yourself first. The central message of The Richest Man in Babylon is to “pay yourself first.” This means setting aside a portion of your income for savings before you spend on anything else. While it’s a simple idea, it’s one of the most powerful habits you can develop for building wealth. The book suggests saving at least 10 percent of your earnings. This is a good starting point, but many financial experts today recommend a higher savings rate, up to 25 percent. Establishing this habit, whether you start at 10 percent or higher can help you steadily accumulate wealth over time.
2. Live below your means. Another fundamental lesson is to live below your means. Even though this idea might sound obvious, the book drives home the point that just because you make more doesn’t mean you should spend more. By keeping your expenses in check, you leave more room to save and invest.
3. Invest wisely. Clason emphasizes the importance of making your money work for you. Once you’ve saved a portion of your income, it’s essential to invest it in a way that will allow it to grow. However, the book cautions against high-risk or “get rich quick” schemes, encouraging you to seek low-risk investments that generate steady returns.
4. Seek wise counsel. One recurring theme in the book is the importance of seeking advice from knowledgeable people before making financial decisions. Many characters in the stories make poor choices because they take advice from the wrong people. The lesson here is to consult trusted experts and surround yourself with those who have proven financial success. Today, there are many free resources that you can use on your journey of financial education. You can find some of my favorites here!
5. Protect your wealth. The Richest Man in Babylon also teaches the importance of protecting your wealth. Avoiding unnecessary risks, securing your assets, and steering clear of debt are key principles in maintaining your financial security. While it may seem like common sense, it’s advice that can easily be overlooked in everyday life.
6. Increase your ability to earn. The book encourages continuous learning and self-improvement as a way to increase your earning potential. By developing new skills or seeking better opportunities, you can grow your income, which provides more money to save and invest. This simple but effective strategy helps to ensure long-term financial success.
7. Take action. Finally, one of the biggest takeaways from The Richest Man in Babylon is the importance of taking action. You can know all the financial principles in the world, but if you don’t act on them, they won’t make a difference. The book emphasizes the power of discipline and consistency when it comes to building wealth.

Though I found The Richest Man in Babylon to be repetitive and overly simple at times, its core messages remain relevant. These principles – paying yourself first, living below your means, investing wisely, and seeking good advice – are timeless and provide a solid foundation for building financial security. Despite its simplicity, the book offers important values that anyone, whether new to personal finance or looking for a refresher, can benefit from. It’s all about taking action and applying these lessons to your everyday financial life.