Thursday, November 20, 2014

The Richest Man in Babylon by George S. Clason

“Without wisdom, gold is quickly lost by those who have it, but with wisdom, gold can be secured by those who have it not.”



Someone who does not know the laws may enjoy windfalls, but they are likely to lose the money just as quickly. The five laws not only help you build wealth, but if you follow them they protect you from losing what you have built.

In the book’s first story, two friends—a chariot builder and a musician—reflect on where their working lives have taken them. Though pleased to have wives and young families, they struggle to make ends meet and wonder if there could be another way. The conversation turns to a man they grew up with, now considered to be the richest man in Babylon. His name is Arkad, and they resolve to go to see their old friend and seek his advice. They ask Arkad how fate has come to make him rich. He immediately rebukes them for assuming that “fate” has contributed anything to his success, telling them that they have only remained poor “because you have either failed to learn the laws that govern the building of wealth, or else you do not observe them.”

Paying yourself first
The man agreed, and in the morning revealed this principle: “A part of all you earn must be yours to keep.” Living expenses quickly eat up whatever you earn, the money lender observed, which means that you become a slave to your work and earn merely to survive. However, by putting aside at least 10 percent of your earnings and marking that off as “not for expenditure,” over time this amount builds and starts earning money for you, without you having to do any work. It matters little how much you start with, as long as you observe the rule to pay yourself first out of whatever you earn. You will soon not even notice the absence of this small amount.

The five laws. In brief, they are:
1 Money comes to those who save.
2 Money multiplies for those who invest it.
3 Money stays with the person who entrusts it to wise people.
4 Money is lost when invested in things with which you are not  
   familiar.
5 Money is lost at a fast rate by pursuing get-rich-quick schemes.



In a nutshell
The principles of wealth building are free to all, but only a minorityuse them to their advantage.

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