*This will be the first of a seven part series based on “The Richest Man in Babylon” by George S. Clason.
I don’t normally write about the finance books that I read, but George S. Clason’s “The Richest Man in Babylon” has some really sound financial principles that I want to pass along. It’s a tiny little book, only 140 pages and since it’s older you should be able to pick it up at your library or on Paperback swap if you want to read it yourself.
“The Richest Man in Babylon” is the fictional story of Arkad, a man who started life as a simple peasant and has now become extremely wealthy. From his castle the King of Babylon sees the poor in his country continue to suffer as they mismanage their resources. He asks Arkad to teach the citizens the secrets to achieving financial security.
The lessons Arkad teaches he calls the “Seven Cures for a Lean Purse”. While they are not revolutionary, their simplicity makes them very valuable information.
Cure # 1: Start thy purse to fattening (A Frugal Chick’s Translation: Save Something!)
According to a recent MSN article, Americans are optimistic about the economy in 2010. Along with their other New Year’s Resolutions, people want to build up an emergency fund. It is my belief that the current financial state of our country has finally shown people the importance of having something for a rainy day.
And Arkad’s teachings go along with this idea. He says if you earn 10 coins, you need to take 1 coin and place it in your purse, not to be removed. The satisfaction of having your purse feel a bit heavier will bring peace to your soul.
In more recent terms this is called “Paying Yourself First.” Before you pay bills, before you go out to eat, before you see a movie, you need to put something in savings. If your employer has an automatic savings plan consider using it. (For me personally, I have my employer deposit an amount of money into a savings account at a bank I do not normally use. I can get to the money if I need, but it requires a trip out of my way.)
If it seems like a small amount at the beginning, it’s okay. Every time you make a deposit, you can watch your money grow. Small amounts of money over long periods of time can give you a significant nest egg!