I’ve heard a lot of people recommending this book, so I picked up a copy of The Richest Man in Babylon by George S. Clason at the library. It’s been out a while, so chances are there is a copy out there, or try getting a copy used. The book is compact, and my edition was only 144 pages long.
Overall, the book was more inspirational than educational, much in the same vein as Rich Dad, Poor Dad. It is told as a set of Babylonian short stories, with Old English writing style including phrases like “Which desirest thou the most?”. Truth be told, it got a bit annoying after a while. However, there were some good rules set out in the book, which include “start thy purse to fattening”, “control thy expenditures”, “make thy gold multiply”, and “make thy dwelling a profitable investment”.
In my opinion, the most powerful idea that the book presents is that you should live on 90% of your income. That is, for every dollar that you take home, automatically 10 cents should go into savings. If you can save more, great, but 10% is the minimum. This is the only way to stop living from paycheck to paycheck. The situation is slightly different if you are in debt. The book then advises that you live on 70% of your income. 20% would go to pay down the debt, and 10% would still go to savings. Once the debt is gone, you can go back to living on 90%.
Living on 70% would be difficult for many people, but I think the 90% rule is a good goal for most. Most of us have the tendency to spend more once we get more. But putting away 10% somewhere where it can grow is the first step to financial freedom. And then you can feel good about spending the rest of the 90% as you see fit. I’m personally trying to do better than 10%, but I am part of a DINK (dual-income, no kids) family and so I think I should be.
Overall, I think this book would be a great idea for people just starting out or those want to a basic foundation to handling their finances. If you are already saving 10+%, there’s not much to be gained here. No clear solutions are set out in the book (investing advice is limited to “Don’t give your money to people who don’t know how to handle it”). But you have to start somewhere, and this book is a good start.