I’m writing my key takeaways of the best books that I read and recommend. Visit my Library if you are interested: Pavanskipo’s Library
While I was researching on achieving FIRE ( stands for Financially Independent, Retired Early ) I came across a book titled — The Richest Man In Babylon by George S. Clason and it quickly became part of my personal collection.
Here’s a list of what I’ve learnt from the book:
1. A part of what you earn is yours to keep
Simply put — “Pay Yourself First” | “A part of all that I earn is mine to keep”
Imagine this, A person starts working, staying away from their family and loved ones, 9 hours a day, 7 days a week for 1 month. They then get their salary but only after the Government deducts taxes from it, Now the person has to pay the rent, buy food and clothing, spend on entertainment and other expenses such as travel, vehicle maintenance, etc… ( all of which have their own taxes ) and after all this their purse has already become lean and the person has to wait for the next month to repeat this cycle again.
If you know a friend like this, or much worse if you are like this…then you should start paying yourself first, consider yourself as an entity you have to pay for and keep aside one-tenth (1/10) of your income every month, you can challenge yourself to save more if you want to.
Not motivated? Think of it like this, If you keep aside one-tenth of your income for 10 months, you’ve gotten yourself 1 month of income without working :D (technically you did work for it but still it’s the fruits of your labour)
2. Wealth does not equal Income
Simply put — “It’s not how much you make, It’s how much you keep” | “Necessary expenses will always grow to equal our incomes unless we protest to the contrary.”
This one is very important, I’ve seen people run after appraisals and better paying jobs but ignore their lifestyle habits. Better pay does not always mean that the person is wealthy. A person who earns 40k but spends 15k is better off than a person who earns 60k but spends 45k. Control your expenses and make the money work for it’s master ( which is you by the way ).
3. Create a River not a Pond
A Wealthy person is one who has an income stream, not the one who has it all stashed in one place.
If you followed the first step and kept saving every month but haven’t invested it somewhere then it’s value will start depreciating (due to factors such as inflation, global economy). This is like a Pond where draining of water is much faster than the rate at which it replenishes, Instead you must create a constant stream of income through which you can spend without worrying that it will deplete (such as income from Real Estate, Passive Income streams)
4. Power of Passive Income
“If you don’t find a way to make money while you sleep, you will work until you die.” — Warren Buffet
Think about the above statement especially if you are an Employee, an Employee trades time and effort for money but the money always remains a constant, even though you worked more that 8 hours per day or even if you’ve worked during week-ends the pay is always the same.
Instead what you must pursue is a way by which money compensates for effort that you put it and which takes least amount of your time, such as writing a Blog, making a video, building a video game,… all these require more effort but time is only used once (initially) and it generates a steam of income even while you sleep, because the internet doesn’t sleep :D
5. Goddess of Luck
This one is straight forward.
Luck is defined as percentage by which you succeed or fail, some people who are deemed talented have greater chance of success but in order to succeed or fail one must first do the task. So if you keep moving forward chances of success will also be higher.
That was my takeaways from this book, I highly recommend it.
Do share your thoughts on this article and also books that you recommend!… (^_^)
- Book Link — The Richest Man In Babylon
- I also recommend this set — World’s Greatest Books For Personal Growth & Wealth