My wife had read this some time before; I read this while we were staying in the hotel before we moved into our current apartment. It's one of the books my division commander had credited for his financial success in life.
George Clason compiled the financial advice pamphlets he'd originally written for banks and insurance companies into book form in 1926. It's not really a guidebook to getting rich so much as a timeless compilation of financial wisdom.
The thing that stands out to me the most is the importance of a 10% savings rate. I remember my grandfather saying something like this a long time ago, but I thought it was more important to pay off debt rather than save. In retrospect, it may have been better to save -- maintaining a highly liquid reserve allows a person to take advantage of opportunities that come up.
A second lesson is the importance of shaping your finances around your goals, not the other way around. In the first chapter of the "Lean Purse," the rich guy looks out at a crowd and sees men of every walk of life and many different income levels; the one thing they have in common is no one has any money in their pocket. In another part, you hear a guy protest against budgeting as "an infringement on his rights to spend his money as he pleases" (an argument I also have heard). The rich guy's response is insightful.
Most people will save from what they have left over after they buy all their "necessities." Clason says to adjust expenses so that saving becomes a personal mandate. Over time, putting that money to work establishes a "stream of gold" that flows without regard to a person's normal income.
I think this idea was expounded in Sharon Lechter/Robert Kiyosaki's book "Rich Dad, Poor Dad," where it's called passive income. Rather than continually working for your money, have your money work for your money.
It's entirely possible, though I confess that I've only been taking it seriously since my deployment started in 2011. As I learned in business school, in the short term some expenses are fixed -- one's mortgage, for example, is not something you can easily change. However, in the long term, all expenses are variable -- if need be, you can move into a cheaper place.
Richest Man in Bablyon is a great book for explaining the importance of financial discipline.
Friday, September 21, 2012
Review: Richest Man in Babylon
My wife had read this some time before; I read this while we were staying in the hotel before we moved into our current apartment. It's one of the books my division commander had credited for his financial success in life.
George Clason compiled the financial advice pamphlets he'd originally written for banks and insurance companies into book form in 1926. It's not really a guidebook to getting rich so much as a timeless compilation of financial wisdom.
The thing that stands out to me the most is the importance of a 10% savings rate. I remember my grandfather saying something like this a long time ago, but I thought it was more important to pay off debt rather than save. In retrospect, it may have been better to save -- maintaining a highly liquid reserve allows a person to take advantage of opportunities that come up.
A second lesson is the importance of shaping your finances around your goals, not the other way around. In the first chapter of the "Lean Purse," the rich guy looks out at a crowd and sees men of every walk of life and many different income levels; the one thing they have in common is no one has any money in their pocket. In another part, you hear a guy protest against budgeting as "an infringement on his rights to spend his money as he pleases" (an argument I also have heard). The rich guy's response is insightful.
Most people will save from what they have left over after they buy all their "necessities." Clason says to adjust expenses so that saving becomes a personal mandate. Over time, putting that money to work establishes a "stream of gold" that flows without regard to a person's normal income.
I think this idea was expounded in Sharon Lechter/Robert Kiyosaki's book "Rich Dad, Poor Dad," where it's called passive income. Rather than continually working for your money, have your money work for your money.
It's entirely possible, though I confess that I've only been taking it seriously since my deployment started in 2011. As I learned in business school, in the short term some expenses are fixed -- one's mortgage, for example, is not something you can easily change. However, in the long term, all expenses are variable -- if need be, you can move into a cheaper place.
Richest Man in Bablyon is a great book for explaining the importance of financial discipline.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment