The Trim blog is pretty great, but we want to help you discover other awesome sources of personal finance wisdom. This is the first entry in a series that brings you key lessons from classic books about personal finance.
Written in 1926 by George Samuel Clason — and currently available on Kindle for $1.99 — The Richest Man In Babylon is the original guide to personal finance. And unlike the dry textbooks that are published in droves these days, it tells a great story.
The Richest Man In Babylon is structured as a series of parables set in ancient Babylon, centered around the story of two friends who set out on a mission to ask their wealthy former classmate just how he got so rich.
We love this book because it provides powerful lessons of personal finance in a simple, entertaining way. Here are seven of our favorite pieces of timeless wisdom from the book:
- “Start thy purse to fattening”
This is the big one: don’t spend all the money you make and pay yourself first! The rich old man in the book recommends that you “save one piece of gold for every ten you earn.” It’s a little easier than putting gold under your mattress these days, of course; there are tons of services that auto-transfer money from your checking to savings account, helping you save ten percent of your income a few dollars at a time.
- “Control thy expenditures”
The best way to make sure you have an extra “piece of gold” to save is to not spend it in the first place! You can use Trim to cancel old subscriptions, fight overdraft fees and earn back money to save.
- “Make thy gold multiply”
In a word: invest! The market has been volatile lately, but instead of buying individual stocks, you can’t go wrong by putting your money in a passive index fund that tracks the overall stock market. Vanguard has a few great options.
- “Guard thy treasures against loss”
A simple one at heart but not always easy to put into practice: don’t be a sucker! Avoid making risky loans or investing in pie-in-the-sky ventures that you don’t understand.
- “Make of thy dwelling a profitable investment”
This piece of advice suggests that you should invest in your own home as soon as possible, instead of paying a landlord. We’d say that the rent vs. buy decision depends on where you live and your lifestyle and financial goals — but given the existence of big tax breaks for homebuyers and low interest rates, we’re inclined to agree.
- “Insure a future income”
Some of the most important words of wisdom on the list: make sure to save up for retirement! We think that rather than investing in risky mutual funds, buying a set of passive index funds is the way to go. If you have a family, buying life insurance is important, too.
- “Increase thy ability to earn”
Possibly the most non-intuitive but crucial piece of advice from the rich old man in Babylon: improve yourself and you’ll improve your earning potential. Set concrete goals, pay your debts promptly, pursue education and deal with folks honestly, and you’ll massively amplify your financial — and personal — success.
We think that following these principles is a great start to achieving financial success, and we want to help. Sign up for Trim to cancel subscriptions, fight fees and get money back.