FSS Newsletter :: March
2003
Money Matters :: Recommended Reading
George S. Clason first published The Richest Man in Babylon
in 1926. Told as a collection of narratives set in ancient
Babylon (supposedly the wealthiest city in the history of
the world), the book stresses simplicity and common sense
in the management of one's finances.
The tales in Clason's book swirl around a group of simple
characters differentiated by class, specifically, those characters
who are in difficult financial straits (and are looking to
find a way out) take it upon themselves to meet with a few
of their notably affluent fellow citizens. They then inquire
as to the basis of the affluents' riches. There are few complicated
remedies espoused by the Babylonian "financial gurus." Rather,
these are the absolute basics of successful personal finance.
Readers will see these same tenets rehashed and rephrased
in just about every other personal-finance book out there.
1) The stream of money that flows into and out of one's
life is immense. Wealth and security can be secured from
it, but only if portions of that stream are diverted. Time
and again, the book's "enlightened" characters
stress saving at least ten percent of your income every month,
without fail. Accomplish this by setting aside that ten percent
before all other expenses are considered.
2) The amount of
money a person makes is important, but it is secondary to
the degree to which that person controls his expenses. Budget
and plan your expenses earnestly demand value for the dollars
you spend.
3) Three words: interest, interest, interest.
Take care to see that all saved monies are kept in the highest-yield
interest-bearing accounts available. If you have the experience
and education to do so, invest a portion of your money by
other means, always striving to create a reasonable risk/reward
ratio.
4) Forget about gunning for those astronomical returns
promised by market gurus and their "hot tips." And
don't bother with those wacky startup businesses you see
boxed in the classified ads, either. If you're going to take
risks and invest your money, then make sure you have the
education to know how to guard and protect your assets. Only
you can keep your best interests at the forefront. Your savings
control your future; treat them like it.
5) In most cases,
home ownership, even when financing is included is preferable
to renting. At some point, the mortgage payments will end,
and ownership will be achieved. There is no ownership for
the renter.
6) The future cannot be known, but preparations
can be taken to assure a certain level of financial safety.
Whether this is done via a strict savings plan, outside insurance,
or a combination of both, one must be careful to provide
for the wellness of himself and his loved ones in later years.
Disability and untimely death have caught and ruined families
and their finances since time immemorial.
7) Last among Clason's "cures" is
action taken to increase one's earnings. Acquire education,
experience, and confidence in yourself, and use these
things to improve your income. You might begin a second,
part-time job, or simply freelance your abilities in your
spare time. Whatever you do, never underestimate the opportunity
to turn a favorite hobby or skill (woodworking, photography,
home decorating, cooking, etc.) into extra income.
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