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The richest man in Babylon

Can you believe that the basics of reducing debt, increasing savings, and generating passive income are still the same today as they were 6,000 years ago in ancient Babylon? The book "The richest man in Babylon” shows us the basic rules for increasing wealth that have stood the test of time. 

The book was first published in 1926. You may be wondering, what can a book written nearly 100 years ago teach me about finance? The answer is, a lot. While the success of our society is measured by the universal criterion of money, the principles to which it is subjected are the same today as they were 100 years ago or 6,000 years ago in Babylon. And most important of all, they will continue to be relevant for the new generations. As stated in the book, these principles are as universal and immutable as the law of gravity.

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1.- The author  - George S. Clason

George S. Clason was an American businessman who achieved success with his map printing company and amassed a great fortune. Still, he was best known for writing a series of educational booklets on personal finance, which used parables set in ancient Babylon. The book "The Richest Man in Babylon" compiles the most important parables and is very easy to read as it immerses you in little stories of the day-to-day life of the Babylonian world. The concepts that are explained in this book are also a reference and are used in many other personal finance and financial freedom books such as "Rich father poor father" by Robert Kiyosaki or "The path to financial freedomby Bodo Schafer.

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2.- The 7 keys to achieving wealth

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The book tells the adventures of several characters, including Arkad, a boy who worked as a scribe and who set out to be rich, since he found that, although money does not bring happiness, it can contribute greatly to improving its quality. of life. Arkad began a quest for knowledge to learn how to make more money so that he could lead a freer and more fulfilling life, as well as working hard at his profession as a scribe. Arkad decided that the best way to seek such knowledge was to ask people who have been successful. Thanks to the knowledge acquired and his successful business management, Arkad became the richest man in Babylon and even the king asked him for advice. Arkad always kept in mind that money is nothing more than an instrument to be able to enjoy life to the fullest. 

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In one of the stories, the king asks Arkad to share his wisdom with the citizens of Babylon and he explains to them in a somewhat biblical way the seven ways to fill an empty bag of gold, which today is synonymous with increase wealth.

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2.1.- Start filling your bag

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The first key is "Start filling your bag." What we want to explain here is that you keep a part of what you earn in your gold bag, in the book it is said that said part should not be less than one tenth of what you earn and that you should not spend that part. In other words, this is the same as saying that you set a monthly savings quota greater than 10%.

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2.2.- Control your expenses

The second way is “Control your expenses”. What you think are unavoidable expenses always tend to grow in proportion to our income if something is not done to avoid it. Don't mistake unavoidable expenses with your desires. Create a budget that allows you to control expenses without touching at least a tenth of what you earn. When budgeting expenses, you may find a part that is not inevitable and that you can add additionally to your savings quota.  If you want to know how to control your expenses, clickhere.

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2.3.- Make your gold bear fruit

The third guideline is "Make your gold bear fruit." In this case, gold is a synonym for money, since gold was the currency in Babylon and what is meant by this point is to learn how to make money work for you. In other words, it is about investing your money in a beneficial way so that there are more and more sources of passive income that feed your wealth. 

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In Babylon there was no The Stock Exchange, where they buy and sellActions, but there were loans where one person lent their gold to another to carry out a project or a company. As you can see, quite similar to what we know today as actions. Fortunately today there are different Stock Exchanges where we can comfortably participate not only in local companies but also worldwide and thus make our gold or rather our money work for us. 

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2.4.- Prevent your treasures from being lost

The fourth guideline says "Prevent your treasures from being lost." Therefore, it is not a principle to fill the bag of gold but rather to prevent it from emptying when you have a certain amount saved and what the book wants to tell us is that you always invest money safely without risk of losing it and in In case of lending money, always do it with guarantees or with a deposit as gold lenders did in ancient times. 

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The fourth guideline says "Prevent your treasures from being lost." Therefore, it is not a principle to fill the bag of gold but rather to prevent it from emptying when you have a certain amount saved and what the book wants to tell us is that you always invest money safely without risk of losing it and in In case of lending money, always do it with guarantees or with a deposit as gold lenders did in ancient times. There are many ways in which you can invest your money, however, many of them can bring you losses. Therefore, it is important to have a minimum of financial education, to be advised by competent people thanks to their proven experience and knowledgeable in the matter, to establish and follow a long-term strategy to increase wealth and, above all, to have a good understanding of financial assets in the ones you are investing. 

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2.5.- Make your property a profitable investment

The fifth tip says "Make your property a profitable investment." What the book comes to say is that everyone should buy their own property to live in, not to rent. This is possibly advice that in 1926 had some validity but that today can be quite controversial. 

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2.6.- Ensure income for the future

The sixth guideline says “Secure income for the future”. The walls of the city of Babylon were very strong and protected the citizens from unexpected attacks. Here an analogy is made with the fact that you must plan your income for the days to come, that is, your retirement, and thus ensure the protection of your family from unexpected tragedies that may arise at any time with very safe and reliable pension plans and investments. You can read all the information about pension planshere.

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2.7.- Increase your skill in the acquisition of goods

The seventh and final way to fill your bag of gold says “Increase your skill in acquiring goods”. What has been commonly improves your income. To do this, you must invest in your human capital by cultivating your intellectual faculties, studying and specializing. 

This is a very very important point. Many people focus too much on saving more and more money by tightening their belts and leading an almost frugal life to increase their savings rate so they can invest more. This is surely a good approach, we believe that it is better to focus those energies on increasing income. Saving has the problem that you can never save more than 100% of your income and that is already quite unrealistic. However, there is no limit to increasing your income and you can always increase it above 100%. That is why it is more important to focus on how to increase your income, in order to increase your savings quota and be able to invest more. 

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3.- Conclusion

In addition to these seven concepts, there are many more very useful financial tips in the book, which we have not uncovered in this review.

If you want an easy and enjoyable reading on personal finances to deepen your knowledge, we recommend this book "The richest man in Babylon". The concepts in this book have inspired the books of many other financial education authors and will surely make you reflect on your attitude towards money. It is a basic and short book, which should be on every shelf of people who are interested in their financial education. If you are interested, you can buy it by clicking on the following link: “The richest man in Babylon”.

Write us in the comments which are your favorite books on personal finance.  

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