18 Lessons Learned from The Richest Man in Babylon (Smart Military Investor Book Review)
Business owners around the world have used The Richest Man in Babylon by George S. Clason as their navigational aid to successfully fly their businesses to new heights. Many credit the book to building a successful schema and have highly recommended it to all aspiring entrepreneurs.
What if I told you that there are lessons that in this book that can help or servicemen and women like me become rich? It's the truth.
I am going to spell out 29 lessons I learned from this book in hopes that it inspires you to pick it up and extract the same knowledge I did from it.
1. New Technology Does Not Make Our Generation Smarter
Have any of you had the moment with your parents where you had to show them how to download a program on a computer? Be honest, did that make you feel intellectually superior to them? Technically, in the single act of downloading computer software, you were.
As time and technology increases younger generations feel like they become less dependent on the lessons of the generations before them. The truth, however, is that younger generations are very much so dependent on the trials and tribulations of the people who came before us.
As George S. Clason so eloquently put it, the sun rises and falls the same way is as it did when my parents were alive. Technology is meant to be outdated, but lessons are not.
2. Wealth is NOT About How Much Make, But How Much You Keep
Some of you may not now the story of Antoine Walker. He played over decade in the NBA. Over that time, he made over 100 million dollars. His story, like many other professional athletes, ended sadly. Within a few years of retirement, he was bankrupt.
Because he had little other professional skills, it was an upward battle for him. You see, it wasn’t about the top dollar salary he made, it was about the amount of it he did not keep. The Richest Man in Babylon didn’t earn that title because he had a cushy job, he earned it because he kept the money that was paid to him.
3. Advice is So Easy to Come Across; Only Take Advice That is Worthwhile
People love to hear themselves speak. It is one of the most annoying, natural mannerisms of humans. There is usually a lot of rubbish coming out of people’s mouths and you need to protect yourself from it.
I am not telling you to be a skeptic. Skeptics do not win people over. What you should do is scrutinize and legitimize the advice you get against facts.
4. Luck is Another Word for Preparation
When people think of Las Vegas, they think of black jack tables, slot machines, and, most importantly, Lady Luck. For if you have Lady Luck on your side you will become a big winner.
The real secret is Lady Luck only blesses those who prepare. Do you know the people Lady Luck really blesses in Las Vegas? The Casino owners who created the odds in their favor. Sure, they must pay out to winners, but only after they have made 100 times that amount.
Preparation is what will bring you good fortune because you will always be ready to pounce on an opportunity.
5. True Character is Doing What You Say You Will Do
No matter how minuscule the task, if you say you will do it, do it.
6. You Must Believe There is No Limit on Wealth
Big money comes to those who are creative and hard-working.
If you are just creative, but a poor worker, you may earn a lot, but you won’t keep earning because of your willingness to give up.
If you are hard-working, but not creative, you will work a lot of hours for a normal living and never taste the good life.
Put your mind to use and find unique ways to make money. The most creative people built Babylon, the richest city of its times, from the barren desert.
7. Be Wary of Investments that Promise High Rate of Returns
If we all must be a fish, then you can call me a shark. I feed on the poor decisions of investors. Those other investors are like fish that take the bait on the hook. Promises for 50% returns, easy business opportunities, or some deal to buy precious metals because inflation is scary are examples of that bait on a hook.
Money isn’t meant to be easy to obtain. You must work. Anytime you try something to make fast money, there is usually a pitiful ending waiting for you.
8. Small Returns are Better than Taking on A Lot of Risk
If you did your research on a rental property and you know that you can rent it for $400 a month, that investment is probably safer than buying a house and expecting it to appreciate for a 70% profit.
Buying a well-ran, dividend company is probably better than buying a tech start up that you don’t know much about. Sure, the tech company could blow up, but it could also flop in a few years like many others typically do.
Small gains are nothing to scoff at. Take your small earnings, reinvest them, and repeat. The power of the compounding will work in your favor.
9. You Can Adapt to a Stricter Savings Plan
If you make less than $4,000 a month, you may feel like you need every penny to meet ends meet. That couldn’t be further from the truth.
The powerful thing about humans is we have an innate need to survive. Use that primal instinct to your advantage. Use it to adapt to living on a lower percentage of you take home income.
I guarantee you that you can live on 70%-90% of your take home pay and save the rest without even feeling a difference. Your mind and body will adapt to the change. So, just start saving a little more today.
10. To Build Wealth, You Must Reprogrammed Your Mind
No, you do not need a fancy car. No, you do not need a Netflix subscription. No, you do not need to eat out every day.
Yes, you need cash. Yes, you need to max out my IRA. Yes, you need to make home improvements. Yes, you need to earn a new degree.
Simple reprogramming of how you view things will help you put money into things that matter. Things that create positive net worth growth.
11. Surround Yourself with People with Similar Money Goals
This can be difficult because you may be loyal to friends that you had for years. I do not want to mislead you. You shouldn’t shun those people.
Instead, you should focus on the people who understand your goals and have the same goals as you do. It is easy to get caught in the trap of impressing your peers. The need for a bigger houses and cars or the newest pair of shoes are what can keep you from every achieving true wealth.
Find a friend who likes to invest. You may know someone who started their own business. You may already have that friend but you never cultivated that type of conversation.
Having friends with similar goals will drive you to your goals.
12. Make Your Goals Simple and Definite.
Saying ‘I want to be a millionaire’ is a dream not a goal. It is okay to dream, but its meaningless if you don’t have actionable goals.
My rule of thumb is anything that takes longer than a year to a complete is a dream.
If you want to be a millionaire, you need to decide what you can do this year to complete that goal. Do you want to save to be millionaire? Do you want to create a product or service and sell it? Whatever you choose to take, you need to find out what you can do within a year to achieve your dream. That task is your goal.
13. Reading Will Allow You to Earn More Money
There is not much more I can say about this. Pick up books, magazines, on-line articles and read them. You should make a habit of reading.
Your wealth is hidden in the shelves of your local library.
14. Money Comes to Those Who Understand It
Do you understand a company’s financial statements? Do you understand how to protect your business by applying for a LLC? Do you know how to find undervalued real estate?
If you don’t know how money works, then you can’t make money. There are rules to money. A lot of them. I suggest you learn the rules so you can play the game.
15. Help your friends, But Do Not Do the Work for Your Friends.
You should always be willing to lend a helping hand. First, however, you need to analyze the situation. Are you setting them up for success or are you making them dependent on your handouts?
For example, giving someone a $1,000 dollar to make an investment that could yield $5,000 is genuine help. You recognize that your friend is going to do work and make something of your investment.
An opposite example is if you friend comes to you and says I need $1,000 to cover this month’s rent. In this scenario, you are doing the work for your friend. There is nothing prompting him or her to work themselves. You should, instead, offer to find opportunities to make more money. Maybe you have a connection that they don’t. That is real help.
16. Debt Should be Reserved for The Savvy Investor
This is one of my favorite lessons from The Richest Man in Babylon.
In the years of youth, people are not responsible with debt. Instead of using debt as a booster to make money, it is just becomes a never-ending cycle of mediocrity ensuring no path to wealth.
If you don’t understand how to obtain debt to make money, then you should stay away from it all together.
17. If You Have the Determination, a Path to Wealth Can Be Found
Sometimes finding out how tomake more money isn’t always clear. There me be a lack of knowledge, experience or capital. Whatever the setback, if you have the right determination a path will present itself to you.
18. Wealth Building Should Be Celebrated
I know a lot of this post focuses on sacrifices. Sacrifice is not enjoyable. It is hard.
The truth is, that you must reward yourself. If you don’t, you will quit. Don’t be afraid to take an extravagant vacation or buy new flat screen TV. If you have learned and mastered every principle in this post, then expenditures like that should not run you off your path.
Your life is meant to be enjoyed.
Thank you for reading this post. If you have not read The Richest Man in Babylon a link to buy it is right below.