The Richest Man in Babylon (free book!)

I just finished reading my first ever personal finance book, the Richest Man in Babylon. I chose it since it seems to be one of the most commonly recommended books by personal finance bloggers. The book gives some insightful lessons on finance through parables set in Babylon. Each chapter has some sort of lesson of its own, but one of the chapters explains the Five Laws of Gold.

1. Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.
This idea is echoed by many personal finance gurus who stress the importance of paying yourself first. Before spending your money, just put away 10% in savings and forget about it. It sounds like a lot, but surprisingly, you won't really notice that it's missing.

2. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
This is basically saying make your money work for you. Invest it in something with a decent return, and let compound interest work its magic.

3. Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
If you're going to invest your money, it's wise to follow the advice of experts in the field rather than your next door neighbor (unless he happens to be an expert).

4. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.
This is kind of the opposite of rule 3, and something that Warren Buffet preaches: don't get involved in something you don't completely understand. As much potential as there is in tech stocks, Warren Buffet can admit that he doesn't understand the industry very well, so he avoids investing in it. Amazing to see such humility nowadays.

5. Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.
Essentially, don't get caught up in something that sounds too good to be true - because in most cases, it is too good to be true.

There are many other important lessons in other chapters. While the book is well written, I can't point my finger on anything that caused a lightbulb to go off in my head. I think I've heard the ideas presented in the book many times, but that just goes to show how truthful those statements are. If you think you're pretty familiar with most basic financial concepts, you probably won't learn anything new, but if you're a novice, this can be a great guide to the pillars of personal finance.

If you're interested in reading this book, I got mine for free from Paperbackswap.com, so I highly recommend that route or borrowing it from your public library. I am also giving away my copy, so if you leave a comment or send an email stating your desire for this book, you will be entered into a random drawing to be held in one week.

Also, does anyone have any recommendations for good personal finance books that are a step above the basic books?

Tags: richest man in babylon, book, free