Principles for Investing and Life

One of my favorite books is The Richest Man in Babylon by George S. Clason. It was written in 1926 during the Roaring 20s. The principles for investing and life are timeless which may explain why it was reprinted throughout the Great Depression in 1930, 1931, 1932, 1933, 1936, and 1937. Think about that! No one, except for the fortunate wealthy, had money to spare during the Great Depression. And yet the demand for this little book was so great that the publisher had to reprint and reprint the book. The book is only 144 pages, so its a quick read. I recommend it.

What are the powerful principles for a prosperous life? Every day, we make countless choices: Will I buy lunch at a restaurant or brown bag my lunch? Will I buy a newspaper or surf the web for news? Will I buy a new computer or rehab the old computer in the kids' room? Do I go to my favorite overpriced dry cleaners or the less expensive dry cleaners down the block? Do I zone out on another episode of Law and Order or digest an educational hour of financial news? The cumulative impact of our daily choices will determine our financial destiny.

The Richest Man in Babylon is the story of a chariot builder in ancient times who is struggling. He wants the security of wealth but he doesn't know what to do. A friend suggests that the answer might be found by asking the richest man in Babylon. The suggestion is smart, particularly since the richest man had started out in life as a nobody, another kid in the neighborhood like everyone else. (I understand this narrative because one of my favorite uncles started with nothing during the Great Depression and died owning 16 properties.)

The struggling chariot builder learns from his childhood friend that these are the principles for prosperity:

1. Save a portion of your income (preferably 10%).
2. Control your expenditures.
3. Make your money multiply by wise investment decisions.
4. Safeguard your savings and investments from loss.
5. Own, don't rent.
6. Insure a future income so that you are provided for in your old age.
7. Increase your ability to earn by investing in your knowledge.
8. Our prosperity as a nation depends upon the personal financial prosperity of each of us as individuals.
9. Success means accomplishments as a result of our own efforts and abilities.
10. Proper preparation is the key to our success.

We live in an age of computers, not chariots. Nonetheless, the same thoughts can generate financial rewards today. Try to live by these principles every day. I know its hard if you're just graduating from college or graduate school. You may be unemployed and have overwhelming debt. I have been there. I remember how I used to live on a dollar a day. I kept digging a deeper and deeper hole for myself until it occurred to me that there must be a better way. I began by controlling my expenditures. I then forced myself to save 1% of my income. 1% was a pittance but it got me into the habit of saving. 1% became 2%. 2% became 3%. As I paid off more and more debts, the savings rate increased until it hit 10%. That was my savings goal.

Once you have savings and are controlling your expenditures, you will feel more secure and confident. I'm not bragging about my learning curve. My mom would save 50% of her income when she was single. She was way smarter than her hapless son living in Gaithersburg, Maryland on $1 a day/smile. My favorite uncle had an ungodly savings rate. And he plowed those savings back into his properties and bank accounts.

Well, that's it for this Sunday morning. There is nothing new under the sun when it comes to principles for prosperity. Don't debt. Save, preferably, 10% of your income. Invest your savings in wise investments.

Read The Richest Man in Babylon. Its a good investment in your financial future.

Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.