This site is all about education. One of the best ways I have found to learn is through reading. Therefore, I will provide book reviews from time to time of books which have taught me much about personal finance.
I have chosen to discuss the first book I ever read about personal finance. It is also one of the best. The Richest Man in Babylon by George S. Clason is a collection of very readable and interesting stories which teach fundamental financial lessons. Written from the perspective of people living in ancient Babylon, it teaches through story, which I think is one of the most effective ways of learning.
The book provides a simple plan for financial success:
1) Save at least 10 percent of your income.
2) Wisely invest your savings so that it can multiply.
3) Find people who have industry specific knowledge who you trust to help you invest wisely.
4) Don’t invest in things you don’t have knowledge of or things of which your trusted industry experts do not approve.
5) Don’t invest in things that appear to good to be true or with people without integrity.
These five laws, collectively referred to as “The Five Laws of Gold,” are a great foundation into effectively handling money. What I learned too late is that building wealth is very uncomplicated.
Sometimes when it comes to investing, we try to be sophisticated. There is a time for sophistication. But most investing, particularly when you are just starting to build wealth should be kept as simple as possible.
There are many other lessons in this book, such as making the most of opportunity and the value of hard work. The wisdom gained from reading this simple book is a great primer into the fascinating world of personal finance and investing.