The Richest Man in Babylon by George S. Clason is a classic book on the accumulation of wealth. It is not a get rich quick book but rather one that teaches how to build wealth over time. The principles derived from this book have stood the test of time and can be applied and utilized by any generation regardless of current economic standing. The principles are:
1. Set Aside a Portion of Income. It stands to reason that it is impossible to accumulate savings and wealth by spending more than current earnings allow. Accumulating savings should be the highest priority in the budget. The book recommends that a minimum of 10% of income should be set aside.
2. Live on the Rest. As an individual's income grows, expenses always seem to grow with them. Unless these expenses are controlled and maintained within the portion of income left over from savings, monetary wealth will never be realized. Do not increase lifestyle with each and every rise in income. Use a spending plan for monthly expenses.
3. Build Passive Income. The accumulated savings should be invested to begin earning interest and dividend income. By doing this, one can tap the power of compound interest which Albert Einstein reputedly described as "the most powerful force in the universe." One can also use time to create passive income streams which will multiply earning potential over time.
4. Own a Home. This may not seem wise advice given the recent market in real estate. However, it does make sense to figure out the relative cost of renting a home versus purchasing given one's expected circumstances. As the cost of real estate declines from the recent bubble, affordability is increasing and making home ownership with the potential for equity a more logical choice.
5. Increase Earnings. This can be accomplished in many different ways. Obtaining a more advanced degree, starting a business part-time or gaining technical skills can all be ways of increasing one's earnings. These increased earnings can be used to pay off debt or be added to savings to build wealth even faster.
There are several other useful principles in this short book that can be used to accumulate and safeguard wealth. One would be wise to follow the advice of The Richest Man in Babylon.
 | It's up to you when saving for retirement, since Social Security alone won't provide enough income for you to live comfortably. Managing taxes and risk are the keys to growing your retirement savings. |
 | Early retirement requires long-term planning, discipline and a strategy. With a little sacrifice, the dreams of an early retirement can become a reality, and it's never too early in your career to start thinking about early retirement planning. |
 | Whether you are 35 or 55 years old, it's never too early or too late to focus on your retirement savings plans. |
As an older adult, you have probably reached the milestone of retirement. To make your retirement dollars stretch as far as possible, it is particularly important that you sacrifice wants for needs. Good money management can help you live within your means. |
Retirement plans have been front page news in the past few years, mostly in negative ways. Polaroid retirees watched their pensions disappear. Enron employees were prodded to put their retirement money into Enron stock, and you know what happened to that. Then there are General Motors's current problems. |
