Our CEO’s column in our employee newsletter, Logix Out Loud, is always an enjoyable read. Usually it is filled with big happenings at Logix, ideas for providing great service, or insights about how the credit union is doing. This month, Dave used his column to tell our staff about one of his favorite books, “The Richest man in Babylon.” The financial advice in the book is timeless, and certainly worth sharing with our members. Here’s Dave’s post to our staff:
I found the road to wealth when I decided that a part of all I earned was mine to keep. And so will you." --- Arkad (from The Richest Man in Babylon, by George Samuel Clason)
I don’t generally endorse books or products in this column, but I encourage everyone to read The Richest Man in Babylon as soon as possible after beginning to earn income, whether from an allowance, babysitting, eBay sales, or a regular full or part-time job; but even for those who have worked for decades, it’s never too late to begin managing one’s finances wisely, and Clason’s book is a terrific source of financial wisdom.
I stumbled upon The Richest Man in Babylon in middle school. I needed to complete a book report for a class assignment, and reluctantly walked over to the school library armed with strict criteria for a book selection – something short and easy. The librarian recommended Clason’s book, a recommendation that would change my life.
Soon after reading The Richest Man in Babylon, coincidentally, I started earning money for the first time, with a paper route. I immediately began practicing the book’s lessons, and I credit those practices, along with a diligent work effort (and, as mentioned in another article, the advice to “always give more than expected”) with any financial success I have achieved.
The tenets of Richest Man are simple and straightforward – common sense that isn’t very common – as told through the parables of fictional characters in ancient Babylon, but equally true today. Here are the important points:
1. Save at least a tenth of your income (and as much more as you can afford), and put that money to work earning interest [our 401(k) plan is a great and easy vehicle for this purpose]
"How can anyone save a tenth of all he earns when all he earns is not enough for necessary expenses? What we call “necessary expenses” will always grow to equal our incomes unless we understand the difference between ‘necessary expense’ and ‘desire.’ Budget expenses to pay for necessities and desires without spending more than nine-tenths of your earnings."
2. Reinvest (don’t spend) the earnings on your savings
3. Don’t take investment advice from the inexperienced, and don’t invest in “get rich quick” schemes of friends and acquaintances
"Friends and relatives often eagerly enter tempting investments, and urge us to follow. Invest only where the principal is safe, and where you will not fail to collect a fair return. Secure the advice of those experienced in the profitable handling of money." [our Financial Consultants are terrific resources for this purpose]
4. Own your own home
“If you pay rent to a landlord all your life, at the end of your life you'll have nothing to show for it. If you instead pay a mortgage on a house, at the end of your life you'll have a house to show for it.” [Our Employee Mortgage Discount Program is such a terrific benefit that it simply must be used by qualified employees]
5. Prepare for retirement and buy insurance to provide for your family [both available through Logix]
6. Work to achieve concrete goals, not only to advance in one's career, but also to become wiser [take advantage of opportunities to learn, including available classes and tuition reimbursement]
7. Pay your debts promptly and do not stay in debt
8. Have compassion for the unfortunate, and aid them within reasonable limits [our Community Stars program gives us the opportunity to aid others less fortunate than ourselves]
Many of our employees already follow these practices, perhaps intuitively, perhaps based on advice from family or friends, or perhaps – like me – after reading a book with the power to change a life.
Here’s to great books and to financial success!
Editor's note: For those who are interested, there is a Kindle version available on Amazon for $1.99