Have you ever heard that piece of old, but good, advice?
As far as I know, it was popularized by George Samuel Clason in a parable* he wrote titled “The Richest Man in Babylon” (click the link to download a PDF file). That story has long been available in a book of the same name, where it appears along with other similar works by Clason.
My first recommendation to anyone whose finances aren’t what they should be is to read this book. It’s a very simple book. It’s nearly 100 years old and about 100 pages long. You won’t find anything technical or complicated in “The Richest Man in Babylon“. Nothing about any specific investment product, no references to some obscure section of the tax code. Nothing mathematical beyond the concept of 10 percent. A 12-year-old child could read and understand it — and 12-year-olds should read it.
You should get two things from this book: (1) some basic principles of personal finance, like “Pay yourself first”, and (2) the inspiration that makes you want to put those principles into practice.
Did you notice that I said it’s a parable? Yes, “The Richest Man in Babylon” is a book of parables, written in a slightly silly though still quite agreeable style that is something of a mix of the Arabian Nights and the Bible. There’s a moral in each of these tales, about “Bansir, the chariot builder” or “Arkad, the richest man in all Babylon” — lessons everyone should learn.
Pay yourself first; A part of all you earn is yours to keep.
is the first and most important lesson. (continued …)
* Some sources say that “Pay Yourself First” originated with Bob Hazen, of the Benj. Franklin Savings and Loan company in Oregon. The phrase appears in old advertisements for the Benj. Franklin Savings and Loan, but I have not been able to determine if it was used first by Mr Hazen or Mr Clason. By the way, it’s a parable and not a fable. According to Wikipedia, both parables and fables are stories that are designed to teach you the “moral of the story”, but fables feature animals or other non-human characters, while parables are typically about ordinary humans.