My Favorite Finance Book Of All Time

There are as many financial books available than there are trees in the the forest, so out of the abundance of choices, there is one book that still stands the test of time. The book is "The Richest Man in Babylon" written by George Samuel Clason in 1928.

This book uses a series of parables set in the time of ancient Babylon to teach the principles of personal finance and investing. IMO this is the greatest starter book for anyone looking to learn about finance and investing. Even though it was written in 1928, the principles are still as sound. Actually, the principles espoused in this book are more important today than ever, as almost an entire generation has built the habit of living on credit and putting little to nothing into savings. No matter your age, if you haven't yet read this book then I highly recommend it.

Some of the topics discussed include saving at least 10% of your income, putting your savings to work for you(compound interest), protecting your principal from loss, creating a future stream of income, and increasing your ability to earn among others. The parables include a character named Arkad, who is the wealthiest citizen of Babylon at the time, and has become a bit of a mentor to the working class of the city whom he is trying to help to become wealthy one day.

Not only could the world benefit from more people reading and applying the principles laid out in this book, the world also needs more Arkads. Older, wealthier people who fully understand how to create wealth can produce a great benefit to the younger generations by mentoring them on the principles of wealth building. Giving one's times to help a younger person understand these principles is a form of charity, since the elder gives his time without expecting payment or anything else directly in return. When a society becomes thrifty and follows sound financial principles, this is the first step in any nation becoming richer. There has never been a poor country that became rich solely due to the charitable givings of other wealthy individuals, groups, or nations. Poor countries become rich through savings/investing and through innovation. Neither of these can be effective without a healthy dose of economic freedom though, and this is probably the most important factor of all. For economic freedom is the healthy soil that prosperity grows from. Bad soil(little to no economic freedom) will yield little in the way of prosperity. Warren Buffett and Bill Gates have pledged to give away practically all of their wealth when they die, but even that amount (which will be at least over 100 billion) won't help the poor people of the world in any fundamental way. Instead, these individuals would be better off mentoring the younger generation in hopes of inspiring the next Warren Buffett to emerge. Outright charitable giving helps a small number of people in the very short term, whereas teaching the principles of wealth creation helps everyone out in the long run(same concept as Henry Hazlitt's "one lesson").

I encourage everyone to read this book, and if you already have, find a young family member to recommend it to. I feel that spreading the ideas of sound financial principles is a noble cause, and this book is one of the best ways to do it.