Dear Millenial News Reader, another Monday is here with us. Better yet, it is a new month: happy new month. I hope the month of August brings you good tidings. 

In Kenya, it is our election month which breeds a lot of excitement and nervousness as well. Be sure to make it count wherever you are!

For the past three weeks, we have tackled the topic of financial management and what it means to the millennials and gen zs. We have discussed how we can better manage our money and some lessons we can learn from the way these two generations view money/ financial management. We also discussed how millennials and gen zs differ in financial management; while these two generations are very similar, they also have differences and that is also evident in financial management and literacy.

Today, I want to introduce you to a book; “The Richest Man in Babylon” by George S. Clason. The Richest Man in Babylon is a 1926 book by George S. Clason that dispenses financial advice through a collection of parables set 4,000 years ago in ancient Babylon. The book remains in print almost a century after the parables were originally published, and is regarded as a classic of personal financial advice. 

The parables are told by a fictional Babylonian character called Arkad, a poor scribe who became the “richest man in Babylon”. Included in Arkad’s advice are the “Seven Cures” (or how to generate money and wealth), and the “Five Laws of Gold” (or how to protect and invest wealth). A core part of Arkad’s advice is around “paying yourself first”, “living within your means”, “investing in what you know”, the importance of “long-term saving”, and “home ownership”.

As I read this book, I realised that there are a few lessons that millennials and gen zs can learn about money:

  1. Start their purse by fattening

“Pay yourself first” may have been coined by Clason. It means you should put away 10% of every paycheck into savings.  Allocate your savings to an emergency fund amounting to at least six months of coverage for basic essential expenses.  Unforeseen events are undesirable, so plan ahead.

  1. Control thy expenditures

To set aside money for saving and investing, you may need to cut some costs. To control your expenses, assess your budget for your basic living needs. These are predictable monthly fixed costs such as mortgage payments or rent, property taxes, utilities, car loans, typical grocery bills, credit card payments, and other monthly expenses. Remember, these costs are for our 

  1. Make thy gold multiply

Saving and investing your money as early as possible enables you to benefit from compound interest through the years. Compounding is a magical way of earning interest on the principal invested and the cumulative effect of earning interest on that interest. Compounding works to your advantage when it is your invested money

  1. Guard thy treasures from loss

Investments are often fraught with dangers, especially for beginners. Not every investment bears fruit. Learn about the risks of investing, whether in the stock market or investing in a new business. Consult those with training and more experience in that field. Arkad tells of his folly when he entrusted a bricklayer to buy jewels for him and returned with glass.

  1. Make of  thy dwelling a profitable investment 

Buying your own home versus renting is a widespread debate. Clason via Arkad advocates in favour of owning your home. Do you still think buying a home is a profitable investment? Leave a comment in the comment section below.

  1. Increase thy ability to earn

After you earn your college degree, real learning has just begun. You should leverage any skill-building or training opportunities to increase your earnings if offered at your workplace.

  1. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.

Arkad tells a Babylonian tradition that sons of wealthy parents must earn the right to inherit the estate of the parents. Arkad gave his son two things his parents denied him. First, he gave his son a bag of gold and a clay tablet carved with the five laws of gold. He told his son to come back in 10 years and give his father an account of how he did. If worthy, he would inherit the estate. Ten years later, his son came back to tell his father he handled the gold poorly and lost it all. He had gotten involved with horse racing and wagering with deceitful men. His son admitted he knew nothing of horses, a business he was unfamiliar with. These men defrauded him. The son sought employment but had no practical training. He then turned to the clay tablets, which contained financial wisdom and provided him with a road to wealth.

  1. Budget Rule:  10/70/20

The clay tablets of Babylon provided a budgeting plan of 10/70/20 with earnings allocated as follows:

  1. 10% goes for savings for future investments.
  2. 70%  should go for necessary expenses, notably to provide for home, clothes, and food.
  3.  20% will be for paying off debt.

The above percentages provided by Clason differ from the  Budget Rule of 50/20/30 or spending 50% for your needs, 30% for your wants and 20% allocated to savings.

While the Babylonian budget rule may seem to be antiquated, budgeting of any kind that works for you is the best way to control your spending. Overspending leads to having to borrow and carrying too much debt. Whatever plan you choose and stick to is good so long as you spend within your means and don’t overburden yourself with debt too challenging to pay off.

This is a book that really pushed my thinking and was challenging for me to read as it is my first financial management book to read. What lessons do you think you can start implementing as soon as possible? Maybe the first thing you can do is to invest your money in buying this book, it is a game changer.

Till the next time, bye and happy reading!

Ruthie K ❤❤❤