How to Become Rich 💰 - The Richest Man in Babylon (Animated Summary)

In this video, we will discuss the 6 principles of progressive wealth creation and although It was written almost a century ago and the principles in this book are basic, they still hold true to this day.

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Transcript:
1) Pay Yourself First (Start thy purse to fattening)
The first lesson is immediately the most important lesson of the book. Without this lesson, all the other lessons don’t work. Something the rich do that the poor don’t is that the rich pay themselves first. They pay themselves at least 10% first, just for them to keep. This lesson is covered in almost every personal finance book out there which should make it overwhelmingly clear that this is very important. When you don’t pay yourself first, and instead you just look at how much you have leftover at the end of the month, you won’t be consistent in building wealth.

2) Live below your means (“Control thy expenditures”)
If a person has a great salary doesn’t necessarily mean that person is rich. In the book “The millionaire next door” the author discusses statistics of high earning individuals. And a lot of the time these high earners have something called lifestyle creep. And they are just as poor as the rest of us. They make more, so they buy a bigger house, a better car, and move into a better neighbourhood because they think that they can afford it. This is a great way to trap yourself financially. The solution to this is obvious. Live below your means.

3) Make your money work for you. (“Make thy gold multiply”)
After you’ve built up a significant buffer of 3-6 months of your monthly expenses. You should start thinking about investing from that point forward since you actually lose money in your bank due to inflation. You want your money to work for you and the best way of doing this is by investing in ETF’s, stocks and bonds. On average the stock market returns somewhere around 7% per year. At first 7% doesn’t seem like much. Let’s say this year you invest 1000 dollars, then your approximate return would only be 70 dollars by the end of the year. But don’t let this sway you. Next year it will be 7% of 1070 dollars + whatever you will invest that year. And through compound interest, what seems slow at first will ramp up quickly. Make that money work for you.

4) Insure to protect your wealth. (“Guard thy treasures from loss.”)
Insurance helps safeguard our wealth by absorbing potential loss and mitigating our financial situation. There are many types of policies that you should consider. Make sure you research those that you need yourself. And although you might lose a little money through this in the long run, the damage an unfortunate event can do to your financial wellbeing is far greater and should be avoided.

5) Have a retirement plan. (“Insure a future income.”)
When Benjamin Franklin died in 1790 he left 1000 pounds or 5000$ after inflation in a trust. After 200 years the recipients of this trust finally took it out and they were shocked that it grew to over 7 million dollars. 5000$ to 7 million dollars! This is what time does to your money when you invest it smartly.

6) Invest in yourself. (“Increase thy ability to earn.”)
One of the best ways we can continue to increase what we earn is by investing in ourselves. And let’s be honest, you know what to do. Invest in your health by working out. Invest in your mental capacities by reading books. And invest socially in community for emotional stability.

#wealth #money

Видео How to Become Rich 💰 - The Richest Man in Babylon (Animated Summary) канала Lifelong Learner