After Rich Dad Poor Dad, I read The Richest Man in Babylon. The first books have points in common, but this one insists on a simple idea: part of what you earn should stay with you and be invested.

If I were to summarize it: if you want to accumulate wealth, be able to save at least one-tenth of everything you earn.

The Constant Flow

The most common mistake of those who start earning money is believing that wealth comes down to the amount sitting in their bank account.

“A man’s wealth is not in the purse he carries. A fat purse quickly empties if there is no golden stream to refill it.”

You pay rent, groceries, taxes, and the internet. At the end of the month, you may have paid everyone but yourself. The book asks: if you work only to pay others, aren’t you doing exactly what a slave does in exchange for food and clothing?

The book repeats this phrase: “A part of all I earn is mine to keep.”

The 70 / 20 / 10 System (Engineering to Get Out of Debt)

For people with tight cash flow, the book proposes adjusting their standard of living to this model:

• 0.7 (70%): This is the ceiling of your living expenses. Learn to live on less than you earn.
• 0.2 (20%): Exclusively dedicated to paying off debts and clearing your name.
• 0.1 (10%): Paying yourself. This tenth is non-negotiable and must always be saved, at the very least.

The 5 Laws of Gold

Once you have learned to live on less and started retaining your capital, you need to know how to allocate it. Money obeys strict rules of preservation and multiplication:

1. The Law of Accumulation: Gold comes gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future.
2. The Law of Multiplication: Gold labors diligently and contentedly for the wise man who finds for it profitable employment. It must multiply.
3. The Law of Caution: Gold seeks the protection of the cautious owner who invests it according to the advice of experienced men.
4. The Law of Risk: Gold slips away from the man who invests it in businesses or purposes with which he is not familiar.
5. The Law of Greed: Gold escapes the man who forces it to impossible earnings, who listens to tricksters, or who trusts in romantic desires when investing it.

Discipline and work

The book connects wealth and discipline. Indiscipline can lead a person to ruin.

That includes not being too proud to do honest manual or technical work and knowing how to protect your capital. If you want to help a friend, do it without taking their burdens onto your shoulders.

Work well done, whether building an allocation spreadsheet, studying, or in your primary profession, brings satisfaction and makes a man better. The more knowledge we acquire, the more we may earn.

Link to buy the book: Get the book here

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Next reading: How to Organize Your Financial Life