today we're talking about nine money lessons that I learned from the book richest man in Babylon this is part of a new series of videos on the channel where we'll be breaking down my favorite lessons from my favorite money books in this video we're breaking down the book into three parts so we're going to go into spending money making money and protecting money let's start with spending money lesson number one start thy purse to fattening in the book Arad who is the central character in the whole book and the wealthiest man in Babylon says that
a part of all you earn is yours to keep we tend to treat a paycheck as if it belongs to everyone else so the moment it comes in you might hand over a bit to your landlord and some of it to the grocery store and some of it to the electric company and then maybe pay for a vacation or a night out or two and then at the end of the month you realize it's just been paid out to everyone else and none of it's left over what Arad is saying is that some of that
money belongs to you to keep and the way that I've applied this to make sure I do it in my own life is to always pay myself first so before I do anything else with my paycheck as soon as some money comes in I put a portion of it towards my savings and then I spend the rest I have an automatic transfer every month from my main account to my separate savings account and it started off with just being 5% of my take home pay and then every year I slowly increased it as I made
more it went up to 10% 15% 20% but this simple shift in mindset just paying yourself first will be a complete changer for your finances lesson number two control thy expenditures in the book arcad warns that what each of us calls our necessary expenses will always grow to equal our income unless we protest to the contrary so there is something called lifestyle creep which is essentially that we as humans have this tendency to increase our spending as our income grows so if you remember when you first started working maybe a simple meal out might have
been a real treat a very occasional thing you did maybe to celebrate something but now that meal out might be a regular occurrence or maybe you used to walk everywhere to save money but now getting an Uber is your go-to option so ARA's lesson here is that we need to clearly examine our expenses and distinguish between true needs and wants that are just disguised as needs and we need to keep our wants under control because if you don't you're always going to be in a cycle where you're constantly chasing the next paycheck or the next
material possession by the way before we get into lesson three if you're enjoying this video I'm running a completely free a 7-Day savings crash course that will be starting very soon so every day you'll get an email from me where I'll be sharing strategies principles tools and hacks that you can do to save money without sacrificing your lifestyle I'm really excited about this because we ran this free series in June and had over 50,000 people sign up and everyone was sharing saving tips with each other and in our survey we found that on average people
saved over $11,000 that month if you head over to Nisha meave you can sign up again completely free lesson number three enjoy life while you can so while this book focuses quite heavily on on saving and Building Wealth one of my favorite Parts is when the richest man in Babylon Arad reminds us that life is meant to be enjoyed along the way he says that life is good and life is Rich with things to enjoy which really ties in to the philosophy from another one of my favorite money books which is die with zero which
essentially Advocates the idea that the ultimate Financial goal isn't to die with a hefty bank account balance but it's instead to use your money as a tool to create a really fulfilling rich life this mindset changed the way I approached my own finances I now intentionally budget for enjoyment every single month I allocate a specific amount for things that intentionally I know brings me happiness whether it's traveling ding out with friends and family indulging in a new hobby the key is knowing that I'm responsibly saving and Investing For My Future which then allows me to
enjoy the present without feeling guilty really recommend this just set aside a fun category in your budget it doesn't have to be anything extravagant just make sure you're making room for the things that enrich your day-to-day now move moving on to the making money part lesson number four is make thy gold multiply in the book the richest man in Babylon says that gold in a purse is gratifying but it does not multiply gold in use will earn more than gold and this speaks to the difference between just saving money and putting it to work through
investing many people just assume that saving money in a bank account is enough but that is the passive approach while keeping money in a savings account is fine if you're building an emergency fund it won't grow on its own and to truly multiply your wealth you need to invest it for example if you save 1,000 a year and let it sit in a bank account its growth will be minimal over time but if you invest that same 1,000 annually say in the S&P 500 which has historically averaged over 10% return that difference in what you'll
end up with is dramatic it would grow exponentially multiplying far beyond what a simple savings can do lesson number five is to ensure a future income so in this book there's a story about a camel Trader who once lived a very comfortable life with a large herd of camels and he spent all of his wealth he didn't save anything for when he got older and as he aged and he couldn't manage his business anymore his wealth eventually disappeared and he became poor and he had to rely on other people to survive and there's a sentence
in the book that provide in advance for the needs of thy growing age and the protection of thy family in other words don't just think about making money now make sure you're setting up income for later when you can't or don't want to work anymore in our 20s and 30s retirement can feel so far away that it just doesn't seem important we rather focus on the present and we only really take planning for retirement seriously when it feels a little bit more urgent but that way of thinking can lead to losing out on years and
years of compounding growth which is one of the most powerful things that you need to build wealth over time setting up your Investments or your retirement savings while you're younger means you won't be left scrambling later on in life number six is increase thy ability to earn a lot of people think that their income is fixed and the only way to get ahead is by Saving more and more and more and more of that limited income that they have but this where thinking creates a ceiling on how much you can save because you could only
save as much as you make but you could always make more too often people fall into this fixed mindset thinking that their abilities and income potential are just set in stone and this kind of thinking limits your growth and your chances to earn more over time simply kind costs won't make you rich you also need to focus on increasing your earning potential and invest in your savings so that they can grow then let's move on to protecting money lesson seven is to guard thy Treasures from loss after saving his first few pieces of gold a
brick maker came to arcad who is the briest man in Babylon with an offer he suggested using arcad savings to buy rare jewels from far off lands and promised they will both make a profit when they sell them back in Babylon and the problem was that the brick maker knew nothing about Jews and arcad not knowing any better trusted him so when the brick maker returned the jewels turned out to actually just be worthless glass and Arad lost all of his money and Arad says in the book guard thy treasure from loss by investing only
where thy principal is safe it's not just about making money it's about protecting what you've earned and I love this because if I think about my Investment Portfolio a large portion of it is in stocks and shares and in real estate and I've had times where I've thought about taking my money out of some of these assets and putting it into crypto and other speculative assets which are a lot more volatile it can go up really quickly it could go down just as quickly but I need to remind myself that the plan isn't to make
more money really quickly it's also to protect the money that I do have so that it grows consistently over time so while I do have some money in crypto I'm not going to just put everything into it that would impact my life hugely in a negative way more than it would in a good way than if it doubled tripled or even 10x lesson number eight seek the counsil of wise men it's so easy to latch onto Trends oh everyone is investing in this right now I need to be investing in it too or I'll miss
out and it's easy to just follow the crowd because everyone seems to have an opinion on what you should do with your money where you should save it how you should manage it what you should spend on and while their intentions might be good the reality and one of the main lessons from the book is that if you're serious about growing wealth you need to listen to people who have already walked the path that you're on these are the people who truly understand the rests and opportunities because they've been through it themselves and number nine
cultivate good luck through action this is probably my favorite because it's so easy to think that successful people just got lucky and we assume that there's a secret formula or a magic trick that made them wealthy and we end up feeling frustrated that we're not getting that same lucky break but studies show that this comes from something called self-serving bias where people attribute their successes to their own actions but blame external factors for their failures and in the book Arad says that the men of action are favored by the goddess of good luck the key
takeaway here is that what we often core luck is actually the result of preparation meeting opportunity those who take calculat risks jump on opportunities and act with purpose are the ones who seem to be the luckiest so bottom line is just take action whether it's applying for that job you want starting a side business learning a new skill the more proactive you are the more lucky breaks you'll create so those are the nine lessons I've learned from this book if you like these kind of videos on book reviews you might want to check out this
video right here all right go into more detail to summarize another one of my favorite money books and what I've taken away from it
