"Our prosperity as a nation depends upon the personal financial prosperity of each of us as individuals." – The Richest Man in Babylon
There was a time not long ago when wealth was admired. Children looked up to the prosperous man and hoped to emulate him one day. Living well was the positive result of good character and the road to riches was an admirable ambition. We have since lost our way.
Today, the financial situation for many Americans is dire. Savings are down and debt is up. Half of Americans don’t have $1,000 in savings to pay for an emergency and nearly a third have no savings account at all. The leading causes of debt are school loans and credit cards.
Most of the debt held by millennials is school loan debt. In fact, seventy percent will graduate with an average debt of $30,000, with a million defaulting on this debt every year. To make matters worse, forty percent of undergraduate students won’t finish college, while another forty percent of grads are under-employed in their first jobs. Presidential candidates and other vote-buying politicians are calling for debt forgiveness of college loans; certain that the government is the only solution.
Spending, too, is out of control with expenses exceeding income. The average credit card holder has 4 credit cards and carries over $8,000 in credit card debt, with Americans collectively holding over $1 trillion in debt liabilities. And, unfortunately, that number is climbing.
Claims of stagnating wages and job insecurity have made more and more people feel that there is nowhere to turn.
So, who will rescue us from all this trouble? Will it be Trump? Are there enough tariffs in the world to save every job? Will it be Bernie Sanders? Is there enough free to go around? Is there a way to survive regardless of who sits in the White House and controls the public purse strings? Or, perhaps there is something we can do to take matters into our own hands.
Social scientists generally agree that certain behaviors and choices reduce the likelihood of poverty: graduate from high school, get a job, any job, get married before having children, and be law-abiding. If a nation is wealthy because individuals are wealthy, it is the responsibility of its citizens to take the steps to make it happen.
In George Clason’s 1926 book, “The Richest Man in Babylon”, Clason tells the tale of how the richest man in a once-great city, used savings, insurance, and dependable investments to secure his financial well-being. In a collection of parables set in ancient Babylon, the world’s oldest city with a thriving economy, the success secrets of the ancients give the reader lessons in the virtue of thrift and financial planning. While the chariot builder wanted to be a man of means, own land, cattle, fine robes, and coins, the city of Babylon only provided fertile soil and water from the river. Beyond that, all its riches were man-made. Almost a century old, this book is still valuable today.
Clason gives his readers a list of seven steps to financial wellness and a cure for a lean purse. Here’s how. He starts his lesson with a call to tithe the first ten percent to oneself. This was normal savings back in the 1960s and 1970s, but in more recent times have dropped to a low personal savings rate of less than 5 percent. Additional lessons encourage the reader to control their own expenses, be thrifty, and spend less than they earn. To make yourself more valuable, Clason encourages workers to improve their skills. Lastly, to take advantage of compound interest, savings and investment should begin with your first check. Because in the end, savings are your friend, and debt is your enemy.
The richest man also touts his love of work. “I am glad that work is not reserved for slaves. If that were the case I would be deprived of my greatest pleasure.” Meaningfulness with one’s job is the biggest contributor to overall happiness.
In a world of uncertainty, wealth is power. Most millionaires in the United States are first-generation, new money. Nine out of ten of the richest people in the world are self-made and have not received their riches through inheritance. In America, over 10 million households have a net worth of $1 million, and 600 more are billionaires. Many of these individuals followed the advice of Clason, understanding that wealth is not the same as income. Wealth is what you accumulate, not what you spend.
So, who will win the presidential election in 2020? Who cares! The future is in your hands, and your hands only.
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