SINGAPORE - Many years ago, when I had just completed my master's degree in England and was heading back to Singapore to start my career, my then-boyfriend, now husband, introduced me to a book, The Richest Man In Babylon, by George Clason.
Originally published in 1926, it dispenses advice on thrift, financial planning and personal wealth, set in ancient Babylon and written in the style of biblical parables.
It's a great classic that makes a lot of sense, he told me then. I found it mildly ironic that he was recommending it to me. The British aren't especially known for their financial prudence - at least, not the way the Chinese are known for being hardworking, thrifty savers.
It was more typical of his generation for people to get by on bank overdrafts, roll over their credit card debts from month to month and rent their digs for years instead of owning them.
In contrast, most of my friends and I were of a generation brought up by parents who were poor and experienced the growing pains of Singapore developing from Third World to First.
I was taught to never spend more than I earned, never get into debt, and that paying rent was wasting money.
The book turned out to be a great read.
It originated from a collection of pamphlets used by banks and insurance companies for their customers and even though it was written in 1926, its author says he drew lessons from ancient Babylonians who were considered the original inventors of money as a means of exchange - lessons that have endured the test of time and are still relevant today.
Executing the advice is another matter, however. I vaguely recall trying to apply what I read back then, but as work got busy and life's events occupied me, the lessons were but a distant memory.
For years, I hadn't consciously ensured that a set portion of my income went into savings and I spent and invested my money at whim.
My husband, on the other hand, stealthily got his house in order over the years by applying some of the lessons and saving his income, rejecting all offers of credit cards and personal loans, and finally investing in a home so he no longer had to pay rent.
I found myself reaching out for the book again recently, as we started doing some comprehensive financial planning for our family, prompted by the arrival of our son.
As I read through it, I was struck by how some of the lessons seem so simple and logical, yet I would bet that not many of us necessarily apply it. So I feel compelled to share some of its wisdom with readers of this young and savvy column.
The first point it makes is: A part of all you earn is yours to keep.
But isn't all that you earn yours to keep? Not necessarily.
The parable illustrates that if whatever you earn is spent entirely on things - food, clothing, housing, luxury goods - then none of that money is yours.
It advises you to keep at least 10 per cent of your income for yourself, more if you can afford it - this is considered "paying yourself first".
Once you have learnt to live on less than you earn, it says, next is to seek advice from those "competent through their own experiences to give it", and then make the money work for you.
In other words, do your research to seek out those experienced enough to give you investment advice, and then invest your savings so that they will multiply.
It sets out "seven cures for a lean purse". I'll give a brief elaboration but those who would like more details can always look up the book.
Start thy purse to fattening
Spend less than you earn. For every 10 coins you earn, spend at most nine of them.
Control thy expenditure
Budget your expenses so that you have enough for necessities, enjoyments and worthwhile desires, but never cross the 90 per cent mark.
Make thy gold multiply
Make your money work for you so you have a stream of wealth flowing into your purse.
Guard thy treasures from loss
Guard your money from loss by investing only where your principal is safe, and may be reclaimed and where it will collect a fair return.
Make of thy dwelling a profitable investment
Own your own home.
Insure a future income
Plan in advance the needs of your growing age and the protection of your family.
Increase thy ability to earn
To cultivate your own abilities, as the more we know, the more we may earn.
There are some other gems; it explains that those we deem as "lucky" financially are usually men of action who do not procrastinate when good investment opportunities come knocking.
There are also the five laws of gold, advice for lenders and borrowers, the importance of protection and the value of being willing to work.
Most importantly, the book does not encourage the blind pursuit of wealth. It speaks about the virtues of humility, charity and hard work - qualities that those who are money-obsessed can easily lose sight of.
But as we know and can see from many high-profile examples around us, money can't buy happiness.
The journey of accumulating personal wealth is not just about how to get more money, but also about getting the most happiness out of the money one has managed to amass.
It's also about using that wealth to gain happy life experiences, like an appreciation for people and nature around us, beyond merely accumulating physical things.
Reading the book again was, for me, a good reminder of certain basic principles that should form the guiding light for any personal financial plans that I make for the future.
stinvest@sph.com.sg
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