The other day I was having a conversation with a friend about handling your finances as an independent contractor, and I mentioned to her this book; The Richest Man in Babylon, and how it fundamentally changed the way I viewed my finances.

If you are an agent, then you probably already know that adjusting to life as an independent contractor in a business where your commission checks can come months apart (hopefully only at the beginning of your career) can be quite difficult.

That makes managing cash flow a tricky balance of; spend on your personal bills, invest in your business, put away money for your quarterly taxes and save/invest for the future.

While I do not pretend I know the perfect way to manage all of this, I will say that trying to follow the principles of The Richest Man In Babylon have certainly helped…I’ve read this book every year for the past 5 or 6 years (yes, that is my actual copy in the picture) and I try my best.

The book can be a little arduous to read, as it teaches in parable form lessons of personal finance that take place 2,500 years ago in the Biblical City of Babylon. For your sake, I’ll give you the book’s title of the lesson/parable and then my simple view of what it means.  (No need for you to struggle through stories of camel traders who turn their back on good fortune, or a chariot maker who spends too much money on wine and robes).

The book basically breaks its teachings down to two main themes: The 7 Laws of Acquiring Gold and the 5 Laws of Gold (both of which are pretty interconnected).

The 7 Laws of Acquiring Gold

1. Start thy purse to fattening: Basically save a little of everything you earn. Before you split up your earnings, first put at least 10% away and live off the remaining 90%.  This is a pretty big principle throughout the book.  It basically says that you should treat the 10% as if you never earned it.  Always look at your income in every situation as 90% of what it really is. (Even if you are paying off debt, save 10% before spending the 90% on your living expenses and debt re-payment).
2. Control thy expenditures: Live on a budget and be cognizant of what you absolutely need vs what you simply want (don’t waste money on frivolous things).
3. Make thy gold multiply: Put your savings to work for you by making reasonable investments in fundamentally sound opportunities.
4. Guard thy treasure from loss: Be weary of risky schemes that offer outsized returns.  Seek advice from those knowledgable in the field you are investing in and never invest heavily in places where your principle can easily be lost.
5.  Make of thy dwelling a profitable investment: Simple one for a Realtor®, own your own home.
6. Insure a future income: Put money away for retirement and have the necessary insurance to take care of your family if you become sick or worse.
7. Increase thy ability to earn: Constantly strive to improve yourself so that you become more skillful at your trade, or even learn a new one.

The 5 Laws of Gold

1. Gold cometh gladly and in increasing quantity to any man who put by not less than one-tenth of his earnings to create an estate for his future and that of his family: The more committed you are to saving, the more money you will earn.

2. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field: Put your savings in reasonable investments and it will grow

3. Gold clingeth to protection of the cautious owner who invests it under the advice of men wise in its handling: Don’t take investment advise from people who are not experienced in the particular industry you are investing in.

4. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep: This is pretty much the same as 3 with the caveat that you shouldn’t invest in areas you are not familiar with, or are considered overly risky ventures.

5. Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment: If the promised rate of return is outsized, it is probably too good to be true. Make sure the people you are taking advice from are legitimate experts with solid plans, and be honest with yourself about your own ability to judge an investment opportunity.

Other General Advice from The Richest Man In Babylon

1. Better a little caution than a great regret: Enter every endeavor with a skeptical eye, but when the time is right, don’t lose out on a solid opportunity by being overly cautious…Be a little cautious in every endeavor but not to the point of paralysis.

2. We can not afford to be without adequate protection: Have insurance and/or money put aside for catastrophic events.

3. Where the determination is, a way can be found: The same old adage, “Where there’s a will, there’s a way”.