October 31 is World Savings Day. Most people know the date for Halloween. Fewer know it is also a day to celebrate the habit of saving.
For this post, I went back to The Richest Man in Babylon by George Clason. I first read it over 20 years ago. I did not take notes, so I forgot most of it. When I reread it, I enjoyed it just as much the second time.
One simple rule sits at the heart of the book. Keep one-tenth of everything you earn. In this post, I explore that rule, why it works, and how to start it today.
This post is general education, not financial advice.
How World Savings Day Began
World Savings Day started in 1924 in Milan, Italy. Savings banks from around the world met at their first international congress. On the last day, October 31, an Italian professor named Filippo Ravizza proposed a day to celebrate saving.
The timing mattered. Europe was still recovering from World War I, and many people did not trust banks. The goal was to encourage people to save, and to keep their money safe in a bank instead of under the mattress.
Today, many countries mark the day on October 31. Where that date is a public holiday, they hold it on the business day before.
Here is a detail worth noting. The Richest Man in Babylon was first published as a book in 1926, just two years after the first World Savings Day. Both were born from the same idea. Ordinary people can build security one small saving at a time.
An Old Rule From Ancient Babylon
In the book, two poor friends, Bansir and Kobbi, want to change their lives. They decide to visit their wealthy friend Arkad and ask how he became rich. They bring along other friends who face the same struggle.
Arkad shares what he learned from Algamish, a moneylender. Part of what you earn is yours to keep. So pay yourself first. Keep one-tenth of what you earn, and live on less than you make.
Arkad followed that advice, and it changed his life. Wealth can grow from a tiny seed. You water and nurture it with steady saving.
The book turns this rule into the first of seven cures for a lean purse. It also appears in the five laws of gold. Gold comes to those who save at least one-tenth of their earnings. Over time, those savings can build an estate for your family and your future.
Arkad adds one more point. Many people never build wealth because they never truly seek it. They do not focus on it or commit to it.
Why One-Tenth Works
The Richest Man in Babylon makes a simple promise. You will get along without the 10 percent you hold back. Most of us adjust to what is left in our hands.
Two modern books land on the same number. In Rich Habits, Thomas C. Corley studied rich and poor habits for five years. His ninth Rich Habit is to save 10 percent of your gross income from every paycheck. In The 21 Success Secrets of Self-Made Millionaires, Brian Tracy says to take 10 percent off the top of each paycheck. Put it in a special account just for building wealth.
The secret is the order. Pay yourself first, before bills and spending. If you wait to save what is left over, there is rarely anything left.
Tracy adds two helpful habits. Question every expense, and practice frugality. Clason agrees. Separate what you need from what you only desire, and use a budget to help your savings grow.
Jim Stovall, author of The Millionaire Map, uses a similar image to The Richest Man in Babylon. Replant a portion of what you earn so you keep earning. Every dollar you save today can grow much larger later.
What If You Have Debt?
Many people believe they cannot save until their debts are gone. The Richest Man in Babylon disagrees. It offers a simple split for anyone in debt.
- Live on 70 percent of what you earn.
- Save 10 percent for yourself.
- Use the remaining 20 percent to pay down your debts.
This way, you build the saving habit while you climb out of debt. You never start from zero.
Stovall adds a few steps of his own. First, stop adding new debt. You cannot borrow your way to prosperity. Once you are out of debt, build an emergency fund that covers a few months of income, or more.
He also points out a common leak. Many people spend small amounts on lottery tickets, hoping for a big win. Stovall suggests saving that money instead. A steady habit beats a lucky break.
The Other One-Tenth
While reading about money, I noticed something interesting. One-tenth shows up in a second way.
In The Money Code, H.W. Charles writes about tithing. The word itself means one-tenth. In Jewish tradition, tithing is an ancient practice of giving a tenth to God and to those in need. The book presents it as a key principle of financial success.
So one tradition teaches us to keep one-tenth. Another teaches us to give one-tenth. They are not in conflict. Saving builds your own security. Giving builds the security of others.
Clason also warns against hoarding. Arkad tells his friends to enjoy life and not to cling to money for its own sake. Saving is a tool, not the goal.
I will explore giving more fully on Giving Tuesday, December 1. For now, notice how the same small number can serve two good purposes.
Your Action: Start Your One-Tenth Habit
World Savings Day is a perfect day to begin. Here is a simple plan. Pick the parts that apply to you.
- Choose your number. Aim for 10 percent of each paycheck. If that feels too big, start with 1 or 2 percent and raise it a little every few months.
- Pay yourself first. Move the money as soon as you are paid, before you spend anything else.
- Give it a home. Keep your savings separate from your everyday spending money, so you are less tempted to dip into it.
- Make it automatic. If your bank allows it, set up an automatic transfer on payday. Then you do not have to remember.
- Find one leak. Pick one small expense you can cut this month, and add that amount to your savings.
- If you have debt, try the split. Live on 70 percent, save 10 percent, and put 20 percent toward debt.
- Check in monthly. Watch your savings grow. Small wins keep you going.
The amount matters less than the habit. Start small, but start today.
Conclusion
A parable from 1926, a five-year study, and a success coach all agree. Keep one-tenth of what you earn, and pay yourself first. It is one of the simplest money rules there is, and one of the most powerful.
I wish I had learned these lessons decades ago. When I first read The Richest Man in Babylon over 20 years ago, I also wish I had taken notes. That is two lessons in one.
This World Savings Day, plant your first seed. Choose your number, move it before you spend, and let it grow.
Books in This Post
- The Richest Man in Babylon by George Clason (affiliate link)
- Rich Habits by Thomas C. Corley (affiliate link)
- The 21 Success Secrets of Self-Made Millionaires by Brian Tracy (affiliate link)
- The Millionaire Map by Jim Stovall (affiliate link)
- The Money Code by H.W. Charles
Sources
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