The Richest Man in Babylon is a personal finance advice book published in 1926 by George S. Clason. The Book has a collection of parables set 4000 years back in the ancient city of Babylon. The book provides great personal finance advice through the medium of storytelling.
The book has parables from the ancient city of Babylon and helps us understand personal finance. I have read many personal finance books but none have explained personal finance in this style. The storytelling in this book is so great that it keeps the reader hooked all time.
Table of Contents
- 1 The Richest Man in Babylon Summary
- 1.1 Chapters of The Richest Man in Babylon:
- 1.2 The Seven Cures of a Lean purse.
- 1.2.1 First lesson: Start thy purse to fattening
- 1.2.2 Second lesson: Control Thy expenditure
- 1.2.3 Third lesson: Make thy gold multiply
- 1.2.4 Fourth lesson: Guard thy Treasure from Loss
- 1.2.5 Fifth lesson: make of thy dwelling a profitable investment
- 1.2.6 Sixth lesson: insure a future income’
- 1.2.7 Seventh lesson: Increase thy ability to earn.
The Richest Man in Babylon Summary
Here below are 10 points that I have learned from the book Richest Man in Babylon. These are some great teachings and if you follow them, they will definitely help you improve your financial condition.
- A part of all I earned is mine to keep. Every time you make money, make sure to keep 10% aside as savings and spend the rest 90% for daily needs.
- Every man has needs and every man has desires. Never misinterpret your desires with your needs.
- A man never has enough money for saving. Often all he spends are on necessity. But you can differentiate between needs and desires by budgeting.
- Make your money work for you. Every penny you save, invest in things that would bring you more money.
- Invest in mastering a skill. The more you learn the more you will earn.
- Always be cautious about your investment. Rather than regretting later.
- Luck comes to only those people who put their ideas into action. Just thinking about it won’t be of any luck.
- The money will always go away if you don’t invest wisely. Invest with advice from people with expertise in the field.
- When a man looks for money and investment advice from friends or family who don’t have any expertise in the matter, money flows away.
- Men always make mistakes, learn from them, and go ahead.
Chapters of The Richest Man in Babylon:
- A historical sketch of Babylon
- The Man who desired Gold
- The richest man in Babylon
- Seven cures of Lean purse
- Meet the Goddess of Good Luck
- The five laws of Gold
- The Gold Lender of Babylon
- The walls of Babylon
- The camel
- Trader of Babylon
- The clay tablets from Babylon
- The luckiest man in Babylon
From the above-mentioned chapter here we will look into 1 chapter. This is one of those books which had me hooked the entire time. I can hardly say that the level of information or storytelling had a dip in any of the chapters.
But of all the chapters the one which had the most impact on me was Seven cures to a lean purse.
The Seven Cures of a Lean purse.
After defeating his enemies in war and coming back to Babylon the King was on the received with a little bad news by his counselors. He brought to the kings’ attention the poor condition of Babylon’s citizens. The king questioned, even after providing a state of the art irrigation facilities, great temples, how did this happen?
The counselor pointed out that since the city has all facilities there are currently no jobs, because of which people are spending less and the wealth has started to accumulate with a few rich.
The king asked how few people hold the majority of gold. Can’t we teach our people, The art of making money?
The counselor said only the rich know the art and only a rich can explain the art. This is when the King of Babylon Summoned Arkad, the richest man in Babylon.
The king explained to Arkad the poor economy state in which the city is and only a few wealthy monopolize the collection of gold. The king desired Babylon to be the richest city on earth, so for that, he wanted many wealthy people.
So then the king asked can the art of earring money be taught to people?
Arkad gave an affirmative reply and said the art can be taught. He asked the king to arrange 100 people to whom he can teach and they can teach the art to other people.
Soon 100 citizens were assembled and Arkad tod then he would be giving them 7 lessons of a lean purse. If they understand these 7 lessons they will soon be able to enjoy handsome wealth.
For the next 7 days, he would give them 1 lesson each day. Hence the same 7 Cures of a lean Purse.
First lesson: Start thy purse to fattening
Arkad, the richest man in Babylon first goes around the room and asks every man how he earns his daily bread. After asking everyone. He says not all of us have the same amount of income, some earn more some earn less.
Then he gave them their first lesson. Off all the money you earn, spend only 9/10 th of that money and save 1/10 of that income.
This means if you earn $100 then spend $90 and save $10. Spend the $90 on food clothing and shelter. This $10 saved each month will grow and soon you will fatten your purse.
Now many of you will be like even the $100 that we earn or not enough for our monthly needs and we often are short of money each month.
Arkad answers this question in the next lesson.
Second lesson: Control Thy expenditure
When the second session started Arkad was asked, how can a man save 1/10 of his income, when all he earns is not enough for his family to feed.
Then Arkad explains to his student that many people have necessary expenses and this necessary expenses are equal to the amount earned each month.
Now people have misinterpreted necessary expenses with desires.
The line from book reads
“Confuse not the necessary expenses with thy desires, each of you together with your good families have more desire than your earnings can gratify. Therefore are thy earnings spent to gratify these desires. And still, there are more desires left to gratify”
And so arkad said to all his students to create a budget and write down all the things that they need and not that they want.
Men have often confused what he needs and what he wants. The richest man of Babylon was clear with his ideas.
“All men are burdened with more desires than they can gratify. Because of my wealth thinkest thou i may gratify every desire? This is a false idea. There are limits to my time, there are limits to my strength, there are limits to the distance I may travel, there are limits to what I may eat. There are limits to the zest with which i may enjoy.”
Third lesson: Make thy gold multiply
The third law mentions that money in the pocket is a good feeling for thy heart but is of no purpose. The money that you saved must grow and that money should work for you.
Arkad here mentions his first investment. Where he loaned a shield maker some amount so that he can buy the raw material and deliver his shield. Every time the shield maker returned the amount with interest he would again loan a larger amount after including the interest as well.
So it would bring him more money next time. Due to this process the money went on growing.
The same applies to today’s world. We need to use 1/10 of the money saved and invest in things that would bring us more money. Just having them in your purse will do nothing.
Fourth lesson: Guard thy Treasure from Loss
“Misfortune loves a shining mark. Gold in a man’s purse must be guarded with firmness, else it be lost. Thus it is wise that we must first secure small amounts and learn to protect them before the gods entrust us with larger.”
We often are tempted by a new money making scheme where a friend of ours comes and tells us that the money will be doubled. Has this happened to you. I Once on someone’s advice without thinking invested an amount in bitcoins. This was after the big rise of bitcoins and the price of bitcoins was coming down.
So Someone said that he’s sure it will go up again. I without thinking invested and ended up in loss.
If you are not sure of even getting the principal back then its unwise to invest in such ventures.
The main reason for this failed investment is that we listen to men that do not possess the knowledge of the subject. But tells us that he’s sure about the investment. Even you are tempted to make a quick buck in such situations.
If you are buying gold and want to confirm the legitimacy of gold you ask guidance from a gold smith not cobbler. Wise men will guide you to the right path.
Fifth lesson: make of thy dwelling a profitable investment
In the fifth lesson, Arkad advises his students to own a property, a house where they can live with their families. A place which they can say is there’s.
He explains to his student. That currently they are paying the rent for their shelter from the 9/10th of the income. What if they could take a loan to buy a new property.
Then instead of paying the rent each month to a homeowner. He needs to pay the money to the money lender and soon in some years that property will be completely owned by him.
This will not take any money from the 1/10th saved. Rather from the 9/10 set aside for daily needs.
Sixth lesson: insure a future income’
“Provide in advance for the needs of thy growing age and the protection of thy family.”
We often hustle at a young age to make a good amount of money and spend it on our desires. Here Arkad instructs his students to make investments such that they can pay dividends even when you are old and cannot work. Like, get an additional house.
The rent will be an income stream and will work for you even when you are retired. Make a small investment now that can grow big by the time you are unable to work.
Seventh lesson: Increase thy ability to earn.
Preceding accomplishment must be desires, thy desires must be strong and definite.
Our desire should be specific. If we desire to be rich that is a weak desire , but similarly if we desire to make $1000 then that’s a strong specific desire.
People today want to make big money, too soon. People want to be millionaires in days. But towers are not built in a day. Every day one piece of brick is laid and that process goes on.
The same way at the beginning look for small targets to achieve. And once you are able to achieve small targets then go a little bigger one. In the same way, keep repeating.
“Desire must be simple and definite. They defeat their own purpose should they be too many, too confusing, or beyond a man’s training to accomplish.”
The more wisdom we have in a particular subject the more we will earn. The man who seeks to learn more of his craft will be richly rewarded.
You only increase your ability to earn if you learn more. The more wisdom you have the more money will come to you.
Learn a craft and master it, improve, and correct your mistakes. Be keen-minded and seek greater skills so that people depend on you.
Life doesn’t give you what you want. It gives you what you work for.
That’s my take and some learning on the amazing book The Richest Man in Babylon. This is the first personal finance book review that I have written at geeksla. I had earlier written a review of productivity books like Atomic habits.
I think this is a must-read book for all ages. In today’s world, we lack financial knowledge and no one is giving you this knowledge unless your family or friend is rich and kind enough to share the knowledge.
Thanks for reading, kindly share the content and book with your family and friends and spread the word of knowledge