The Richest Man in Babylon, by George S. Clason, contains traditional, actionable, and effective financial wisdom. The author shares invaluable lessons from the point of view of a very rich man named Arkad.
Babylon was the wealthiest city in the ancient world and Arkad was the richest man living in that city. Arkad shares his secrets of becoming the richest man and how others can achieve the same prosperity. He shares financial advice in an easy to understand and implementable manner. His major lessons like – ‘Seven Cures for a Lean Purse’ & ‘The Five Laws of Gold’ are worth to take notes from and apply immediately. This book serves as a guide to financial education for many generations to come.
“Advice is one thing that is freely given away, but watch that you only take what is worth having.”
George Clason, The Richest Man in Babylon
Let us discuss some cures for a lean purse. A lean purse is a metaphor of empty pockets, one who is unfortunate.
The richest man in Babylon’s seven cures for a lean purse
Arkad, the richest man in Babylon teaches these seven principles for seven days to workers and merchants on command of king Sargon.
The first cure
There are several forms of employment through which men can earn money. Each of the ways to earn is a seam of gold from which the worker must divert a portion for his own purse.
Arkad spoke to the egg seller:
“If you choose one of your baskets and every morning you put ten eggs into it and take nine of them out every evening, what will happen?”
“The day will come when it will overflow because every day I put it one egg more than I take out,” replied the egg seller.
“And there you have it, the first cure for a lean purse was to do what I have suggested for the eggs — for every ten coins you collect, only spend nine of them.”
“Our acts can be no wiser than our thoughts.”
George Clason, The Richest Man in Babylon
The second cure
Control your expenditure
Expenditure that we call mandatory always increases in proportion to our income. Carefully review your life habits and you will discover that most of the expenditure that you accept as mandatory could be reduced or eliminated.
Choose expenditure that is genuinely mandatory and which is possible within nine-tenths of your income. The purpose of a budget is to help your purse to grow.
Budget your expenditure in order to pay your unavoidable expenses and your leisure, without spending more than nine-tenths of your earnings. “
“If you desire to help thy friend, do so in a way that will not bring thy friend’s burdens upon thyself.”
George S. Clason, The Richest Man in Babylon
The third cure
Make thy gold multiply
Let us see how to make your gold work.
The richness of a man is not the gold that is in his purse, it is located in the income which continues to bring in money, whether you are at work or traveling.
This is the third way to fill your purse: put every coin to work so that it will reproduce and make your income a stream of wealth which will continue to feed your fortune.
The modern term – Investing!
“Will power is but the unflinching purpose to carry the task you set for yourself to fulfillment.
George Clason, The Richest Man in Babylon
The fourth cure
Guard thy treasures from loss
The first principle of investment is to ensure the safety of your capital. Carefully study the situation before separating yourself from your treasure, and make sure it can be reclaimed in complete safety.
Before lending your gold to anyone, make sure that your debtor is able to reimburse you and that he has a good reputation for this effect.
Here is the fourth way to garnish your purse: protect your treasure against loss by investing only where your capital is secure, where it can be reclaimed at the desired moment, and where you will make a suitable amount of interest. Consult wise men who are experienced in the profitable management of gold.
“The reason why we have never found a measure of wealth. We never sought it.”
George Clason, The Richest Man in Babylon
The fifth cure
Make of thy dwelling a profitable investment
It is recommend that every man own a roof under which to shelter his family.
You can borrow what you need to build your home, and when it is built, you pay the lender with the same regularity as you paid your rent. After a few years, you will possess a valuable property, and you have nothing more to pay than the taxes of the king. So here is the fifth way to garnish your purse, by owning your own home.
“As for time, all men have it in abundance.”
George Clason, The Richest Man in Babylon
The sixth cure
Insure a future income
The life of every man runs from childhood to old age. It is up to every man to provide a suitable income for the day when he will no longer be young, and will no longer be able to look after his family and meet his needs. You can buy houses and land for this purpose.
You can also pay a small regular payment to a lender, which over time and with interest will produce beneficial results. So here is the sixth way to garnish your purse, plan to have an income later in life, and guarantee the protection of your family.
“Where the determination is, the way can be found.”
George S. Clason, The Richest Man in Babylon
The seventh cure
Increase thy ability to earn
Desire must precede accomplishment. Your desires must be strong and well defined. Vague desires are but weak wishes. The simple desire to be rich has no value.
The man who wishes to acquire five pieces of gold has a tangible desire that he can achieve. Once the five coins are acquired and placed in security, he can find similar ways to get ten coins, then twenty, and later one thousand gold coins.
And that is how he became rich.
So, the seventh and last way to make a fortune is to cultivate your intellectual capacities, to study, and to become wiser and better-educated, to act with self-respect.
“MEN OF ACTION ARE FAVORED BY THE GODDESS OF GOOD LUCK”
George S. Clason, The Richest Man in Babylon
Now, let’s take a look at the five laws of gold described by The Richest Man in Babylon.
These laws were found on the ancient stone tablets found as proof of the existence of the richest city of the ancient world, Babylon.
The five laws of gold
First law
“Gold comes willingly, in ever-larger amounts, to the man who puts aside no less than one-tenth of his earnings to create a well in anticipation of his future and that of his family. “
Second law
“Gold works diligently and in a profitable manner for the wise owner who finds a beneficial use for it, and multiplies it like the beasts in the fields.”
Third law
“Gold remains under the protection of the cautious owner, who invests it according to the advice of wise men.”
Fourth law
“Gold escapes the man who invests without purpose in enterprises with which he is not familiar or which have not been approved by those who know how to use the gold.”
Fifth law
And “Gold slips away from the man who would force it to provide impossible gains or who would follow the seductive advice of fraudsters and misleading information or who would rely on his own inexperience and his romantic investment desires.”
The richest man in Babylon is filled with short stories about how people used to conduct themselves. This is by far the most interesting book on financial success.
It is highly recommended. As I believe that everyone should learn how to handle money smartly.
If you wish to read more about how to be financially independent I would recommend reading Rich Dad Poor Dad next.