80. The Richest Man in Babylon
Rating: ☆☆☆☆
Recommended by:
Author: George S. Clason
Genre: Fiction, Finance, Self-Help
144 pages, published 1926
Reading Format: Book
Summary
First published in 1926, The Richest Man in Babylon is a classic book in the world of personal finance and reveals the secret to personal wealth. The book uses the format of an ancient tale to impart the following precepts:
The 7 simple rules of money: 1) Start thy purse to fattening (save money); 2) Control thy expenditures (don’t spend more than you need); 3) Make thy gold multiply (invest wisely); 4) Guard thy treasures from loss (avoid investments that sound too good to be true); 5) Make of thy dwelling a profitable investment (own your home); 6) Ensure a future income (protect yourself with life insurance); and 7) Improve thy ability to earn (strive to become wiser and more knowledgeable).
To bring your dreams and desires to fulfillment, you must be successful with money.
The laws of money are like the laws of gravity: assured and unchanging
Money is plentiful for those who understand the simple laws of making money.
Babylon was the wealthiest city in the world at the time of its height because its people appreciated the value of money.
You must constantly have an income that keeps your purse full.
“It costs nothing to ask wise advice from a good friend.”
It’s simple to say, but many people never achieve a serious measure of wealth because they never seek it. They never truly seek it, focus on it, and commit to it.
Youth often assumes, incorrectly, that the old and wise only have wisdom about days gone by.
You will only begin building wealth when you start to realize that a part of all the money you earn is yours to keep. That is, pay yourself first. You always pay others for goods and services. Pay yourself as much as you can. Save money.
You should save at least 1/10th of what you earn. More if you can afford to do so.
Do not take advice on finance from a brick layer. Go to people who are experts in a particular subject if you want expert advice. It’s too easy for amateurs to give out advice.
Build for yourself a mountain of gold first, then you can enjoy as many banquets as you wish without worry. Don’t spend your money as soon as you earn it.
Surround yourself with people who are familiar with money, who work with it each day, and who make lots of it.
Enjoy life while you are here. Do not overstrain to save.
Do not put your money in investments which do not pay a dividend, but also do not invest in risky places that seem too good to be true.
What each person calls their “necessary expenses” will always grow to match your income unless you resist that urge. Do not confuse your necessary expenses with your desires.
“A man’s wealth is not in the coins in his purse. It is in his income.”
Ensure a future income. Every person gets old. Make sure your income will continue without work.
By life insurance. Provide in advance for the protection of your family.
Increase your ability to earn. Improve your skills. As you perfect your craft, your ability to earn more increases.
The more we know, the more we may earn. The person who seeks to know more of their craft is capable of earning more.
You cannot arrive at the fullest measure of success until you crush the spirit of procrastination within you.
The 5 Laws of Gold: 1) Gold comes easily and in increasing quantity to the person who saves at least 1/10th of their earnings; 2) Gold labors diligently and multiplies for the person who finds it profitable employment; 3) Gold clings to the protection of the person who invests their gold with wise people; 4) Gold slips away from the person who invests gold into purposes through which they are not familiar; 5) Gold flees the person who tries to force it into impossible earnings.
If you desire to help you friend do not do so in a way that brings their burdens onto you. There are many ways to help people. You don’t have to choose the ways that restrict your time, money, energy, or ability to care for yourself.
The wise lender always has a guarantee of repayment should the investment go poorly.
Above all you should desire safety for your money. Better a little caution than a great regret.
Protect yourself with insurance. You cannot afford to be unprotected.
Do not live beyond your means.
No man respects himself if he does not repay his debts.
The soul of a free man looks at the world as a series of problems to be solved. Meanwhile, the soul of a slave whines, “What can I do?”
“Where the determination is, a way can be found.”
If you are in debt, live on 70% of what you make. Save 10% for yourself. Use the remaining 20% to repay your debts.
Stick with the plan. Money accrues surprisingly quickly and debts are gone fast with discipline and consistency.
Work attracts friends who admire your industriousness. Work attracts money and opportunity. “Hard work is the best friend I’ve ever had.”
Quotes
“Advice is one thing that is freely given away, but watch that you only take what is worth having.”
“If you desire to help thy friend, do so in a way that will not bring thy friend’s burdens upon thyself.”
“The hungrier one becomes, the clearer one’s mind works— also the more sensitive one becomes to the odors of food.”
“As for time, all men have it in abundance.”
“When no buyers were near, he talked to me earnestly to impress upon me how valuable work would be to me in the future: ‘Some men hate it. They make it their enemy. Better to treat it like a friend, make thyself like it. Don’t mind because it is hard. If thou thinkest about what a good house thou build, then who cares if the beams are heavy and it is far from the well to carry the water for the plaster. Promise me, boy, if thou get a master, work for him as hard as thou canst. If he does not appreciate all thou do, never mind. Remember, work, well-done, does good to the man who does it. It makes him a better man.”
“Wealth, like a tree, grows from a tiny seed. The first copper you save is the seed from which your tree of wealth shall grow. The sooner you plant that seed the sooner shall the tree grow. And the more faithfully you nourish and water that tree with consistent savings, the sooner may you bask in contentment beneath its shade.”
“One may not condemn a man for succeeding because he knows how. Neither may one with justice take away from a man what he has fairly earned, to give to men of less ability.”
“Opportunity is a haughty goddess who wastes no time with those who are unprepared.”
“The reason why we have never found measure of wealth. We never sought it.”
My Take
While the language and stories in The Richest Man in Babylon can be a little corny at times, its message is rock solid and inspiring. When I was 21 and newly graduated from college, my dad sat me down with a HP Financial calculator and showed me the magic of compound interest. I got the message that it I started a regular practice of saving and investing then I would have a vast sum of money later in my life. A few years later, my mom and stepdad preached the value of investing in real estate to me and helped me with a loan to buy my first house at age 26. 25 years and several houses later, my husband and I have made a huge amount on our real estate investments. The Richest Man in Babylon articulates these principles (and more) in an easy reading, parable style. I highly recommend this book for young people just starting out or for anyone else trying to figure out how to make money work for them.
