The Richest Man in Babylon
By George Samuel Clason
The Richest Man of Babylon by George Samuel Clason is a piece of classic financial guidance told in the unique format of parables or short stories based in the ancient citadel of Babylon. Centering on a conversation between the characters Bansir, Kobbi and Arkad, this book explores the conditions which lead to the creation of wealth and the choices which allow individuals to sustain and grow their investments.
Bansir and Kobbi each turn to Arkad hoping to gain insight into how he has been able to amass wealth while they have struggled to attain financial independence despite being very skilled at their respective crafts as a chariot builder and musician. Arkad relays to his former childhood friends the unique guidance which has allowed him to grow his fortunes and transition away from the struggle of the day to day rat race in favor of a more comfortable and relaxed position of financial independence.
Check out just a few of insights to be gleaned from the pages of The Richest Man in Babylon:
Start thy purse to fattening
“For every ten coins, thou placest within thy purse take out for use but nine. Thy purse will start to fatten at once and its increasing weight will feel good in thy hand and bring satisfaction to the soul.”
Everyone can save money. Not everyone chooses to. As Arkad advises: anyone can live with 10% less of their earnings and begin to build wealth.
“I, too, carried a lean purse and cursed it because there was naught within to satisfy my desires,” the richest man in Babylon explains to his class. “But when I began to take out from my purse but nine parts often I put in, it began to fatten. So will thine.”
Control thy expenditures
“What each of us calls our ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary,” Arkad explains. “Confuse not the necessary expenses with thy desires.”
If you keep spending more than you take in, it’s impossible to grow your wealth. This was as true in Babylonian times as it is today. The simple but surprisingly potent piece of advice in our world of leisure, excess and credit.
Make thy gold multiply
“The gold we may retain from our earnings is but the start,” says Arkad. “The earnings it will make shall build our fortunes … Learn to make your treasure work for you. Make it your slave. Make its children and its children’s children work for you.”
Building a fortune means getting your money to work for you. Things like your 401K, investment portfolio, and compound interest can all be tremendously helpful to actually achieve this.
Guard thy treasures against loss
“The first sound principle of investment is security for thy principal,” says Arkad. “Is it wise to be intrigued by larger earnings when thy principal may be lost? I say not. The penalty for risk is the probable loss. Study carefully, before parting with thy treasure, each assurance that it may be safely reclaimed. Be not misled by thine own romantic desires to make wealth rapidly.”
Invest in life, not quick schemes. Success is a long game and it is far better to wait to make the right choice than to mistakenly take the wrong one.
Make thy dwelling a profitable investment
“I recommend that every man own the roof that sheltered him and his,” Arkad tells his class on the fifth day. “Nor is it beyond the ability of any well-intentioned man to own his home.”
To rent or own? This question was as salient in Clason’s time as it is today and while this choice will be a personal one, there is much reason to believe property investment may be the single greatest key to growing wealth.
Anyone who is aspiring to financial independence and success through entrepreneurship can take much away from this book. Though it was written in 1926, many of the core tenets of this book are as relevant now as they were when they were first published.
If you are looking for a quick and unique read which combines history with concrete financial advice, The Richest Man in Babylon is a book you do not want to miss!