Book: The Richest Man in Babylon
Author: George Samuel Clason
Where to find it: Amazon
My Rating: 8/10
What the book is about.
The Richest Man in Babylon is a timeless classic in which George Clason wrote using ancient time parables, the principles of becoming rich. He points out that the same principles that ancient Babylonians used are still and will remain the same now and forever.
Initially, the principles outlined were written in the form of financial management pamphlets but later compiled into a book. This is the most inspiring book on wealth creation ever written and simply a must read for everyone who wants to understand the basic principles of becoming rich.
In this book, two man, Kobbi and Bansir are tired of having worked so hard ever since they were young but have nothing to show for it. They then decide to go ask their long time friend, Arkad how he had managed to accumulate so much wealth despite having started with nothing just like them.
Arkad tells them how he had, gone to a rich old man, Algamish and asked that he be taught how to accumlate wealth as well. Algamish later mentored him, teaching him one principle at a time. Algamish would teach Arkad one principle, depart to a far country and return after some time to check on the progress of the young man.
Who is it for
Absolutely anyone who enjoys stories that have got real life financial lessons.
Here are the top 10 lessons that I learnt from this book.
1. Pay yourself first
‘I found the road to wealth when I decided that a part of all I earned was mine to keep. And so will you.’
This is very interesting and rather mind-blowing the first time you hear it. Actually, if we look at how we earn money and how it disappears from us, it is not surprising that the reason why we are frequently broke is that we don’t oblige to this.
Here is a paragraph from the book.
‘Do you not pay the garment- maker? Do you not pay the sandal-maker? Do you not pay for the things you eat? Can you live in Babylon without spending? What have you to show for your earnings of the past month? What for the past year? Fool! You pay to everyone but yourself’.
There is nothing much really to add to this, it is simply the painful truth. More often than not, we pay to everyone else except ourselves.
2. Spend less than you earn.
You see, in this modern world, making money may not really a big problem for most but rather the problem comes in what the individual does with the money. However, this principle states, one is free to spent as much as he pleases, as long as he spends less than what he earns ( live below your means in other words). Specifically, the money saved should not be less than 10 percent of the income.
“Now I will tell thee an unusual truth about men and sons of men. It is this; That what each of us calls our ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary”.
The other problem with most people be that, as soon as their income increases, their expenditure also increases and sometimes to even exceed their income. At the end of the day, it does not matter how much you earn, if you are going to spend all or more than your earned money, you are likely to end in debt.
3. Seek advise only from those who are competent
” Every fool must learn,’ he growled, ‘but why trust the knowledge of a brick-maker about jewels? Would you go to the bread-maker to inquire about the stars?
As it turned out, the young man had saved a tenth of his earnings over twelve months but after that, he went on to give his savings to a brick-maker who told him that he was traveling over the far seas and he would buy for him rare jewel from some foreigners, but guess what happened. “The foreigners were scoundrels and sold him bits of glass. My treasure was lost”
This was also illustrated by Robert Kiyosaki in his ever popular ‘Rich dad poor dad’. The problem is that most people take financial advise from people who are struggling financially themselves. The other rather cold statement that Kiyosaki goes on to say that, except if your parents are millionaires themselves then you surely shouldn’t trust them to advise you on becoming rich.
The best place were you can financial advise is to find a mentor – someone who has already made it.
4. Invest that which you have saved.
” Gold in a purse is gratifying to own and satisfieth a miserly soul but earns nothing. The gold we may retain from our earnings is but the start”.
This is probably one golden rule in wealth creation and I can’t simply overstate it. Perhaps saving some money isn’t much of a problem after all, it’s just that, most people use their savings on things they crave for. They buy houses, cars, clothing e.t.c. instead of investing so that their income can grow.
“You eat the children of your savings”.” How do you expect them to work for you”.
However, Algamish says that, once one has saved some reasonable amount, that money is not to be used on luxuries, the usual temptation, but rather it should be invested somewhere such that it earns more money.
5. Only Invest in industries you are familiar with.
“Guard thy treasure from loss by investing only were thy principal is safe, were it may be reclaimed if desirable”.
If you are a fan of billionaire Warren Buffet, you probably would be familiar with this principle. I mean it is his favorite investment strategy of all time – Invest in only what you fully understand. It was also illustrated by Benjamin Graham in the intelligent investor. “Risk comes when you don’t know what you are doing, if you are investing in what you don’t know then you are gambling” – Warren Buffet
6. Have direct and clear goals.
“General desires are but weak longings. For a man to wish to be rich is of little purpose. For a man to desire five pieces of gold is a tangible desire which he can press to fulfillment”.
The problem with most people be that, right from the beginning, their goals are vague and so their accomplishment is uncertain as well. If you say that your goal in life is to be rich, it is very broad and simply impossible to achieve – What is being rich, when do you want to be rich. Both of these need to be clarified for any dream to manifest
A typical fruitful goal will be, I want to be a millionaire at 30. There is somehow some energy and urgency associated with this statement compared to the former one. As Napoleon Hill said, A goal is a dream with a dead line. Otherwise it is a mere wish.
7. Fortune favors the brave
The truth is this, good luck can be enticed by accepting opportunity. “Those eager to grasp opportunities for their betterment, do attract the interest of the good goddess. She is ever anxious to aid those who please her. Men of action please her best.”Action will lead thee forward to the successes thou dost desire.”
MEN OF ACTION ARE FAVORED BY THE GODDESS OF GOOD LUCK.
And as the American Founding Father Thomas Jefferson said, I’m a great believer in luck, and I find, the harder I work the more I have of it. It is simply what it is, there is nothing more to add except the fact that, there is not such a thing as luck, opportunity and preparedness to act on it is what constitute of LUCK!
8. Invest in your ability to earn.
“To him who is without knowledge of the five laws, gold comes not often, and goeth away quickly. But to him who abide by the five laws, gold comes and works as his dutiful slave.’
For one to be able to increase his capacity to learn, he must position himself to earn more. This is achieved by investing time and energy to learn the basics and rules of the game. In other words, put effort in finding out how one can be valuable to the world, if the world thinks you are worth a billion, it will surely give you a billion dollars.
9. Do not let greedy cloud your judgments.
“Gold flees the man who would force it to impossible earnings or who followeth the alluring advise of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment”.
Greedy desires are what drives most people. They go for get-rich-quick schemes, gambling and betting on horses or football teams with the hope to win $10 000 by placing a $1 bet. The risk-reward ratio simply doesn’t tally here and the probability of loosing money is much higher. Despite that, lots of people get lured into this simply because of their desires of wanting to receive something by giving absolutely nothing.
Fortunately or unfortunately, there is no substitute for sacrifice when it comes to success, the price must be paid and only when one has paid that price, only then will success come, not before.
10. Becoming rich is simply following the rules of money
“Men have much gold when they know the five laws of gold and abide thereby. Because I learned these five laws in my youth and abided by them, I have become a wealthy merchant. Not by some strange magic did I accumulate my wealth”.
This is probably the most encouraging of them all. Wealthy is surely for everyone and anyone can attain it. There not hidden secret to wealthy but rather that, once one is acquainted with the rules of the game and abides by them, he or sure will surely attain financial freedom.
Abidance by the rules of wealthy is the only secret to true wealthy!!!.
What I liked
> The principles in this book are clearly illustrated and anyone can understand them.
> Based on other books I have read and what other successful people say, the principles are timeless, they remain true even in the modern world and anyone can implement them to their advantage.
What I did not like.
> The ancient style of writing can probably be difficult to read through and be discouraging to some readers.
> The book is a bit long unnecessarily due to repetition of ideas and illustrations.
> Despite the fact that his principles are applauded to be true, there is not much information about Clason himself. He probably wasn’t one of the richest of his times which might bring a bit of skepticism towards his ideas about financial success.
Despite the ancient style of writing, this book is a good book and ever since I read it, I have not forgetting its simple principles of success. I would recommend it to anyone who is interested in knowing the very basic principles of becoming wealth, principles that were used long ago and still remain true to today. What are you waiting for, go check it out for yourself here.
Thank you for spending some time reading the article. Please leave us a comment below. If you have read the book, I would like to hear the lessons you learnt for the book and what you think about it.