The Richest Man in Babylon, By George S. Clason (99 pages)
Babylon was an ancient city in Mesopotamia that enjoyed its heyday 4,000 years ago. It was an incredible place, renowned for its beauty (the hanging gardens of Babylon is the most famous) and advanced learning.
Babylon, located in present-day Iraq, was not endowed with great geographic resources. Yet it grew to be a military power and wealthy kingdom. It is here that Clason sets his book. The main character, Arkad, is said to be the wealthiest man in all of Babylon. Arkad shares his wisdom with a childhood friend, who has not fared as well, in a series of stories.
Each parable is told to illustrate a fundamental lesson of good business and money management. The core lessons are listed in the third chapter of the book: The Seven Cures for a Lean Purse.
Here’s the short version: save 10% of everything you earn, invest it conservatively and let it grow. Over time you will amass a sizable net worth and will live happily ever after.
Should You Read the Whole Book or Just the Summary?
This book is a short read and therefore doesn’t require a large time commitment. Its 99 pages are written in the vernacular of a sort. The stories are told using old-style, formal speech.
“Which desirest thou the most? Is it the gratification of thy desires of each day, a jewel, a bit of finery, better raiment, more food; things quickly gone and forgotten?”
If you’re interested in a charming series of stories that highlight financial best practices I would recommend reading or listening to The Richest Man in Babylon. There are many publications that deliver similar lessons in a tome-like text. This little gem is the antithesis of a textbook.
The caption on the back of this book reads, “The Bible of Financial Freedom”. Yes, it uses stories and parables to teach lessons, just like the bible. However, it is not comprehensive enough — in my view — to rise to the level of a “bible”.
I’m sure the format is not for everyone. If you’re looking to learn the intricacies of finance and investing the fictitious stories may be annoying and seem trite.
However, if you want to ruminate on sound financial management in an enjoyable fashion give this book a try.
Comprehensive Summary of the Richest Man in Babylon
Chapter 1: The Man Who Desired Gold
The story opens with Bansir, a chariot builder sitting and contemplating instead of working, even though his purse is empty. His friend, Kobbi, comes along and they engage in a reflection on their dilemma: Why is it that hard-working men, living in a wealthy and magnificent place such as Babylon, cannot acquire enough gold to live comfortably?
The name of Arkad comes up. He is an old friend with humble beginnings and yet now is the richest man in all of Babylon. They decide to go and seek his advice.
Chapter 2: The Richest Man in Babylon
Bansir finds his old friend, Arkad, and begs his wisdom. Arkad, a benevolent man, gladly shares his path to gaining wealth.
Arkad began as a scribe, working long and hard with nothing to show for it. One day a money lender needed an order expedited. Arkad promised to work all night in order to complete the job in exchange for the money lender’s wisdom about money.
After working through the night, eyes burning, back-breaking, he completes the assignment. The moneylender makes good on his part of the bargain.
“I found the road to wealth when I decided that a part of all I earned was mine to keep. And so will you.”
Lesson: If you don’t pay yourself first, and the book suggests 10% of all you make, then you are simply working for others. If you pay for food, rent/mortgage, utilities, Amazon purchases, etc, and have nothing left over therein lies your problem.
Chapter 3: Seven Cures for a Lean Purse
This chapter enumerates the step-by-step solution to end poverty with 7 “cures”.
- Start thy purse to fattening.
You must save 10% of your earnings.
- Control Thy Expenses.
To those who say that it is not possible to save 10%, the book suggests if you were to suddenly get a 10% decrease in salary you would make do and survive. It may mean wearing shoes longer than you want, eating out less than you want, reusing aluminum foil (ok, this is not specifically listed) but it can be done.
- Make Thy Gold Multiply
A key component to building wealth is to make the money you save “your slave”. Make it work for you and produce more savings.
- Guard They Treasures from Loss
Once you have some money saved there will be many ways to lose it. Friends and family will reach out with business ideas. Investment schemes promising huge returns will tempt you. Don’t fall for any of it.
- Make of They Dwelling a Profitable Investment
The book is a strong advocate for owning your own home as soon as possible. It is an asset that will grow in value. Debt is the devil throughout most of this book, but borrowing to buy a home is seen as a wise decision.
- Insure a Future Income
Some of your savings should be invested long-term for your retirement. Again, real estate is offered as an example of an asset that, over a long period of time, will ensure a comfortable retirement.
- Increase Thy Ability to Earn
There are two sides to any budget, spending and earning. Boost your earning power through ongoing education in order to be more marketable and thus increase your salary.
Chapter 4: Meet the Goddess of Good Luck
This chapter resonated with me. Some people truly seem to be luckier than others. In this chapter, Arkad speaks to a group of eager students about luck.
He begins by asking all those who gained wealth at the gaming tables to raise their hands and share their stories. He is met with silence.
Arkad posits that it is normal to profit from trade or business. The “luck” comes by identifying and taking advantage of opportunities that present themselves. Those who let these “lucky” situations slip through their fingers believe they are unlucky.
My husband is a 21st century example of this lesson. When he was 25-years-old his uncle made him aware of a 3-family house for sale at a good price (under $100,000). At the time being a landlord seemed too annoying, so he passed on the opportunity.
In retrospect, that investment would have provided income year after year and the building is worth well over a million dollars today.
Chapter 5: The Five Laws of Gold
The chapter begins with a question:
“A bag heavy with gold or a clay tablet carved with words of wisdom; if thou hadst thy choice which wouldst thou choose?”
As you might expect the men listening all answered, “the gold, the gold”. This, of course, was the wrong answer. Gold will come and gold will go if you don’t have the wisdom. Here is the wisdom, the 5 laws of gold:
- Gold comes in increasing quantities to all who save — you guessed it — 1/10 of his earnings
- Gold will work for you and multiply if invested properly
- Seek out experts in whatever avenue you choose to invest your gold
- Invest your money in something you understand well
- If it seems too good to be true it probably is. Do not place your savings in high yield “schemes”
Chapter 6: The Gold Lender of Babylon
Rodan, one of the men who has been listening and learning, has managed to save 50 pieces of gold. He’s excited but has a dilemma. His brother-in-law wants to borrow some of his gold for a business idea.
So Rodan goes to the moneylender, another wise man, for advice. Just like Arkad, the moneylender teaches with a story…
There is an ox and an ass on a farm. Ox complains to the ass: they’re working me to the bone! The ass suggests: why don’t you play sick tomorrow and get a day off? The ox decides to take his friend’s advice.
The next day Ox lies down moaning (can an ox moan?!) The field must be plowed, so the farmer hitches the ass to the plow and he is forced to work all day!
Lesson: helping others is fine, but be sure not to hurt yourself in the process.
Chapter 7: The Walls of Babylon
The tale in this chapter describes an attempted invasion of Babylon by a fierce enemy. The siege lasts for weeks and many within the walls of Babylon are terrified. But the walls withstand to attacks and finally the enemy retreats.
Lesson: You must always have adequate protection against unseen tragedy.
Chapter 8: The Camel Trader of Babylon
The camel trader is a wise and wealthy man. He has lent money to a friend’s son who turns out to be lazy and uninspired. The young man loses all of the money and is left penniless and hungry.
As the camel trader eats a sumptuous dinner in front of the starving lad he shares a story of hope and tenacity.
Lesson: Perseverance wins the day.
Chapter 9: The Clay Tablets of Babylon
This chapter is a series of letters between a college professor and an archeologist who uncovered tablets relaying the stories in this book.
The professor and his wife suffered financial ills of debt and mismanagement. He follows the lessons from the richest man in Babylon and turns his finances around.
Lesson: Good money practices of 3,000 years ago are still effective today.
Chapter 10: The Luckiest Man in Babylon
The final parable of the book speaks of the value of hard work. An enslaved man, utilizing his labor and a positive attitude, is able to endear himself to his master and eventually earn his freedom.
I found no groundbreaking money insights in this book. It’s like a good, simple plate of pasta, fundamental yet satisfying. But Is there enough “meat” to chew on in this book? I think so. The stories are enjoyable even though there are no surprise endings. And there is value to revisiting basic money principles.
The parables remind us of “wise” money management lessons, such as saving and investing in order to retire comfortably. There are others who do not agree. Garrett B. Gunderson, the author of Killing Sacred Cows, believes these are myths that must be unlearned.
For example, Gunderson advocates NOT putting your money in a 401k or IRA in contradiction to the lessons of this book. He goes into great detail as to why this is folly.
That’s another book for another day, but raises the question: Are these parables teaching lessons to live by or reinforcing bad money advice? Hmmm.
By Joan Medori