THE RICHEST MAN IN BABYLON – George S. Clason
“Money makes possible the enjoyment of the best the earth has to offer, and it is plentiful for those who understand the simple laws that govern its acquisition”.
This surprising little book was written in 1926. The ‘Babylonian parables’ explained in it describe the laws of money, which are the same today as they were in ancient Babylon thousands of years ago.
The book is considered to be one of the classics in creating wealth, and it describes stories, or parables, in ancient Babylon. I will attempt in this blog post to distil just the essence of the rules and laws of money. I hope you will find some inspiring ideas; if you do, get the book and read it – the stories are so beautifully written.
SIMPLE RULES OF MONEY ACQUISITION
- Start to fatten your purse
“A part of all I earn is mine to keep”.
Get into the habit of paying yourself first, rather than paying everyone and everything else first. When you earn money, put aside straight away at least 10% of it, and keep that for yourself. Save it, don’t spend it. Learn to live with 90% of what you earn.
- Control your expenditures
Don’t confuse the necessary expenses with your desires. What each of us calls “necessary” expenses will always grow to equal our income, unless we protest to the contrary. We always have more desires that we can gratify, regardless of how much money we earn.
Budget your expenses so that you have money to pay for your necessities, to pay for your enjoyments and to gratify your worthwhile desires, without spending more than 90% of your earnings. Don’t be reluctant to spend; enjoy life, as long as it is within your budget.
- Make your gold multiply
Put the money you save to labour for you, so that it makes you more money. Invest. Use the law of compounding to your advantage.
The goal is to create an income stream that continues to come, whether you work or you travel (=passive income).
- Guard your treasures from loss
Invest where your capital is safe, and where it can be reclaimed. The riskier the investment, the bigger the risk of losing your money. Study carefully before parting with your money, and seek the advice of wise men experienced in money handling.
- Make your dwelling a profitable investment
“Own thy own home.”
Have a plot of ground for your children to play and grow up and for your wife to grow herbs and vegetables*.
Lenders will happily give you money to purchase a home (=mortgage), when you prove to them that you have the capability of saving a portion of its cost (=deposit). Then, the subsequent payments are like paying the rent, but they go towards the ownership of your home instead.
* NB: for the ladies reading this, remember that things in ancient Babylon were quite different than 21st century 🙂
- Insure a future income
Provide in advance for the needs of your growing age and the protection of your family, should you be no longer with them.
- Increase your ability to earn
Firstly, you must have desire; a strong and definite desire always precedes accomplishment. Then, show more interest in your work, more concentration on your tasks. The more we learn the more we earn; we must progress, and not stand still. Study and become wiser and more skilful.
Some other concepts described through the stories of the book are:
- Pay your debts with promptness, and do not purchase that for which you’re unable to pay.
- Make a will, so that if the Gods call you, proper and honourable division of your property will be accomplished.
- Have compassion upon those who are hit by misfortune, and aid them within reasonable limits.
- Good luck waits to come to that man who accepts opportunity. Men of action are favoured by the goddess of good luck. Don’t procrastinate; if a bargain is wise, make payment immediately.
THE FIVE LAWS OF GOLD
- Gold will come gladly and in increasing quantity to any man who will put by no less than one-tenth of his earnings, to create an estate for his fortune and that of his family.
- Gold will labour diligently and contentedly for the wise owner who finds it for profitable employment, multiplying even as the flocks of the field.
- Gold will cling to the protection of the cautious owner who invests it under the advice of men wise in its handling.
- Gold will slip away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.
- Gold flees the man who would force it to impossible earnings or who will follow the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.
I think you will agree that all the concepts are fairly simple – and so true. And that these rules are as much relevant and practical today, as they were in ancient Babylon.
“Good luck waits to come to that man who accepts opportunity.”
– George Clason