The Richest Man in Babylon
Do you know the saying When the student is ready, the teacher appears? That is how it was for me and George Clason’s book The Richest Man in Babylon.
Maybe you have heard of the book and never read it. Well, the book is worth your time and energy. You may not believe that a book written 85 years ago would have much to say to a modern person, especially about something so volatile as wealth building. In the course of a 144 pages, however, Clason shares a few simple parables about saving, wise investing and wealth building.
One of the things I like about the book is its age and the fact that it is reaching back to a much earlier time period. When people are stressed and uncertain, it is easy to think that nothing like this has ever happened before. They think Our grandparents never had to worry about debt. And that is of course, not true. Ever since money was invented people have had trouble managing it. Certainly people in the 1920s didn’t have credit cards to worry about, but most stores, like grocery stores and clothing stores, extended credit to local families, so it was just as easy to get into debt then as it is now.
Clason does a great job of telling simple little stories about ancient Babylonians to illustrate his points about spending, saving and investing. The language has a King James bible feel to it, but for me that added to the charm. There is a modernized version, if the language is a block for you. Do not let the stilted language keep you from the wisdom of this little book. I enjoyed all of the stories. My favorite is probably The Luckiest Man in Babylon, but they are all good and the wealth building principles are easy to understand.
Another one of my favorite chapters is Meet the Goddess of Good Luck. This is because when I was younger, I thought that rich people were simply lucky people. Some people (I thought) were lucky enough to be born into wealthy families and other people were lucky enough to be in the right place at the right time for that “big break.” This chapter teaches that people make their own luck and I now believe that is true. This chapter can be summed up by the saying Fortune favors the brave. And what that means is that if you are willing to take a few risks, Lady Luck will smile on you. This does not mean betting your life savings in Las Vegas. It means carefully saving money until you have some to invest. If you are in a place where you can do without the money, if you lost it, you can be less cautious with it. This is not a license to be foolhardy in the least. And in fact, the book teaches that there are five laws of gold.
In the book Arkad is the title character — he is the richest man in Babylon. In one story he gives his son a bag of gold and a stone tablet with the five laws of gold carved into it. The son must go out and seek his fortune, armed with these two tools. Here are the five laws (in the language of the 1926 version)
1. Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.
2. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multplying even as the flocks in the field.
3. Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
4. Gold slippeth 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.
5. Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience or romantic desires in investment.
These laws are as relevant today as they were 80 years ago, as they were 2,000 years ago! The formula for building wealth is very simple. Live below your means; be patient and cautious when investing your money.