What’s in it? Quick Summary
The Richest Man In Babylon Summary by George S. Clason is a classic bestseller that shares the timeless wisdom of Finance. From the importance of saving to investing wisely, it teaches you how to become wealthy.
Who Should Read The Richest Man In Babylon Summary?
- A person who has started learning about finance.
- Anyone who wants to learn how to build wealth in the long term.
- Anyone whose purse is lean and wants to fatten it.
The Richest Man In Babylon Summary (PDF)
A nation prospers when all its individuals are financially literate.
Some of the financial principles are timeless, while others change with time.
If you want to learn the basic evergreen principles of Finance, this book summary is perfect.
In this article, The Richest Man In Babylon summary, I will share my lessons from this book.
Also, don’t forget to read the article’s critical review at the end.
So without further ado, let’s dive right in.
Lesson #1: “Pay Yourself First.”
If you would ask me to tell only one thing I learned from this book, I’d say to you this:
A part of all you earn is yours to keep.
George S. Clason
The biggest mistake people make is that they spend all their hard-earned money on their needs and wants.
They forget to save money for themselves.
Well, they do buy stuff for themselves, but they don’t pay themselves.
They pay brands. They pay the shop owners. They pay for various services.
They give their money to everyone except themselves.
So should you stop buying stuff and start saving like crazy?
Nope, I don’t mean that.
The author says that you should save one-tenth of your money.
It means: If you earn ten gold coins, you should spend only nine coins on your needs and desires.
And no matter what happens, you must not touch that last gold coin.
Of course, you can save more than one gold coin, but the thing is that you must not save less than one-tenth of your total income.
But what if you struggle to earn and hardly meet your everyday needs?
Yes, even then, you have to save one-tenth of your total earnings. This will put you on the path to riches. This habit will gradually fatten your lean purse.
When you keep aside a part of all your earnings for the future, the compound effect takes place.
And you don’t even realize when that saving of yours becomes significantly bigger.
Lesson #2: “What You Save Must Earn.”
Saving is only a part of the equation.
Mere saving doesn’t help you in becoming wealthy.
The thing is:
Unless you save, you won’t be able to invest.
You can only invest when you have enough money.
It is best to create children from your savings and let them earn.
I know you are confused, “How can one create children from his savings?”
Let me clear this confusion.
When we say children of your savings, it means that you must use your savings in a way that creates multiple streams of income.
One way is to invest in buying assets that will generate money.
After that, you should try to create children of children to create even more income streams. This has many benefits.
The main benefit of creating multiple revenue streams is that you don’t have to rely on one source of income.
And in the worst case, if one source of revenue shuts down, you will have others to rely on.
In short, what you save must help you earn.
Lesson #3: Every Fool Must Learn How To Earn.
Let’s admit that we don’t know as much as we think we know.
A wise person has said:
The more you learn, the more you earn.
A Wise Man
If you fail to learn the principles of making money, you won’t make it.
I believe it’s a sin to think that you will become wealthy without knowing the basics of wealth building.
Sometimes people think that good luck will shine upon them and they will become rich.
Or they always wait for some lottery that would bring them a fortune.
Let’s say that for once, in a super fortunate event, you win the lottery and become rich overnight.
Now what?
You won’t be able to use it wisely only because you aren’t capable enough.
And eventually, you’ll lose it.
Unless you learn how to save and invest your resources wisely, you won’t create much wealth.
This is why you must learn.
That man who seeks to learn more of his craft shall be richly rewarded.
The Richest Man In Babylon
Learning will also save you from the traps that I will discuss later.
Suggested read: Best finance books that everybody should read at least once.
Keep reading to learn more…
Lesson #4: Plant Your Seed Sooner.
You might have heard people saying, “wealth doesn’t grow on a tree.” It’s true.
But nobody talks about the fact it pretty much grows like a tree.
All you have to do is plant the right seed at the right time.
The one-tenth part you save from your total income is like a seed.
When you plant that seed and nurture it for a few years, it grows and becomes a tree that bears fruits.
The sooner you plant the seed (which means saving a part of your income), the sooner you start seeing the results of your effort.
When it comes to investing, wise people advise that you must start early to see the magic of compounding.
But only starting sooner doesn’t get you results.
Results will begin to appear when you water your seed until it grows into a tree.
Just as a tree takes time and nourishment to grow, wealth also takes time and nourishment to build.
It’s a long-term thing.
Therefore, the earlier you start, the sooner you see results.
Lesson #5: Control Thy Expenditures.
One who doesn’t know how to control his expenses will soon find himself with a lean purse.
We all have an inherent desire to buy the best stuff.
But not all can afford that.
There are mainly two types of things we buy:
- Stuff that fulfills our basic needs like food, water, shelter, etc.
- Stuff that makes us happy and fulfills our wants, dreams, and desires.
You must control the expenditure on the second type of thing.
This is because wants are different than needs.
Needs are necessary while wishes aren’t.
It is our wants that are expensive.
Ask yourself honestly questions like:
- Do I need that new featured mobile or a laptop?
- Do I really need that new watch?
- Do my current things meet my needs?
- Am I wasting my money?
- Am I buying something because I need it or due to peer pressure?
The newbies who don’t know much about Finance should use the 50/30/20 rule.
Note: This rule isn’t given in the book, but I’m telling you to follow it.
According to this rule, 50% of your income should be spent on meeting basic needs.
The other 30% should be spent on your wants and desires.
And the remaining 20% should be used for saving and investing.
You can also adopt minimalism in your life to control your expenditures.
It’s simple:
Buy only what is necessary.
Don’t let your desires guide you while you spend.
Confuse not the necessary expenses with thy desires.
The Richest Man In Babylon
Lesson #6: Taking On Debt Is A Bad Idea.
Those who don’t know how to manage money and control their expenditures often take on debt to fulfill their wishes and endless desires.
When you take debt, you have to pay it back with interest.
And when this happens, you fail to save 10% of your wealth.
Some people often end up in a debt spiral.
They often borrow money, but they can’t pay it back, so they have to borrow more money.
This can lead to a situation where they are in more debt than they can pay back, and instead of getting more money, they become poorer.
Therefore, the debt must be avoided if possible.
Don’t purchase anything if you don’t have enough money. This is far better than taking on debt.
Lesson #7: Good Luck Comes To Those Who Work For It.
Good luck indeed comes to those few people who accept the opportunity when it comes.
Some people procrastinate and let the opportunity pass.
But those who grab every opportunity and work hard often find themselves in situations where they are rewarded with fortune.
Opportunity waits for none.
You have to be quick when you see it.
And you know what?
It often comes when you least expect it.
Men of action are favored by the Goddess of good luck.
George S. Clason
Lesson #8: Ensure A Future Income.
Investing can be risky at times.
So whatever you do with your money, make sure that you have plans for future income.
Here are a few reasons why you should ensure your future income:
- To secure a comfortable lifestyle after retirement
- To ensure that healthcare expenses are covered
- To enable you to pursue your dreams and goals
- To provide peace of mind knowing that you have a secure income for the future
- To have the financial freedom to make choices without worrying about money
To better ensure your future income try to make long-term plans.
Short-term plans often lead to future problems.
Associate yourself with people who have achieved success in making money.
Surrounding yourself with finance experts can help you learn how to create a steady income.
Future income must be planned to support you and your family in the future.
Provide in advance for the needs of thy growing age and the protection of thy family.
The Richest Man In Babylon
Lesson #9: Protect Your Money with all your might.
Humans build walls around their houses to protect themselves; similarly, you should create plans and strategies to safeguard your money from potential threats.
Protecting your money is important for several reasons.
First, it helps ensure that you have the money available when you need it.
For example, if you have an emergency expense or if you need to make a large purchase, having the money saved up can help you avoid taking out a loan or using a credit card.
Also make sure your accounts are secure and that you are using a secure banking system, you can help protect your money from being lost or stolen.
If you are keeping your money in a savings account, you should make sure you are taking advantage of any interest rates in order to get the most out of your money.
Protect your wealth with all your might.
Tragedies can occur unexpectedly, so it’s wise to be prepared for the worst.
Guard thy treasure from loss by investing only where thy principal is safe.
The Richest Man In Babylon
The Key Takeaways From “The Richest Man In Babylon”
Let’s wrap up the key points from this book:
- Pay yourself first.
- Make your money work for you.
- Learn as much as you can about earning money.
- Learn about investing money.
- Control your expenses.
- Avoid debts if possible.
What else will you learn from blinks?
- Learn how to be lucky.
- How you can accumulate wealth by trial and error?
- How to seize opportunities?
- How to make long-term investments?
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The Richest Man In Babylons Summary Infographic
The Richest Man In Babylon Review
This book shares the story of Babylon, which was one of the wealthiest and most glamorous cities in the old times.
The wealthiest man in the city, Arkad, shares with the city’s people the wisdom of why he is so rich and how his wealth multiplies rapidly.
Things I liked in this book:
The author has told timeless financial lessons through stories.
This book is excellent for beginners who know little or nothing about Finance.
Things I didn’t like about this book:
One thing worth noting in this book is the old English language.
Words like “thy,” “thou,” “hadst,” etc., were seriously irritating, making the sentence sometimes hard to read.
The style of writing didn’t appeal to me.
Although this book is short, I think it could be even shorter.
Most of the lessons given in this book are based on common sense.
Your Turn
Which lesson did you like the most?
Do you have any other timeless wealth-building advice?
Tell me in the comments.
Recommended book summaries:
- Rich Dad Poor Dad
- The Psychology Of Money
- The Science Of Getting Rich
- The Automatic Millionaire
- Millionaire Teacher
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Great work
Thanks, Sachin.