The Richest Man In Babylon by George S. Clason is a classic bestseller that shares timeless wisdom of Finance. From the importance of saving to the importance of investing wisely, it teaches you how to become wealthy.
The Richest Man In Babylon Summary
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, then this article is perfect for you.
In this article or The Richest Man In Babylon summary, I’m going to share the lessons that I have learned from this book.
Also don’t forget to read the critical review at the end of the article.
So without further ado, let’s dive right in.
1. Pay yourself first
If you would ask me to tell only one thing I learned from this book, I’d tell 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 actually pay themselves.
They pay to brands. They pay the shop owners. They pay for 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 that if you earn ten gold coins, then 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 earning. This will put you on the path of riches. This habit will gradually fatten your lean purse.
When you keep aside a part of all your earning for the future, the compound effect takes place.
And you don’t even realize when that saving of yours becomes significantly bigger.
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 out of your savings and let them earn.
I know you are confused, “How in the right mind, one can 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 streams of income. This has many benefits.
The main benefit of creating multiple streams of revenue 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.
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, chances are you won’t make it.
I believe it’s a sin to think that you will become wealthy without learning 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 kind of 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.
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 about how to save and invest your resources wisely, you won’t be able to create a lot of 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 am going to discuss later.
Keep reading to learn more…
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 out of 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 which bears fruits.
The sooner you plant the seed (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 so that you see the magic of compounding.
But only starting sooner doesn’t get you results.
Results will begin to appear when you water your seed consistently till 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.
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 fulfils our basic needs like food, water, shelter, etc.
- Stuff that makes us happy and fulfils our wants, dreams and desires.
You must control the expenditure on the second type of things.
This is because wants are different than needs.
Needs are necessary while wants aren’t.
It is our wants that are expensive.
Ask yourself honestly questions like:
- Do I need a new featured mobile or a laptop?
- Do I really need a 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.
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 in saving and investing.
You can also adopt minimalism in your life to control your expenditures.
Buy 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
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 fulfil their wishes and endless desires.
When you take debt, you have to pay back with interest.
And when this happens, you fail to save 10% of your wealth.
Some people often end up in a debt spiral and instead of getting wealthy, they become poor.
Therefore, debt must be avoided if possible.
Don’t buy anything if you don’t have enough money. This is way better than taking on debt.
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 simply 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
8. Ensure a future income
Investing can be risky at times.
That is why whatever you do with your money, make sure that you have plans for future income.
Make long-term plans.
Short term plans often lead to future problems.
Associate yourself with the people who have established success in money-making.
When you surround yourself with finance experts, you get to learn how you can develop a sustainable income.
Future income must be planned as it’d support you and your family in future.
Provide in advance for the needs of thy growing age and the protection of thy family.The Richest Man In Babylon
9. Defend thy money
Protect your wealth with all your might.
Just as humans use to build walls around their houses to protect themselves, you should also have plans and strategies to guard your money against the threats.
You must not only avoid money scams but also protect your money through walls of insurance, saving accounts, and dependable investments.
Tragedies can happen without any warning.
It’s better to be prepared for the worst.
Guard thy treasure from loss by investing only where thy principal is safeThe Richest Man In Babylon
The richest man in babylons summary infographic
The Richest Man In Babylon Review
This book shares the story of the Babylon, which was one of the wealthiest and glamorous cities in the old times.
The richest man in the city, Arkad, shares with the people of the city, 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 use of 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.
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.
Now you tell me
Which lesson did you like the most?
Do you have any other timeless wealth-building advice?
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