Main lesson of the book: Work hard, be sincere in your actions and plan your finances according to the 7/2/1 rule of budgeting.
So far this book is without a doubt my favorite financial book. The reason why this book just jumped to the top of the list is because it mixes my two passions: A great story and solid advice. This book is filled with nothing but great stories about people who live in the city of Babylon. The title is the Richest Man in Babylon and that is because for a good amount of chapters we follow the life and advice of a man called “Arkad”. Through his own experiences he tells us about his humble beginnings and how he grew into being the richest in a city known for its wealth. Arkad’s biggest lessons were: Keep 1/10 of whatever you earn for yourself. This might sound weird because most of us have been taught to believe that whatever we earn is ours. So when someone tells you to keep what is yours for yourself, it sounds somewhat contradicting. But a lot of what we earn slips right through our fingers. How many of us receive our paycheck only to be dead broke by the end of that exact same day. That is why you should put 1/10 of whatever you earn away and keep it safe. Never let life, situations or others touch. And once what you have earned reached a decent amount, invest it into something that allows your money to work for you.
7/10 of what you earn should be used to live life. Pay your bills, eat and go out with friends from that 7/10 and make sure to never exceed that. Pay your outstanding debt with the remaining 2/10 of your income. If you don’t have any debt or you have cleared all your debt put that 2/10 with the 1/10. So that you will be able to give yourself 3/10 of whatever you earn or 2/10 so that you can enjoy life a bit more as you live off of 8/10. This might sound like a lot but Arkad promises that you won’t even notice the difference and you will make due with what you set aside every month. And make sure that once you’re ready to invest what you have kept safe that you ask those who are familiar with the laws of money how to invest it and where to invest it so that it may work for you and grow. By doing this, you will ensure not only the safety of your future but of that of your family as well.
This entire concept immediately reminded me of Rich Dad Poor Dad stating “Pay yourself first”. It is always nice to see where authors get it from. Another beautiful point this book made through it’s vivid stories was the concept of “Fortune favors the bold”. In that the book states that Lady Luck will only embrace those who create chances for it to happen. The book actually went as far as to give us the laws of gold, which are the following:
“THE FIVE LAWS OF GOLD
- Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earngs to create an estate for his future and that of his family.
- Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
III. Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
- 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.
- 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 and romantic desires in investment.”
The age of this advice is over 80 years old and yet it still rings as true then as it does today. And the fact that this amazing advice was put amidst a story of a son telling his father of his adventures made it all the more worthwhile. The book covers every aspect of doing business, making money, investing money, lending money and how to let your money work for you all the while entertaining you with an amazing story.
My favorite chapter in this book is called “The Camel Trader of Babylon”. This is the story of a man who because of what some might call misfortune ended up becoming a slave. He made a mistake and then kept making them as many of us are prone to do once we are in a bad place. He then slowly started getting into debt as he tried to get his life back in order. But then his debt got the better of him and he decided to run away from his problems and try his luck in a different city. And while he tried to better his life he got caught up in the wrong element, got arrested and thus became a slave. He complained and to his new master’s wife who then told him the following:
“If a man has in himself the soul of a slave will he not become one no matter what his birth, even as water seeks its level? If a man has within him the soul of a free man, will he not become respected and honored in his own city in spite of his misfortune?’”
That quote struck a chord with me that will forever ring throughout my soul. The simplicity and honesty embedded in that line shows so much of what humanity is, that it exceeds past the confines of financial advice. It becomes life advice. The world will respond to what I give it and my reality will reflect my actions. Creating a better world for yourself starts from within.
This book was written in 1926 and the world hasn’t changed much with regards to how money moves and thus the advice and laws within the book still hold weight. This book resonated with me because I am an avid fan of short stories and great stories in general. I have written my fair share of them, but never considered the option of using them as a method to convey advice. The characters though plenty, still feel fleshed out, relatable, sincere and most importantly real. Their stories of humble beginnings will very likely grab the hearts of those in similar positions in life. This book has motivated me to visit the site of where Babylon was located to feel what it would be like to be a part of a culture that gave birth to so much we now hold dear. And I hope that the whispers of the souls that were lost in time as sand and wind eroded the city will inspire me to greatness. Amazing book.