I was around 15 when I first came across The Richest Man in Babylon. I was a spoilt little girl who had everything back then so I didn’t appreciate the lessons in the book.
When I picked it up again recently, I read it with a more mature mind and though the book is over 50 years old, the information still remains valid.
The Richest Man in Babylon by George Samuel Clason
The Richest Man in Babylon by George Samuel Clason started out as a series of pamphlets in 1926 and developed into a book in 1927.
It’s written in parable format and set in the city of Babylon. The book is written in old English style, which isn’t for everybody but the point here is the message.
The Richest Man in Babylon advocates that money is plentiful for those who understand the rules regarding its acquisition. In particular, I found the story of Seven Cures for a Lean Purse quite compelling: –
7 Cures for a Lean Purse – The Richest Man in Babylon
Cure 1: Start thy Purse to Fattening
Reserve one-tenth of what you make for yourself. This is very straightforward and should be a target for every penny you earn. This is a theme across quite a few personal finance books out there as well.
Cure 2: Control Thy Expenditures
Don’t waste your money on nonsense that won’t add value to you in the long run. Carlson urges us “confuse not the necessary expenses with the desires” and restrict yourself to living on only nine-tenths of your income.
Even if you have more money than you need, you should still control how you spend it and stay true to purse fattening.
Cure 3: Make Thy Gold Multiply
As one learns to control expenses and the purse begins to fatten, the next thing to consider is making the money work for you and grow.
Don’t just have it sitting in an account doing nothing. Consider high yield savings accounts or low-risk investments.
Cure 4: Guard Thy Treasure from Loss
Carlson advises guarding the gold in your purse with firmness. Put the money in sound investments and not risky get rich quick ideas.
Carlson says, “guard they treasure from loss by investing only where the principal is safe, where it may be reclaimed if desirable, and where thou will not fail to collect a fair rental…”
Cure 5: Make of Thy Dwelling a Profitable Investment
You should own your home instead of renting and fattening the purses of landlords. This was one lesson my parents taught me, which I have still not been able to make happen but I’m working my way towards it.
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Cure 6: Insure a Future Income
Put a retirement plan in place for your future and/or your family’s future and in the unfortunate event of your passing.
Cure 7: Increase Thy Ability to Earn
Develop yourself and your abilities, learn all you can and position yourself to earn all that you can in your lifetime.
After the 7 cures, George Carlson also tells the tale of the five laws of gold, which focuses on savings, returns, caution in investing, seeking professional investment advice and patience.
The rest of the book is interspersed with several tales, explaining the basic principles of managing your finances.
The message in The Richest Man in Babylon has been echoed over the years and proves that the basic rules of managing money have been in place for centuries and doesn’t really change.
If you’re in the early stages of learning how to manage your finances, this is a good one for you.