Every Sunday we review a personal finance or credit book here on Ask Mr. Credit Card.com. I am pleased to be able to tell you that this week’s book, “The Richest Man In Babylon” by George S. Clason was a wise use of both my money and my time.
The Richest Man in Babylon is a collection of parables – stories of those who lived and died in ancient Babylon.
I never cease to be amazed each time I realize the laws of acquiring and growing money have not changed throughout the years. Indeed, the laws of borrowing money have not changed either, as one of the parables in this book illustrates clearly.
So, if the laws of money have not changed, and the laws of borrowing money have not changed, then it is a simple job to discover them, and put them to work in our own lives. The collected wisdom of our forefathers is there – in black and white – just waiting to be seized and put to good use.
The Richest Man in Babylon is not a long book, or a windy one. All told, it’s only 144 pages. Clason says his piece, and lets it rest, leaving the wisdom to sink in as it will. In fact, there is so much wisdom presented so simply on each page of this book, that I am going to be hard pressed to cover everything in a simple review.
The Man Who Desired Gold:
The Richest Man In Babylon opens with Bansir the chariot maker and his good friend Kobi the bard. Together the two men cannot even come up with two shekels, and they decide to go and speak with one of their old friends, Arkad, who is now the richest man in Babylon.
Arkad willingly agrees to share how he made his own fortune, and thus begins the book.
The first advice of Arkad:
“A portion of all you earn is yours to keep.”
By slowly and methodically setting aside one tenth of his income, Arkad began to grow his wealth. It was not always an easy process, but he persisted. Arkad lost his first year’s worth of savings to a bad investment and had to start over. Because he had already developed the habit of setting aside ten percent for himself, he found it easy to start over, and he learned from his mistakes.
The second advice of Arkad:
“Control Thy Expenditures”
In other words *cough* live on less and draw up a budget. Leave the tenth that you are keeping for yourself alone, and allow it to grow and multiply.
The third advice of Arkad:
“Make thy gold multiply”
Arkad multiplied his gold by loaning a sum each year to a shield maker. Every year the shield maker would borrow money in order to the bronze that his shields were made from. As he made a profit throughout the year, he would faithfully pay Arkad back, plus interest.
Each year Arkad re-invested not only the initial sum he lent the man, but also the interest he had been paid. So not only did his original loan earn interest, but the additional interest he earned compounded to earn him interest as well.
The fourth advice of Arkad:
“Guard thy treasures from loss”
Arkad’s first investment was a simple plan. He loaned his first year’s savings out to a friend; a bricklayer who was traveling overseas to Tyre. The bricklayer proposed to some of Tyre’s famous jewels. Upon his return, he and Arkad would split the profits from the sale of the rare jewels in Babylon.
However, when the bricklayer returned, he found that the dishonest merchants he dealt with had sold him glass gems instead of real ones. Thereupon Arkad learned not to take advice on jewels from a bricklayer. Or, in other words, not to invest in anything that he (or his partner) was not familiar with.
The fifth advice of Arkad:
“Make of they dwelling a profitable investment”
Here, simply put is the age old advice of owning your own home rather than renting.
The sixth advice of Arkad:
“Insure a future income”
By this Arkad suggested not only setting aside a portion of your income to provide for you in your old age, but also to re-invest the dividends of your income so that they provide for your future as well.
The author, Clason, puts the lesson eloquently when he says:
Each penny that you keep becomes a slave for you. If you give it a job, it will work hard, and in time, it’s children, and it’s children’s children will work hard for you as well.
The seventh advice of Arkad:
“Increase thy ability to earn”
Arkad suggests having a definite desire, and working to achieve that goal. Decide on a set amount of money that you would like to earn, and find a way to achieve it. As one accomplishment builds on the next, you can soon find yourself earning far more than you could ever have previously dreamed of.
All in all, excellent advice, though I think it suffers a bit in the re-telling. If you are not currently reading books about money, finance, or credit, then this is the book you will want to start with. It is entertaining, not overwhelming, and it does an amazing job of driving the lessons home in an enjoyable way.
What is it about a well told story that sticks with us far longer than a rote recitation of facts? Maybe it is because, for a short while, we can step into the shoes of those who are having the same troubles we are, and watch as they accomplish their goals.
Maybe it’s because we can readily identify with the human problems of overcoming lust, greed, and ambition as they relate to our money, but we have problems when someone says to us directly “Just make a budget!”
Or, maybe that’s just me.
I do recommend this book to you, with all my heart. It’s one of the best I’ve ever read.
Have you read this book? Give us your opinion below!
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