The Richest Man in Babylon Notes

The Richest Man in Babylon is probably one of the first books I’ve read about money. And although the book was first published in 1926 I still believe it can hold some value in today’s day and age. Written by George S. Clason, this book takes the form of stories set in ancient Babylon, one of the richest cities in the world. Through these stories, Clason teached the fundamental principles of financial success. 

Overall, The Richest Man serves as not only a great entry point for beginners but also as a refresher for more seasoned “investors”. The principles taught are timeless and work just as fine in 1926 as today. 

The Richest Man in Babylon in 3 Sentences

1. Of all the income you receive, be sure to save 10% of it.
2. Use this money to save and invest so that it can earn for you even when you are not able anymore to do so.
3. Keep redefining your professional and money skills to in the end become real wealthy. 

The Richest Man in Babylon Notes

Never lend out all your money. Not even to your best friend.This way your riches will be quickly gone. Especially if you don’t have a way to refill it. 

You’ll never find riches if you don’t search for it.

“Wealth is a power. With wealth many things are possible (page 13). To achieve real wealth you only need time and the willingness to study.

Start building your wealth by keeping a part of all you earn. Keep at least 10% of all you earn for yourself. It can always be more but never less. However, don’t save too much. Life is lived today. Don’t let these savings sit idle. Put it to work so it can earn more for you in the future.

Advice is easily given, but be sure to only take it from those who are knowledgeable. 

Learn yourself how to acquire money, how to save it and how to invest it.

Don’t judge a man based on his success or his misfortune. You don’t know what he has been through. But what a man knows he can learn to others. 

The first step in building wealth is to ‘fattening’ thy purse. Do this with the income you already have. This is probably income from your job. The next step is to control your expenses. Be sure to not confuse your necessary expenses with your desires. You will always have more desires than you can fill. You can use a budget for your necessary expenses.

Put your money to work so it creates an income. An income that continuously fills your bank account whenever you are working or not. This is what everybody truly desires, because it is real wealth. Be sure you learn to guard ‘thy treasure’ from loss. If you first learn to handle small sums of money before you take on big sums it will be easier. Don’t take on big risks if this means (potentially) losing big sums of your money. 

The Richest Man believes you should make a profitable investment from ‘thy dwelling.’ Or in modern terms: ‘Try to own your house.”. This is the only thing you should borrow money for if the payments fit into your budget.

Invest time in ensuring a future income. You will get older and there will be a time when you cannot work anymore. Be sure you have another income ready when that time comes. 

In the meantime increase ‘thy ability to earn’. The more you know and are able to do. The more you can potentially earn.

It is human nature to have a love for gambling a small sum of money in hopes to win big. Yet, remember the house always has better odds than you do. 

Rather search for good luck in opportunities presented to you. Opportunity waits for no one. Take action if you feel comfortable doing so. Don’t delay when action is required. 

Gold can only be handled by those who know how. Therefore you should seek wisdom first to learn how to keep your money. ‘To earn wealth is but a slight burden upon the thoughtful man. Bearing the burden consistently from year to year accomplished the final purpose.’ (page 93). The gold you save will earn more if you keep putting it up to work. Always do your research first before you invest your money otherwise you will lose money. 

You may think you want to be rich but many don’t want the burden of having all that money. The more money you have the bigger responsibilities you have.

If you want to help out others, be sure to not take over their burdens. Don’t borrow unwise amounts of money to gain wealth quickly. It is easy to lend out money. Yet it can be difficult to get back. The first goal of your money should always be to Keep it Safe. ‘Better a little caution than a great regret (page 118)’.

Spend time thinking about if you have enough protection.

Back luck follows everybody who thinks more about spending and lending instead of saving and investing. You cannot respect yourself if you don’t repay your debts. If you are in debt, your debts are your enemies. The soul of a free man looks for solutions. The soul of a slave only sees problems. ‘Where the determination is, the way can be found (page 140)’.

When you are in debt use 70% of your income to live, 20% to pay off your debts and 10% to pay yourself first. This plan works because you pay off your debts while building your wealth.

Doing (hard) work isn’t the enemy. Treat work like a friend so you can reap the awards of it. Work well done makes you a better man while no work to do is bad for any man. Decide what you would like to achieve and create momentum towards that goal.

The Richest Man in Review

The Richest Man in Babylon is one of many beginner books when it comes to personal finance. Maybe it is even the oldest especially if you take into consideration it first started as a series of flyers. Are the stories redundant? Yes. Are the lessons magical? Absolutely! Because they only focus on the things you can control and that is the most important part of personal finances.