If you’re looking for ways to increase your wealth and live an overall richer life, one ancient society might hold the key. No, really! In our The Richest Man in Babylon summary, we’ll go over how the teachings from ancient Babylon could be your path to success.
Even though this book was published back in 1926 (and based on lessons from millennia ago!), it’s still so relevant today for women who want to take control of their finances.
Why should we listen to the ancient Babylonians for advice in this Richest Man in Babylon summary?
The Richest Man in Babylon was written by George S. Clason and is one of the classics when it comes to personal finance books. You can buy this book, audiobook, or purchase The Richest Man in Babylon pdf to find out all the details, but this summary will help you with the basic information.
You might be thinking — what makes the Babylonians so great that we should still be listening to their advice?
As Clason explains at the beginning of the book, they had one of the richest societies in the world. The impregnable walls surrounding the city were 320 feet tall in some places, keeping citizens protected from pillaging armies. This allowed them to grow their wealth in peace and prosperity.
While the tales Clason weaves in this book are obviously fiction, the lessons behind them are visceral and impactful. If you take the advice to heart, the quotes in The Richest Man in Babylon may even change your life.
Seven cures for a lean purse: The Richest Man in Babylon summary
We'll begin our summary of the Richest Man in Babylon book with the seven cures for a lean purse. After pining over their misfortunes with money, the citizens of Babylon head to Arkad for advice. He’s the aforementioned richest man in Babylon and has seven main tips to share.
1. Start thy purse to fattening (start earning)
Arkad’s number one tip? Set aside 10% of your income for you!
You can use that other 90% to pay bills and other expenses. But that 10% is specifically for you to save and invest later on.
“For you” might be a bit misleading. This isn’t money for you to use however you want, like buying a new phone or upgrading your wardrobe. Rather, you need to save money for your future until the time is right.
It seems small at first, but gradually, you’ll start to have a good amount set aside. Arkad argues that most people won’t even notice the missing cash from their budget.
2. Control thy expenditures (Spend less than you earn)
On to the subject of thrift - when you have extra money, it’s tempting to splurge and buy fancy things… in the Babylonian’s case, new robes or jewels.
But don’t! Make sure to live within your means and only take on necessary expenses.
Arkad makes a good point when he says: “What we call ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary.”
Put simply, this means we’ll keep spending more on things we think are necessary but are actually just things we desire.
3. Make thy gold multiply like the Richest Man in Babylon (invest)
Now that you have some money set aside, it’s time to put it to work. When you invest your cash, it can reproduce and bring you a steady stream of income and personal wealth!
Arkad calls this making your treasure work for you. His philosophy is that you make your gold have children, who can then also work for you. In other words, take advantage of compounding interest that can grow your wealth.
In our modern world, this might be loaning money out or getting interest from a savings account.
4. Guard thy treasures from loss (diversify/insure)
You know those get-rich schemes you see circulating on social media promising you can get rich from nothing? The FTC found a 70% increase in get-rich-quick scams for a quarter in 2020 as compared to 2019, so this problem isn't improving. They often sound too good to be true...because they are, as this summary of The Richest Man in Babylon will make clear.
Arkad warns us that there is no way to make massive amounts of money overnight. Instead, it takes time, effort, and knowledge.
And when you are ready to invest, make sure to start small. You need to learn to secure smaller amounts until you can handle larger ones.
Arkad ranks security for the principal far better than rapid wealth. He also praises the ability to reclaim your money should you need it back in a hurry.
The main takeaway here? Study before making an investment so you can be sure it is a wise one. You won’t get rich overnight… but you will get rich eventually.
5. Make of thy dwelling a profitable investment (Own your own home)
We all know that buying is better than renting, not just because you don’t have to worry about getting your security deposit back!
Arkad tells us that “every man should own the roof that sheltereth him and his.” That’s because it can reduce your cost of living and make more money available for your desires.
Instead of just throwing your money away on rent, you’ll be building equity in an investment. And as you’ll see in the next section, that can pay off big when planning for future income.
6. Insure a future income (Plan for retirement)
You won’t be young forever, and you won’t always be able to work. And yet, there's a huge 55% of the employed that plan on working even after they're retired. So make sure you have a plan for income when it’s time to retire.
Arkad recommends planning for retirement in advance to ensure your treasures and protect your family. Naturally, having a savings account or retirement pension with a lot of money saved up is great.
But you can also rent out the property (or hopefully, properties!) that you bought earlier in life. Either way, coming up with a plan now should ensure you’ll be comfortable when you’re older.
7. Increase thy ability to earn (Create multiple streams of income)
Want to earn more? Develop your mindset and your skills! The more wisdom you have, the more you can earn.
As an example, if you know nothing about real estate, it’s not a good idea to jump in and buy investment properties. First, you’d need to study the market and learn all the complicated terminology. You would also want to seek help from a seasoned investor so they can point you in the right direction.
Doing all of these things can help you become a better investor and increase your ability to earn. Whatever you do, start small. Eventually, you can go bigger as you learn and become more capable.
The Richest Man in Babylon summary: A take on luck
Aren’t you jealous of people who seem to have all the luck? Well, there’s good news and bad.
Despite many people thinking luck is hitting the lottery or winning big at the slots, it’s not really. Rather, it’s about making the most of opportunity when it knocks at your door.
People who win large sums of money unexpectedly often lose it all because they don’t know how to handle that. Or, they are afraid to spend it and stash it all away.
People act these two ways because they aren’t prepared for wealth and then have personal financial problems. They didn’t earn it, so they don’t have the habits to sustain it.
That’s where luck comes into play. By taking advantage of opportunities without hesitation, we can create our own good luck.
For most of us, the number one thing standing in our way is procrastination. You have to be ready to act promptly and decisively.
In The Richest Man in Babylon book, Clason uses an example of a livestock trader who had a chance to buy a huge flock at a low price. Instead of closing on the deal right away, he insisted on waiting until morning so he could better inspect the flock. When morning came, other livestock traders heard of the deal and made offers, causing him to miss out on the deal of a lifetime.
The moral of the story? Good luck flees from procrastination. To attract good luck, you need to take full advantage of opportunities. It's not something you can just wait to happen.
The five laws of gold from The Richest Man in Babylon summary
Another key point to take away from this summary of The Richest Man in Babylon is the five laws of gold. These laws were crafted by Arkad and handed down to his son, Nomasir, who had to use them to prove he could make his own way.
The first law of gold
“Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.”
Translation: When you save part of your income (even if you have a low income), it helps you build up your wealth.
Again, Nomasir took the method of saving 10% of his income, and it worked out great for him.
The second law of gold
“Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.”
Translation: When you invest your money, it will multiply so you have more of it.
What this means to us modern-day women is to take advantage of compounding interest. This helps your principal keep building as you earn interest.
The third law of gold
“Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.”
Translation: Leverage the advice of financial experts if you need to when investing your money for more security.
No one grows up being a financial expert. It takes time, experience, and years of learning. That’s why you should always find someone you can trust when it comes to financial help.
The fourth law of gold
“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.”
Translation: Don’t rush headlong into an investment you know nothing about! It’s just asking for trouble.
We talked about real estate investing above, but consider something even simpler, like cryptocurrency. It takes just a few clicks to buy into this virtual money, but if you don’t understand the ups and downs of the market, you’re putting your investment at risk.
The fifth law of gold
“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.”
Translation: Don’t fall for get-rich-quick schemes or scams. You’ll lose your money.
There are many people out there looking to scam you, from Nigerian princes to phishing schemes. You might not know who to trust, but do your best to recognize the signs of a trickster so you aren’t taken advantage of.
Four more parables to think about in The Richest Man in Babylon summary
There are four final stories to end the book which illustrate the above cures and laws in action. In this summary of The Richest Man in Babylon, we'll go over them.
1. The gold lender of Babylon
In The Richest Man in Babylon book, A man named Rodan got 50 coins from the king for a job well done and asked gold lender Mathon for some advice on how to use it. His take?
When lending, only lend to those you trust, who are knowledgeable in their field and have the means to repay. If possible, you should even consider taking some collateral worth the value of the loan. This winning combination of factors ensures you’ll get your money back eventually.
Sure, we might feel tempted to loan a family member money to start a business. But if they know nothing about business, there’s a good chance they’ll fail and you’ll never get repaid.
The moral? It’s better to have a little caution than a great regret.
2. The walls of Babylon
Babylon is under attack, and the citizens are afraid. All-day long, they ask the guard if things will be alright. The guard assures them all the walls will hold, as they are strong and fortified.
Babylon does survive the attack, and Clason uses this to illustrate that we need financial security throughout life. You never know when you’ll be under attack – whether you lose your job or have some emergency medical bills.
Having a financial safety net can help you weather these rough times so you don’t have to sacrifice your prosperity.
The moral? We cannot afford to be without adequate protection.
3. The camel trader of Babylon
Tarkad is in debt to many, when he comes across Dabasir, the camel trader whom he owes money. Dabasir tells his tale of going into debt because of his lavish lifestyle and then falling in with robbers.
He was eventually sold as a slave and was trained as a camel tender. One of his master’s wives, Sira, asks him if he has the soul of a free man or slave. After a while, he realizes he wants to repay his debts, so she helps to free him.
He almost succumbs during a long desert journey, but finds his spirit and makes it back to Babylon, where he works hard to pay off his debts using a precise budget.
Dabasir’s journey is long and harrowing, but in the end, he makes things right and proves he has the soul of a free man.
The moral? Where the determination is, a way can be found.
4. The luckiest man in Babylon
Another story in The Richest Man in Babylon Book is about Sharru Nada, a wealthy merchant prince traveling with the grandson of his deceased partner. The youth has a taste for expensive things and eschews hard work, so Sharru tells him how he used to be a slave.
He was sold into slavery because his brother killed someone and his father couldn’t pay the bond. He ended up working for a baker, where he made extra pastries and shared the money with his master. It was the ultimate side hustle. He wanted to work hard so he could buy back his freedom.
Unfortunately, his master gambled all his money, so Sharru was sold again and almost condemned to a hard labor life before his friend and a fellow slave purchased him. His friend was able to do this because Sharru taught him about the value of hard work.
The moral? Hard work can be your best friend in times of distress and help you achieve many things.
Take these lessons from The Richest Man in Babylon summary and run with them!
There’s a lot to unpack in the Richest Man in Babylon summary, but it’s all sound advice. The framework with which Clason provides his tips makes it easy to enact in your own life. To learn more, read the book, listen to an audiobook, or try The Richest Man in Babylon pdf version if you prefer to read online.