The Richest Man in Babylon – Book Summary
This book is created from the ancient tablet found in the rich city of Babylon. This tablet consists of timeless principles on finance and considered a cure to the lean purse problem. It is said the most of the famous principles of investing and finance are derived from this tablet.
Any person who wants to learn personal finance principles in short stories should read this book. This covers topics about luck in a person’s life to things to consider when lending principles. The principles mentioned in the tablet made Babylon a rich city along with the people living in it.
The Richest Man in Babylon
This chapter starts off with a story about two friends, Bansir and Kobi, discussing how they dreamt about having lots of wealth. Both friends dreamt about having lots of gold coins to make their purses fat but till today failed to do it.
They start to wonder the reason behind it but fail to realize. Kobi witnesses a rich person in a golden chariot and clothes made of fine silk wonder about his secret for his wealth. Bansir soon realized that the rich person was their school Arkad and was also the richest man in Babylon.
Bansir and Kobi then decide to take the guidance and understand the secret behind the wealth. Arkad being childhood friend agrees to share his secret with them.
Arkad mentioned that
- Every person when receiving the salary should at least save 10% of the income before paying off the bills or making any purchases.
- The saved money should be put at work where it starts multiplying itself and further generating more wealth.
- Advice is one thing that everyone gives for free, but advice should be taken from individuals from expertise in their respective fields only. Eg investing tips on finance should be taken from a finance expert and not a gambler.
- Staying away from the investment opportunity that promises exorbitant returns as those are huge risks and way to lose the money. A small return with assured safe investment is always better.
Cure for the Lean Purse
This chapter describes to the reader the ways to increase saving. Once King of Babylon was facing the problem of poverty and the decline of trade in the kingdom. Facing this problem the King called up Arkad once again to solve this problem.
Arkad along with King decided to share the financial learning with the people in the kingdom that he had learned all along with his life. Arkad starts his story mentioning that he had started with a humble beginning.
For every money you receive, keep one-tenth of the money and eventually, it will increase money in saving which will help you feel good.
To have a clear understanding between necessary expenses with desire, if one does not have a clear budgeting system in place will eventually have empty pockets by the end of the month. So have a budget for expenses for and clear understanding of necessary expenses. Limit your expenses to 90% of your earning.
Saving 10 % of earnings is the start. The next step is investing the money so that it starts multiplying itself. This starts producing a stream of income contributing to one’s wealth.
Learning to guard small amounts of money before handling large amounts of money. Not being misleading to make huge wealth rapidly.
Ensuring a future income. A person should plan certain investments or provisions that may endure safely for many years. Provide in advance for the needs of the growing age and the protection of the family.Increasing your earning ability cultivate the power by studying and becoming wiser, to become more skillful. This will increase the wealth of the individual.
This story starts with King of Babylon along with his advisors one fine evening discussing luck. King wanted to understand luck and if there was any way to attract it.
Each subject in the meeting mentioned instances where some had luck and some misfortune. Then the discussion turned to create money through gambling. Most of the time creating riches from gambling is not possible. The gambling house creates odds in such a way that the person playing has more probability of losing money compared to winning the money.
As the discussion continued the conclusion was drawn that good luck comes to those who accept the opportunity. Most of the time people are not able to take action on the opportunity and fall prey to procrastination.
While luck follows in such a way that the men take quick action on the opportunity desiring to be lucky. The spirit of procrastination follows men that they tend to delayed action and in the event, the opportunity is lost.
Once a person understands the procrastination and masters it then he is truly on the path of creating riches for himself. The ending note of this chapter is the men who take action are favored by the goddess of luck.
The Five Laws of Wealth
Here is the story where the richest man in Babylon Arkad tests the wealth management skills of his son named Nomasir. Nomasir was asked to prove his earning and management skill after which the wealth created by Arkad will be passed on to him.
While Nomasir embarked on this journey he was given some gold coin and the tablet which mentioned the five laws of wealth. Nomasir lost all the gold coins which were handed to him. The son persisted and followed the five principles of wealth and returned with bags filled with gold.
The five laws of wealth
- The more money is saved, the more readily it comes in increased quantities. The money which is saved earns more money, and it earns more & more.
- Every man who saves some money aside, opportunity comes for its most profitable use that it surprisingly multiplies itself.
- Money clings to the protection of the cautious owner who invests it under the advice of men wise in its handling.
- Money slips 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.
- Money flees from the man who would force it to impossible earnings or who follows the alluring advice of tricksters and schemers or who trusts it to his own inexperience desires in investment.
Gold Lender of Babylon
This story teaches about lending. This solves the dilemma regarding lending and how to lend money or invest money in the business. The story revolves around the spear maker named Rodan in the city of Babylon. Rodan was gifted gold coins by the King for his craftsmanship.
Rodan’s sister came to know about this and asked Rodan to lend that gold coin so her husband could start a business. Rodan was not sure whether this investment was the best option.
Rodan went to a moneylender named Mathon who would lend money to people to start their business. Rodan wanted to seek the counsel of the expert. Mathon seeing that Random wanted to make the best use of the money was a delight and shared his wisdom.
Rules of Lending
- Help friends in such a way that it will not bring in the burden of friends on to yourself
- When lending, always secure a token as security so that if the person fails to pay back the money, the lender’s money is not lost.
- The safest loans are those whose possessions are of more value than the one they desire.
- Lending money to people always asks about their plan of repaying the money back. Check the knowledge of the person and their source of money generation.
- Never be swayed by mentions or obligation to trust money to other people.
- Not investing money in risky opportunities where there is a chance of losing money is always better than investing in these opportunities.
Tablets from the Richest Man in Babylon
Along the chapter, the author mentions that his archaeological team found ancient clay tablets. The clay tablets mentioned words for leading a life of happiness and success.
Words from Tablets
- A man should keep doing the deeds which makes it worthwhile for his nation & people. This in return will get respect from the nation and people.
- Taking good care of wife and family as they add in the additional strength to man’s vision
- seeking easy wealth is the way to find disaster and to see oneself in the debts
- If you truly seek to undo your mistake and ask for forgiveness with clear intentions most of the time you will receive forgiveness.
This book uncovered that people who desired wealth had an understanding of how money works. People of Babylon discovered the money principle which made the people and the city the richest city at its time. It is really amazing how the money principles have stayed the same for ages and are used even today with few tweaks.
- Always set 10% of income and invest it in the right places.
- Getting rich overnight schemes are all risk opportunities to lose money.
- Learning and cultivating the right mindset is a must to make a person wealthy.
This is a small book who is looking to understand how money works but is written in old English. This book has stories to make each reader understand money principles and also inspire along the way.