In 1926, the American George Samuel Clason published “The Richest Man in Babylon”. A soldier, businessman and writer, he had first made his name with a series of booklets on financial success, handed out by banks and insurance companies throughout the 1920s to introduce an uninitiated public to financial literacy. Written without pretension in the form of parables, the book remains a timeless classic of money management.
The Timeless Secrets of Prosperity
In 1926, the American George Samuel Clason published his book “The Richest Man in Babylon”. A soldier, businessman and writer, he had already made a name for himself by circulating a series of informative booklets on financial success. His aim was to help an uninitiated public learn to manage their money better.
His booklets were notably handed out by banks and insurance companies in the 1920s to raise awareness of financial literacy. They would later be gathered together in the book we are concerned with here. Written without pretension, the work speaks to younger readers too. Indeed, one cannot stress enough how valuable it is to place it in the hands of those just starting out in life.
A Timeless Work Whose Advice Still Holds True
The book is thus a collection of purely financial advice. One might wonder how relevant so dated a work could really be. And yet its content is as timely as ever, its relevance not having aged a single day.
The author sets us down in an idealised Babylon whose opulence recalls a kind of ancient Dubai. Writing in the form of parables, he lays out several fundamental concepts of wealth.
The Babylonian Setting: A Lesson in Ingenuity
The book explains that Babylon lay in a flat, arid valley. With no major natural advantages, the ingenuity of its people, the drive of its inhabitants and the sheer amount of work they put in made up for these initial shortcomings.
The Babylonians refused to let their environment define them. They spared no effort and began to build their fortune through agriculture. They devised systems of irrigation and drainage that diverted the course of the river and watered the land. As a result, the harvests grew more abundant.
The lesson to remember, then, is that we all have the potential to become wealthy, provided we learn to make do with the means at our disposal. Wealth is the daughter of work. Material comfort never comes to the idle.
Fairly early on, George S. Clason sets out the three golden rules of building wealth. In short, to grow rich you need only earn money through work, then take care to keep it, and finally know how to use it.
The Key Lessons to Take Away
Without rehashing the book or introducing the various characters who set the scene for each question, here is what one might take away.
Learn to Replenish Your Bank Account
While everyone has learned how to earn money, very few know how to keep it and make it grow. To start prospering, each of us should save 10% of what we earn (at the very least).
Essential expenses always rise, whatever your income. It is therefore crucial not to confuse need with desire. The author encourages readers to examine their lifestyle and their habits, and to realise that many so-called essential expenses could be reduced, or even done away with altogether. The key, then, is to learn to budget your spending.
Saving alone is not enough to build wealth. You must also grow your savings by investing them, all while protecting your capital. “Make your money work for you,” is the gist of his message.
You must safeguard your capital if you intend to invest your money. What is more, the control you keep over your investment is essential to making sure you do not lose it.
Make sure your debtor is solvent if you hope to recover your initial stake. And turn your property into a sound and profitable investment.
Think about your retirement and about a supplementary plan to secure your future. So follow a financial plan and build up your assets. Finally, sharpen your ability to acquire new possessions.
Set Up a Financial Plan and Stick to It
This plan should prepare the ground for your future prosperity, provide for your daily needs and pay off any debts you may have:
Set aside 70% of what you earn for your day-to-day expenses: rent, groceries, bills, doctors, leisure, shopping… everything must fit within that 70%. Do not spend more than this, and learn to respect the balance. Above all, do not live beyond your means, and do not buy what you cannot afford to buy.
Devote 20% of your income to paying off your debts.
As for the remaining 10%, we have already spoken of it above. This is the money you set aside and must take care to grow.
In short, here is how to divide up your income according to this plan:
| Share of Income | Recommended Use |
|---|---|
| 70% | Day-to-day expenses (rent, groceries, bills, doctors, leisure, shopping…) |
| 20% | Paying off debts |
| 10% | Savings to grow |
Fortune Favours Those Who Know How to Court It
Luck favours people of action, quick to seize the opportunities before them and quick to make the most of them. Luck is fickle and can easily turn, deserting the very person it once accompanied. And yet it belongs to those who know never to have to rely on it. It must be courted and seized, but never trusted.
The Five Laws of Gold
Drawn from the book, here is what they state, in essence:
Law Number One
Gold comes gladly, and in ever greater quantities, to the person who sets aside no less than a tenth of their earnings to build an estate for their own future and that of their family.
Law Number Two
Gold works diligently and profitably for the wise owner who finds it a fruitful use, multiplying even as the flocks in the fields.
Law Number Three
Gold remains under the protection of the prudent owner who invests it according to the counsel of wise men.
Law Number Four
Gold slips away from those who invest it aimlessly in ventures they are not familiar with, or which are not approved by those who know how to handle gold.
Law Number Five
Gold flees from those who would force it to yield impossible returns, or who heed the seductive counsel of frauds and tricksters, or who trust in their own inexperience and their romantic notions of investment.
A Book of Universal Values
“The Richest Man in Babylon” cannot be reduced to the few lines written in these columns. Beyond its core ambition, the book dispenses lessons for living and seeks to instil the values that belong to successful people: a love of work well done, a sense of responsibility, resilience and the strength to face hardship.
Ultimately, wherever you go, parents are always encouraged to have their children read this book. Perhaps it will inspire them to build a prosperity of their own?
