The lessons taught by the Richest Man in Babylon

I just finished reading The Richest Man in Babylon by George S. Clason. I learnt of it probably two years ago when I was looking for information about the famous―I think―idiom: “Pay yourself first”. I ordered many novels recently but none of them seemed to arrive any soon so I gave a shot to this book I always had at the back of my mind.

The book is basically tales, counted by men living at, or about, Babylon few thousand years ago. Those stories are not that interesting but they teach lessons. I will write in detail one big chapter only, that kind of summarize it all, where the richest man in Babylon is asked by the king to teach a class of 100 citizens the route to wealth, for them to then spread their knowledge among their peers in order to make the city prosperous in its whole.

The Seven Cures for a Lean Purse

1. Start thy purse to fattening

This is what the “Pay yourself first” idiom is all about. How gathering money if we do not pay ourselves? How about paying ourselves? not paying stuff for ourselves, just taking out plain money from our paycheck for us to keep. We should keep, at least and never less, one tenth of our earnings for ourselves.

“Into the purse of each of [us] flows a stream of coins large or small according to [our] ability. Is it not so?”

We should start to build our wealth upon our earnings, and follow the “pay yourself first” idiom.

“But all I earn is mine to keep, is it not? ―Far from it. Do you not pay the garment-maker? Do you not pay the sandal-maker? […] What have you to show for your earnings of the past month? […] You pay for everyone but yourself. […] As well be a slave and work for what your master gives you to eat and wear.”

2. Control thy expenditures

No one should ever live beyond his means; this is enslaving our future self and going away from a life of wealth. Now that we keep, at least, one tenth of all our earnings for ourselves, we should consider our means to be the nine tenths left, not the whole earnings. Therefore, we should never spend more than this nine tenths left.

“How can a man keep one-tenth of all he earns in his purse when all the coins he earns are not enough for his necessary expenses? ―Yesterday how many of thee carried lean purses? ―All of us. ―Yet, thou do not all earn the same. […] Yet, all purses were equally lean. […] What each of us calls our necessary expenses will always grow to equal our incomes unless we protest to the contrary.”

I think this is very important, as almost all meetings last exactly an hour although the agenda and the participants always vary, as we eat accordingly to our dishes’ size, although we are not equally hungry each time. If we are not aware of this human habit, we will always use it all, time or money. That is why it is strongly recommended to put the one-tenth for ours to keep away, the right day we receive our salaries, into some places we could not have easy access to. Our biggest enemy is ourselves.

3. Make thy gold multiply

“Gold in a purse is gratifying to own and satisfieth a miserly soul but earns nothing. […] A man’s wealth is not in the coins he carries in his purse; it is the income he buildeth, the golden stream that continually floweth into his purse and keepeth it always bulging.”

Gold should be our slave working for us, not something to adore. Its earnings are its children and should work as well to the same purpose: multiply itself.

4. Guard thy treasures from loss

“Guard thy treasure from loss by investing only where thy principal is safe, where it may be reclaimed if desirable and where thou will not fail to collect a fair rental. Consult with wise men. Secure the advice of those experienced in the profitable handling of gold. Let their wisdom protect thy treasure from unsafe investments.”

We should look for sound investments, liquidity, satisfying returns, and advice from those who did it before us.

There was a similar topic on another chapter: Better a Little Caution than a Great Regret. Once we start accumulating money, we might get solicited in many ways. Let us not be trapped into fairy tales of high and easy return. Also, when someone we cherish asks for help, is it ok to say “no”?

“If you desire to help thy friend, do so in a way that will not bring thy friend’s burdens upon thyself.”

5. Make of thy dwelling a profitable investment

“Own thy own home.”

This should reduce the cost of living, and leave more earnings to be used on investments or desires. I personally think it is a tricky one and I am not sure it is always the best scenario to buy your home. If you cannot pay it front, you acquire a great debt that does not improve your income, the no-go kind of debt to me.

6. Insure a future income

We get our earnings because we are capable, now. What in 5 years, 10 or maybe 30 years? We cannot know the future. What if the country’s pension system fails, you get sick or lose your job? We cannot and we should not count on anyone. Let’s insure we have our future selves’ back for when times are darker.

7. Increase thy ability to earn

“The seventh […] remedy for a lean purse is to cultivate thy own powers, to study and become wiser, to become more skillful, to so act as to respect thyself.”

If we want more, let us make so as to earn more.

The Real Lesson

The book contains clear, easy to understand rules to follow in order to enter a wealth life. Put money away, make it work for us, repeat. I don’t think that is the most important part to be taken away from this book. This book is about industrious people. It is a story of a rigorous, hard-working, not slacking ethic.

There are actual five clay tablets that have been found on Babylon’s soil, where some guy named Dabasir wrote his own story. This guy saw her wife go back to her parents’ and himself ran away from Babylon because he could not handle his too many debts. He became a slave in Syria but found some way to return back to Babylon and tried to follow a plan that would “lead any honorable man out of debt into means and self-respect”, a plan based on advice he received from a friend, gold-lender. He would be working hard from this day on and he would use his earnings as the following: The first tenth should be his to keep, no exception. Then, he would use seven tenths of it, never more, to support his home where his wife agreed to come back. Lastly, he would use the last two tenths of his earnings to pay back all his debts little by little every month, no exception. He succeeded in following his plan, paid back all his debts. His industry made him respectful in his wife’s eyes and among people in Babylon. No doubt, he became a wealthy man at last.

That is the story I would remember the most and I think it to be the real lesson here. This industrious behaviour reminds me of Benjamin Franklin who, from being in New York at 17 without nobody to count on and but very little money in his pocket, also became rich and most respected in his country by working hard and counting his money. We have to be willing to make the effort if we want to success in similar ways.

In any case, this was a good read.