The Richest Man in Babylon
By George S. Clason
One key takeaway: A part of all you earn is yours to keep. Whenever you generate income, the first thing to do is to allocate 1/10 to pay yourself first.
Money is plentiful for those who understand the simple rules of its acquisition:
- Start your purse to fattening
- Control your expenditures
- Make your gold multiply
- Guard your treasures from loss
- Make your dwelling/house a profitable investment
- Insure a future income
- Increase our ability to earn
Money is governed today by the same laws which controlled it when prosperous men roamed the streets of Babylon, 6,000 years ago.
Success means accomplishments as the result of our own efforts and abilities through proper preparation.
A man’s wealth is not in the purse he carries because it is in the income that constantly keeps the purse full.
It costs nothing to ask wise advice from a good friend who knows more about handling money.
If you have not acquired wealth it is because you have failed to learn the laws that govern the building or wealth, or else you do not observe them.
Wealth increases your potency for happiness and contentment. Wealth is power. Time and study is required to achieve wealth. Wealth, like a tree, grows from a tiny seed. The first copper you save is the seed from which your tree of wealth shall grow.
I found the road to wealth when I decided that a part of all I earned was mine to keep. You need to keep 1/10 of all you earn for yourself.
Pay yourself first.
Every gold piece you save is a slave to work for you. Every copper it earns is its child that also can earn for you. If you would become wealthy, then what you save must earn, and its children must earn, that all may help to give to you the abundance you crave. If you “eat the children of your savings” (i.e., spend the interest you earn), then how do you expect them to work for you?
Every fool must learn. You will make mistakes and invest in bad deals and lose your investments. Plant another seed. Try again.
You must learn lessons such as how to live upon less than you could earn and how to seek advice from those who were more competent through their own experiences with money and how to make gold work for you. Three key lessons:
- How to acquire money
- How to keep money
- How to use money
When you set a task for yourself, you complete it.
Wealth grows wherever men exert energy. Energy turns into wealth. Wealth grows in magic ways.
A part of all I earn is mine to keep. Say it in the morning when you first arise. Say it at noon. Sat it at night. Say it each hour of every day.
Then, learn to make your treasure work for you. Make it your slave. Make its children and its children’s children work for you.
Counsel with wise men. Seek advice of men whose daily work is in handling money.
A part of all you earn is yours to keep.
Seven Cures for a Lean Purse
Listen attentively. Debate it with me. Discuss it among yourselves. Learn these lessons thoroughly. Learn how to become wealthy.
- Start your purse to fattening
- Each of the ways of earning is a stream of gold and a faucet of capital
- It is wise to start by utilizing that source of wealth which you have already established
- Trust is always simple
- When you cease to pay out more than 9/10 of your earnings, you will manage to get along just as well, and coins will come more easily than before
- For each 10 coins you put into your purse, you can spend only 9
- Control your expenditures
- Our “necessary expenses” will always grow to equal our incomes unless we protest to the contrary
- Do not confuse “necessary expenses” with desires – you will always have many unfulfilled desires
- All men are burdened with more desires than they can gratify. Desires grow like weeds. Know your limits.
- Limits to your time. Limits to your strength. Limits to the distance traveled. Limits to what you may eat. Limits to the zest with which you can enjoy.
- Therefore, engrave upon clay each thing for which you desire to spend and budget your necessary expenses
- The purpose of a budget is to help your purse to fatten because it helps you realize your most cherished desires and defends them from casual wishes
- Budget your expenses to pay your necessary expenses and gratify your desires with no more than 9/10 of your earnings
- Make your gold multiply
- Put your treasure to labor and to increase it because the earnings it will make shall build our fortunes
- First profitable investment was a loan to a man named Aggar, a shield maker, who would repay me as he sold his shields
- Each time I loaned to him, I loaned back also the rental (interest) he had paid to me. Therefore, my capital increased and its earnings increased (compound interest)
- Man’s wealth is not the coins he carries – man’s wealth is the income he builds with the golden stream that continually flows into his purse!
- From humble earnings, you can build a hoard of golden slaves, each laboring and earning more gold
- Compound interest example: 10 silver grows to 31.5 silver over 20 years AND 10 silver grows to 167 silver over 50 years
- Put each coin to laboring that it may reproduce its kind with a stream of wealth that will flow constantly into your purse
- Make money work for you with compound interest
- Guard your treasures from loss
- It is wise that we must first secure small amounts and learn to protect them before God entrust us with larger
- First sound principle of investment is security for your principal
- Before you loan money to any man assure yourself of his ability to repay and become familiar with the dangers or risks involved
- It’s a mistake to trust a brick maker to buy jewels
- Consult the wisdom of those experienced in handling money for profit as such advise is freely given if you ask and let their wisdom protect your treasure from unsafe investments
- Guard your treasure from loss by investing only where your principal is safe, where it may be reclaimed if desirable, and where you will not fail to collect a fair interest rate
- Make your dwelling/house a profitable investment
- Money lenders gladly consider the desires of men who seek homes and land for their families (mortgage loans)
- Pay the money lender with the same regularity that you paid the landlord (switch from renting to owning)
- Own your own home
- Insure a future income
- Make preparations for a suitable income in the days to come when you are no longer young
- Make preparations for your family should you no longer be with them to comfort and support them
- If you understand the laws of wealth and how to acquire a growing surplus, then you would be wise to give thought to your future days
- Plan certain investments (401k) that may endure safely for many years and be available when the time arrives
- You may loan a small sum to the money lender and increase it at regular (monthly/annual) periods
- Standard interest rate in Babylon was 25% every 4 years
- Provide in advance for the needs of your growing age and the protection of your family (life insurance)
- Increase your ability to earn++
- You need to earn more coins. What do you do to increase your capacity to earn?
- Preceding accomplishment must be desire. Your desires must be strong and definite.
- In learning to secure one definite small desire, you can train yourself to secure a larger one. Man learns and becomes more capable.
- Desires must be simple and definite (clearly defined financial goals)
- Work harder with more interest in your work, more concentration in your task, more persistence in your effort
- Acquire rare and valuable skills for career capital
- Continually seek better goods that can be purchased at lower prices
- Cultivate your own powers, to study and become wiser, to become more skillful, to act as to respect yourself, so that you will acquire confidence in yourself to achieve your carefully considered desires
You must do these things if you respect yourself:
- You must pay your debts with all the promptness within your powers, not purchasing that for which you are unable to pay
- You must take care of your family that they may think and speak well of you
- You must make a will of record that, in case God calls you, proper and honorable division of your property be accomplished
- You must have compassion upon those who are injured and smitten with misfortune and aid them within reasonable limits
- You must do deeds of thoughtfulness to those dear to you
Go forth and practice these truths that you may prosper and grow wealthy.
Go forth and teach these truths that everyone in Babylon may share liberally in the ample wealth of our beloved city.
Meet the Goddess of Good Luck
No rich man won their wealth at the gambling tables.
Good luck waits to come to that man who accepts opportunity.
Good luck flees from procrastination. You must recognize and conquer procrastination because it is an enemy waiting to thwart your accomplishments.
To attract good luck to oneself, it is necessary to take advantage of opportunities. Make the best of such opportunities that come to you.
Good luck follows opportunity.
Men of action are favored by the goddess of good luck.
The Five Laws of Gold
Gold is reserved for those who know its laws and abide by them.
- Gold comes gladly and in increasing quantity to any man who will put at least 1/10 of his earnings to create an estate for his future and his family
- Gold works diligently and contently for the wise owner who finds profitable employment for his gold, multiplying like flocks in the fields
- Gold clings to the protection of the cautious owner who invests it under the advice of men wise in handling money
- Gold slips away from the man who invests it in businesses/purposes with which he is not familiar, or which are not approved by those skilled in its keep
- Gold flees 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 and romantic desires in investment
Memorize the value of these five laws. Do not be content until you know them word for word.
Our wise acts accompany us through life to please us and to help us. Just as surely, our unwise acts follow us to plague and torment us. The strongest torments are those of opportunities which came to us and we did not take.
The Gold Lender of Babylon’s Token Box
If you desire to help your friend, do so in a way that will not bring your friend’s burden upon yourself
For each person to whom I lend, I do exact a token (collateral) for my token box, to remain there until the load is repaid. When they repay I give back, but if they never repay it will always remind me of one who was not faithful to my confidence. The safest loans are to those whose possessions are of my value than the one they desire (collateral greater value than the loan).
HENRY = High Earner Not Rich Yet
Some loans are to those with a high capacity to earn, who labor and are paid in income. These loans are based on human effort.
Humans in the throes of great emotions are not safe risks for the gold lender.
Gold lender has confidence in those with honorable behavior because their tokens come and go frequently in his token box.
Before loaning money, ask “What knowledge have you of the ways of the trade? Do you know where you can buy at the lowest cost? Do you know where you can sell at a fair price?” This reminds me of the movie Joy and the four questions of financial worthiness: “Where did you go to high school? Who were you in high school? Are you prepared, within 6 months of financing this venture, to show adequate returns? You are in a room and there is a gun on the table and the only other person in the room is an adversary in commerce. Only one of you can prevail, yet you have protected your business and my money. Do you pick up the gun?”
You must desire your surplus gold to labor for others and therefore earn more gold. Do not risk losing your gold. Remember the secrets of the token box.
What do you desire most of the gold in your wallet? To keep it safe.
What next after safety do you desire for your treasure? That it earn more gold.
Gold wisely lent may even double. Be conservative in what you expect to earn that you may keep and enjoy your treasure.
Seek to associate yourself with men and enterprises whose success is establishing that your treasure may earn liberally under their skillful use and be guarded safely by their wisdom and experience.
This key lesson applies equally to the borrower and the lender: Better a little caution than a great regret.
We cannot afford to be without adequate protection.
The Camel Trader of Babylon
The hungrier one becomes, the clearer one’s mind works – and the most sensitive one becomes to the odors of food.
Have you a desire to repay the just debts you owe in Babylon? If you contently let the years slip by and make no effort to repay, then you have the contemptible soul of a slave. No man is otherwise who cannot respect himself and no mane can respect himself who does not repay honest debts.
Your debts are your enemies, but the men you owed were your friends for they had trusted you and believed in you.
The soul of a free man looks at life as a series of problems to be solved and solves them (while the soul of a slave whines, “what can I do because I’m a slave?)
Where the determination is, the way can be found.
The Clay Tablets From Babylon
Archaeologists found a series of clay tablets from 6,000 years ago, which stated:
Engraved here is a permanent record of my affairs. My plan will lead any honorable man out of debt into means and self-respect.
First, the plan will provide for my future prosperity.
Therefore, 1/10 of all I earn shall be set aside as my own to keep.
The man who wishes to achieve must have coin that he may keep to jingle in his purse, that he have in his heart love for his family and loyalty to his king.
Second, the plan will provide for me to support and clothe my wife and family.
Therefore, 7/10 of all I earn shall be used to provide a home, clothes to wear, and foot to eat. We spend not greater than 7/10 of what I earn on these worthy purposes. Herein lies the success of the plan, I must live upon this portion and never use more nor buy what I may not pay for out of this portion.
Third, the plan will provide that out of my earnings my debts shall be paid.
Therefore, each time the moon is full (monthly), 2/10 of all I have earned shall be divided honorably and fairly among those who have trusted me and to whom I am indebted. Thus in due time will all my indebtedness be surely paid.
Fourth, the gold lender showed me how I can repay my debts in sums of my earnings.
Therefore, I have visited my creditors and explained to them that I have no resources with which to pay except my ability to earn, and that I intend to apply 2/10 of all I earn upon my indebtedness evenly and honestly. This much I can pay but no more. Therefore, if they will be patience, in time my obligations will be paid in full. It is easier to pay one’s just debts than to avoid them. My heart is lighter than it has been for a long time.
Great is the plan that leads us out of debt and gives us wealth which is ours to keep.
Each time I paid to myself 1/10 of all I earned.
Each time I paid to my creditors 2/10 of all I earned.
Each time I paid to my wife 7/10 of all I earned to provide our home, clothes, and food (Maslow’s basic hierarchy of needs).
The last tablet states that “upon this day I have paid the last of my debts. My wife and I will feast tonight because our determination has been achieved.
Many things occurred upon my final visit to my creditors that I shall long remember. Ahmar begged my forgiveness for his unkind words and said that I was one of all others he most desired for a friend. Old Alkahad is not so bad after all because he said, “You were once a piece of soft clay to be pressed and molded by any hand that touched you, but now you are a piece of bronze capable of holding an edge. If you need silver or gold at any time come to me.” Many others held me in high regard and spoke deferentially to me. My good wife looked upon me with a light in her eyes that makes a man have confidence in himself.
It was the plan that made my success. It enabled me to pay all my debts and to jingle both gold and silver in my purse. I do recommend the plan (1/10, 7/10, 2/10) it to all who wish to get ahead. For truly if it will enable an enslaved man to pay his debts and have gold in his purse, will it not aid any man to find independence? Nor am I, myself, finished with it, for I am convinced that if I follow it further it will make me rich among me.
The Luckiest Man in Babylon
Old man tells a story to his dear friend’s grandson on journey to Babylon.
Grandson and his dad do not know his grandfather’s secret for attracting the golden shekels.
Recollections = memory = re-collections = how do we re-collect stories in our minds?
The old man was a slave who learned the importance of I like to work and I like to do good work, for work is the best friend I’ve ever known.
The grandson begins to see that Work attracted his grandfather’s many friends who admired his industry and the success it brought. Work brought him the honors he enjoyed so much in Damascus. Work brought him all those things I have approved. Nothing takes the place of work.
The Babylonians were clever financiers and traders. They were the original investors of money as a means of exchange, of promissory notes, and written titles to property. The wisdom of Babylon endures.
A part of all you earn is yours to keep.