The Richest Man in Babylon

George Clason

📚 GENRE: Business & Finance

📃 PAGES: 100

✅ COMPLETED: September 24, 2018

🧐 RATING: ⭐⭐⭐⭐⭐

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Short Summary

Using parables set in ancient Babylon, George Clason reveals the secrets to creating, growing, and preserving wealth. Clason explains how to keep more out what you earn, avoid debt, put your money to work for you, attract good luck, choose wise investments, and protect your earnings.

Key Takeaways

1️⃣ Pay Yourself First — Every time you get a pay check, your first move should be to deposit at least 5-10% of it into your investment account and put the money to work. Doing this consistently over time is the key to building stable long-term wealth.  

2️⃣ Define a Budget and Stick to It — In order to save and invest at least 5-10% of every check, you need to be selective with how you spend. Try to limit your expenditures to the bare necessities. 

3️⃣ Increase Your Value — The more valuable you can become, the more you can earn. The more you can earn, the more you can invest. Focus on improving your skills, knowledge, and experience. 

Favorite Quote

"I found the road to wealth when I decided that a part of all I earned was mine to keep. It should be not less than a tenth, no matter how little you earn. It can be as much more as you can afford. Pay yourself first."

Book Notes 📑

Introduction

  • These are concrete principles to managing money.
  • These parables are set in ancient Babylon and show readers how to manage and grow money.
  • Babylon was one of the wealthiest cities in the ancient world because its citizens appreciated the value of money and knew how to grow it. 

Chapter 1

  • Babylon — Located by the Euphrates River. It was very glamorous. Jewels everywhere. 
    • There were no forests, mines, stone, or trade routes. It was a bad place to grow crops. 
  • Most things in ancient Babylon were made and developed by man.
    • Water and soil were Babylon’s only two natural resources.
    • Babylonian engineers diverted water from the river by building dams and irrigation canals.
      • These canals spread across the valley so water could get to the soil in various areas. This is how they grew crops.
  • Babylon no longer exists. It is located in Asia — 600 miles East of the Suez Canal and just north of the Persian Gulf. 
    • It is deserted ruin now.
  • Ancient Babylon used to have huge walls that defended the city. Many kings ruled.
  • Babylonians were highly skilled in the arts. They were great at making things.

Chapter 2

  • Money is plentiful and those who understand it, and know how to build it, can prosper.
  • Money can be earned by anyone — anyone can build wealth. 
  • Bansir — the main character in the parables — is a chariot repairer in Babylon.
    • He works hard, but all of his gold goes towards his living expenses. 
  • Bansir decides to approach his childhood friend — Arkad — who claims to be ‘The Richest Man in Babylon.’
    • Bansir wanted to learn from Arkad and learn how to acquire, build, and manage money. 
    • After working with Arkad for a bit, Bansir realizes he is not wealthy because he has never set out to be wealthy. He didn’t have the right mindset and strategy. 

Chapter 3

  • Arkad decided as a boy that he wanted to be financially independent so he could enjoy his life to the fullest.
    • He learned how to make money early in his life. 
  • Arkad worked as a boy. His mentor explained to him that the key is to always keep a portion of each paycheck for yourself. 
    • Don’t spend every cent you make. Save and invest at least 10% of every check you ever receive.
      • This is how you grow your money. You make your money work for you. 
    • The concept is to PAY YOURSELF FIRST.
  • After learning the three laws of money, Arkad was offered his mentor’s estate because he was dying. 
    • Arkad accepted and used smart strategies to build the wealth over time.

Chapter 4

  • The king of Babylon worries the city is getting poor. He calls on Arkad to teach him, and the city, how to build wealth. 
    • Arkad teaches the “7 Cures for a Lean Purse.” These are discussed in the remaining chapters.

Chapter 5

  • First Cure — Start Thy Purse to Flattening
    • Save and invest at least 10% of every check. More if you can.
      • Never neglect this. Always, always, always take a portion of every check for yourself. 
    • Quote: “I found the road to wealth when I decided that a part of all I earned was mine to keep. It should be not less than a tenth, no matter how little you earn. It can be as much more as you can afford. Pay yourself first.”

Chapter 6

  • Second Cure — Control Thy Expenditures
    • In order to save and invest at least 10% of every check, you have to consciously limit your expenditures.
      • Be smart about it. Really think of some areas of your life where you can save a few dollars. 
    • Don’t confuse necessities with desires.
    • Come up with a budget and a plan for both expenditures and desires. 
      • It’s OK to spend money on expenses and things you want, but don’t allow it to cut into the 10%.
      • Your 10% cut from each check should be purely for saving and investing.

Chapter 7

  • Third Cure — Make the Gold Multiply
    • Saving 10% of every check is just the start. When you invest it, it grows.
    • Put your money to work for you. Find ways to invest it.
    • Always aim to have a steady stream(s) of income. 
      • Ideally, you’ll create streams of passive income (like real estate) where you can lounge and get paid.

Chapter 8

  • Fourth Cure — Guard Thy Treasures From Loss
    • Make sure you are investing in safe options. 
      • Slow and steady investing gains are what you’re looking for. 
      • Don’t get too risky with your investments, especially as you get older.

Chapter 9

  • Fifth Cure — Make of Thy Dwelling a Profitable Investment
    • Own a piece of property to live on.
    • Own a home, don’t rent it. 
      • Owning a home is cheaper than renting in the long-run.

Chapter 10

  • Sixth Cure — Ensure a Future Income 
    • Save enough for retirement and to provide for your family.
    • You are in trouble if you get old and have no money and can’t earn.

Chapter 11

  • Seventh Cure — Increase Thy Ability to Earn
    • You can’t wish to become wealthy. It’s a mindset. You have to work at it.
    • Always look to learn and develop yourself to increase your earning potential. 
      • Make yourself more valuable. Bring more value to the marketplace. This is the key to increasing your income. 
      • When you become valuable via skills, knowledge, and expertise, you increase your demand in the market. 
    • Learn ways to become more efficient. 
    • Always progress, improve, and learn.

Chapter 12

  • There is no such thing as ‘good luck’ when it comes to money.
    • The people who have earned a lot of it have worked really hard and sacrificed a lot to develop themselves.
  • Gambling is dumb. It is very unlikely to net you a lot of cash. 
  • Don’t bank on luck. Take control of your finances and be disciplined to saving and investing your money.
    • Over time, if you invest wisely, you’re almost guaranteed to become financially independent. 

Chapter 13

  • The 5 Laws of Gold:
    1. Save at least 10% of every check
    2. Multiply your money by investing it
    3. Invest your money wisely
    4. Be careful who you trust with your money
    5. Don’t gamble

Chapter 14

  • Some people do not pay back money they borrowed. 
    • Be very careful before loaning money to people.
  • If you borrow money, ALWAYS pay it back. 
  • If you are going to loan money to someone, make sure the person you are loaning to gives you security that it will be returned. 
    • Also, make sure they know what they are doing and have a detailed plan for how they intend to use your money. 
      • It needs to be clear how they intend to pay you back.Â