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The Richest Man In Babylon

February 11, 2017
The Richest Man In Babylon

What’s on the Surface?


The Richest Man in Babylon presents the reader with simple financial wisdom for the purpose of building wealth and achieving financial freedom. Financial principles are told through the tales and parables of characters set in ancient Babylonian times. Babylon may have been one of the earliest known civilizations that sought to grasp the concept of financial mastery through educational lectures in public forums. In the books tales, the Babylonians curiously seek knowledge and wisdom to end their financial frustrations. Their hardships, deep desires, and longing for financial freedom are still echoed by men and women in society today. Moral and practical lessons are shared through the stories of several protagonists– on their journey to acquire wealth, break free from financial enslavement, and prevent the tendency of wealth to slip through their fingers.

Overall, The Richest Man in Babylon is a short introduction to basic financial steps to help you build, maintain, and grow wealth. I would recommend this book especially to young people that are beginning to work and navigate in the world of personal finance management.


  • Financial morals and lessons told through ancient Babylonian parables and stories.
  • Basic financial principles of earning, saving, investing, and loaning.
  • Managing your desires and tendency to spend your wealth.
  • The pitfalls of addiction, gambling, gluttony and indulgence.

How is it useful to me?

  • Learn the basic fundamental lessons of wealth buildingHave you struggled to do the simple steps first such as saving?
  • Understand the common psychological drawbacks associated with having wealthAre you quick to spend any sums of money you receive?
  • Start valuing yourself and the work you doDo you pay yourself first?

What Lies Beneath?

Financial Mastery

The central theme of The Richest Man in Babylon is financial mastery, with many of the principles falling under this category. There are many aspects to financial mastery. I would define a financial master as someone who values wealth, increasingly expands their knowledge on financial matters, has their money working for them, and is able to pass up immediate gratification for long term vision. Below are the primary principles illustrated in the book through the stories and parables of Babylonian characters. As the principles were often the highlights of the stories, I will list them all and elaborate the significance of each. These are the principles that are outlined in the book, however, I have contextualized them from a range of sources that I have read and applied in my own life:

  • Pay yourself first

A part of all you earn is yours to keep – George S. Clason

The financial principle of paying yourself first has become well known and is highly regarded as one of the most simple and effective actions one can do to with their money. The act of paying yourself first has psychological benefits. By saving a portion of what you earn and setting it aside before all other payments, you are declaring that you value yourself and your efforts. You are bringing awareness to the effort you had previously invested in your work or endeavors. You are the one doing the work for which you have received compensation, and it serves to reward yourself with the first slice of the pie. To pay yourself first, take a portion of your income and put it in a savings account separate from your transaction account.

  • Save at least 10% of your income

Why 10 percent? Studies have shown that people can handle up to 10% fluctuations in wealth without eliciting an emotional response. In other words, if I gave you 10 coins but then asked for 1 back, you will not likely sense a feeling of loss. You will not feel an emotional attachment to the 1 coin when you are still holding 9. It is commonly agreed among financial experts that money and emotions do not bode well together. Therefore setting aside a portion of your income of at least 10% is a wise strategy. You may also be able to manage more than 10%. However, it is important to consider that with every increase in percentage saved– the likelihood of resentment increases also. The larger the portion of your income set aside, the larger the sense of loss. The idea is to save at least 10% of every income source you receive, as soon as you receive it (every pay). Saving 10% as a minimum ensures that you have a strategy of building wealth that is most likely to succeed. By saving at least 10% you will see rewarding growth over time. Remember, there is no risk to saving. The worst scenario is– you have the money to pay your bills.

  • Control your expenditures

Most people wait until they receive an usually large sum of money before they intend on saving. Unfortunately it rarely comes. And if it does often our eyes light up at all the potential luxuries we can now afford. The fact is– if saving and building wealth is not high on your hierarchy of values then you will undoubtedly spend your money on whatever is higher than saving. In other words, if you have cars, technology gadgets, and computers higher on your list of values than saving money and building wealth– you will most likely spend your income on laptops, phones, and car related items before any of that money goes into your savings account. It wise to determine your values, and learn how your values dictate where your money will most likely be spent.

If you were given one million dollars right now and asked to write a list of 100 things you would do with it– how many people do you think would have saving money in the top 1-3 things on that list? The reality is most of us would spend the money on other things before saving.

While it is beneficial to control expenditures via strategy, financial planning, and smart choices– it is also advisable to include savings and building wealth in your top 3 personal values. Changing your values may require more than just a concerted effort to save. A great exercise to have an immediate impact on your psychological attitude towards wealth building is; write down 200 general and 200 specific benefits to you of saving money and building wealth. Link the benefits to your other values. For example, if security is a value to me– then saving money is a benefit to me because I feel more secure the more I have saved. It may be difficult to find all 400. But the more benefits you link to saving– the greater your inner force and drive is to save money.

  • Grow your wealth

The fundamental principle of growing your wealth is making your money work for you. Wherever possible and practicable to do so, aim to earn interest or a return-on-investment with your money. Building your financial wealth is synonymous with building self-worth. They tend to rise together. The first step in growing wealth is saving. You must earn the right to risk. Prove to yourself that you can do the basics of wealth building and save consistently. Once you have mastered the methodical basics such as saving at least 10% of every pay– then take advantage of the numerous ways to grow your wealth. These may include high-interest saving accounts, long-term deposits, investing in real estate, trading stocks, investing in a profitable business or a project etc. However, it is advisable not to invest more than 10% of your principle (your initial amount saved).

  • Preserve principle

There are hard lessons to be learned in losing your principal on a bad investment. It can take many years of saving to lose it all in a few moments. Be wary of fast-n-flashy investment opportunities, or friends seeking a loan to experiment in a field they are not experienced in. You must guard your principal by making wise and informed decisions. Seek the guidance of financial experts that will advise you on such matters before leaping in to anything. Be wary of any return offering above 4-8%. Stick with non-volatile returns of investment for a higher chance of achieving wealth building success.

  • Own your home

The advice given in The Richest Man in Babylon is to purchase your own home. There are numerous benefits to purchasing one’s own home or investing in real estate. These include long term capital gain, tax reductions and benefits, a long term income stream, and eliminating rental costs. As well as feelings of pride, security, and ownership.

  • Insure a future income

It is wise to start planning for your retirement as early as possible. Rather than in your old age, when your ability to earn an income is greatly diminished. Superannuation and retirement savings accounts are ideal for this purpose. Also, any investments that are planned for longevity are useful as well. Set aside consistent payments to ensure that your future retirement is insured.

  • Increase your ability to earn

A fixed income is a fixed mindset. A fixed mind means you haven’t taken the time to identify– what can I do that’s important to me, while offering a service to others. There is a customer for anything and everything you can conceive of. If there is something that you love to do– chances are there is a service to be offered to others who love it too. There are many ways to increase your ability to earn. These include finding higher paid employment, developing your skill or trade, further educating yourself, starting your own business or venture, and providing a service or product.

  • Luck comes to those who act

In The Richest Man in Babylon, a discussion takes place around the theory of luck. The characters discuss the pitfalls of betting and gambling, including cards, dice, and horse racing. The consensus of the discussion, is that relying on luck as a precursor to wealth is a foolish and rare strategy for success. They also discussed that luck may be observed when a person acts promptly and wisely on an opportunity that proves fortuitously profitable. It is suggested that relying on luck alone will result in a very low chance of success. Therefore, a person who takes prompt and wise action on opportunities that arise is not just benefiting from luck– they are actually increasing their odds to succeed. Rather than attribute luck as the ingredient of success, it is action and the increase of odds that is deserving of praise.

  • Be cautious with your money

This principle alone can actually cover several other principles mentioned in the book, including the third, fourth, and fifth ‘Laws of Gold’. Although simple, there are several ways to be cautious with your money. I will briefly outline them now. Only seek advice from successful financial advisors and persons that have demonstrated proficiency in handling or investing money. Only invest in a business or investment where yourself or the person managing your money is skilled, knowledgeable, and experienced in the subject of interest. Be wary of get-rich quick schemes or propositions that claim to offer an unusually large return on investment– for there are tricksters and salesmen that will pray on your naivety and eagerness.

Better a little caution than a great regret – George S. Clason

  • Insurance for assurance

Insurance is available for just about anything– in the United States of America there is even ‘Divorce Insurance’. Which insures your marriage against the potential for divorce. While it is not practicable to insure everything in your life, there may be something of value to you that is worthy of insurance. Whether it be unforeseen damage to your car, home, or personal property; or ill health, the loss of income or the loss of life. More often than not, the cost of regret far outweighs the cost of insurance.

We cannot afford to be without adequate protection – George S. Clason

  • Determination

One of the key traits that is expressed by many of the characters in the Babylonian parables is determination. Determination is the quality that one expresses in a relentless pursuit of a personal goal or purpose. Determination is a key component of building wealth, as one has to rigorously apply self restraint in resisting purchases that are for immediate gratification. You must direct your mental attention to a particular goal and endure the inevitable hard times, drawbacks, and struggles along that journey. If there were no drawbacks to building wealth, and the path was easy, we would see a much higher percentage of wealthy people. The truth is that determination is a vital quality in any field of success. It is not through a lack of determination that the top 1% in the world own more than 50% of the worlds wealth.

The 5 Laws of Gold

In The Richest Man in Babylon the “5 Laws of Gold” are shared from father-to-son in one of the parables. The son sets out on his own with a pouch of gold and the 5 Laws of Gold written on a clay tablet. He is told to adventure forth and return 10 years later a wealthy man, to prove worthy of his fathers estate and managing his vast wealth. When the son returns, he admits to loosing the initial gold through naivety and inexperience in the same manner you and I may have experienced– via immediate gratifications or attractive lucrative investments that resulted in failed experiments. The son then speaks of his rise to financial freedom and wealth, and attributes his success to following the 5 Laws of Gold. These are as quoted from the book:

  1. “Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.” (Save at least 10% of your income)


  2. “Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.” (Have your money gaining interest or growing through investments)
  3. “Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.” (Be cautious with who you take advice from)


  4. “Gold slippeth 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.” (Seek wisdom from skilled, knowledgeable, and experienced experts in the subject you are investing in)


  5. “Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.” (Be wary of get-rich quick schemes and other fantastical opportunities)


The Richest Man in Babylon is a simple guide to inspire you to build your wealth a desire shared by many men and women who have lived since the creation of the first coin. While reading the book I felt a sense of eternalness about the challenges involved in building wealth. As I read the stories that detailed the characters impoverished and desperate lives– I envisioned the city of Babylon in both it’s glorious riches and brutal poverty. Mirrored in the stories of the Babylonians are the challenges that I have often faced in my own life. Difficulties such as saving, paying off debt, and starving off the ever-growing endless catalogue of desires; difficulties I imagine many of us share. The Richest Man in Babylon is a valuable resource for anyone seeking to start (or re-start) their journey to financial mastery. It contains basic principles that have survived the ages.

Thank you for reading.

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