Read to learn the fundamentals of building wealth.
The Richest Man in Babylon by George S Clason is one of my favorite personal finance books.
An American hustler in his 50s, who looks like Jason Momoa from Texas, recommended it to me when I was 18. The book opened my eyes to building wealth and ignited an interest in improving my state in life ever since.
A chariot builder and a lyre player living in the ancient city of Babylon have a dark epiphany.
They realize they have worked all their lives and have nothing to show for financially. Their purses are “lean” as a needle. They are tremendously distraught so they ask for advice from an acquaintance, the richest man in Babylon.
He teaches them the “7 cures for a lean purse”. The timeless laws of wealth, as valid to a former slave in Babylon as to a Tik Tok perusing Gen Z er.
1: A part of all you earn is yours to keep (save a minimum of 10% of all you earn).
2: Control thy expenditures
3: Make thy gold multiply
4: Guard thy treasure from loss
5: Make of thy dwelling a profitable investment
6: Insure a future income
7: Increase thy ability to earn
Babylon, one of the richest ancient cities, is an analogy to the modern West. Vastly wealthy, but where people still struggle financially because they do not understand, or apply, these laws.
The Richest Man in Babylon is the fundamental book on personal finance. It won’t give you advice on where to invest your money or which brokerage accounts to use — these are mere accessories. With The Richest Man in Babylon, you will learn the fundamentals. Once you master them, you can move on to the more complex stuff.
Memorable passages from the Richest Man in Babylon
Money is the medium by which earthly success is measured.
Money makes possible the enjoyment of the best the earth affords.
Money is plentiful for those who understand the simple laws which govern its
acquisition.
“Money is governed today by the same laws which controlled it when prosperous men thronged the streets of Babylon, six thousand years ago.”
“If you have not acquired more than a bare existence in the years since we were youths, it is because you either have failed to learn the laws that govern the building of wealth, or else you do not observe them. Fickle Fate is a vicious goddess who brings no permanent good to anyone. On the contrary, she brings ruin to almost every man upon whom she showers unearned gold. She makes wanton spenders, who soon dissipate all they receive and are left beset by overwhelming appetites and desires they have not the ability to gratify. Yet others whom she favors become misers and
hoard their wealth, fearing to spend what they have, knowing they do not
possess the ability to replace it.”
“In my youth I looked about me and saw all the good things there were to bring
happiness and contentment. And I realized that wealth increased the potency
of all these. “Wealth is a power. With wealth many things are possible.”
‘You speak but half the truth,’ he retorted. ‘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.
“Every fool must learn”.
“But as Algamish had bid me, I again saved each tenth copper, for I now had formed the habit and it was no longer difficult.”
“First get thee an army of golden slaves and then many a rich banquet may you
enjoy without regret.”
“You have learned your lessons well. You first learned to live upon less than you could earn. Next you learned to seek advice from those who were competent through their own experiences to give it. And, lastly, you have learned to make gold work for you.”
“Will If I set for myself a task, be it ever so trifling, I shall see it through. How else shall I have confidence in myself to do important things? Should I say to myself, ‘For a hundred days as I walk across the bridge into the city, I will pick from the road a pebble and cast it into the stream,’ I would do it. If on the seventh day I passed by without remembering, I would not say to myself, Tomorrow I will cast two pebbles which will do as well.’ Instead, I would retrace my steps and cast the pebble. Nor on the twentieth day would I say to myself, ‘Arkad, this is useless. What does it avail you to cast a pebble every day? Throw in a handful and be done with it.’ No, I would not say that nor do it. When I set a task for myself, I complete it. Therefore, I am careful not to start difficult and impractical tasks, because I love leisure.”
“Then take whatever portion seems wise. Let it be not less than one-tenth and lay it by. Arrange your other expenditures to do this if necessary. But lay by that portion first. Soon you will realize what a rich feeling it is to own a treasure upon which you alone have claim. As it grows it will stimulate you. A new joy of life will thrill you.”
“Then learn to make your treasure work for you. Make it your slave. Make its
children and its children’s children work for you. “Insure an income for thy future. Look thou at the aged and forget not that in the days to come thou also will be numbered among them. Therefore invest thy treasure with greatest caution that it be not lost. Usurious rates of return are deceitful sirens that sing but to lure the unwary upon the rocks of loss and remorse.
“Provide also that thy family may not want should the Gods call thee to their
realms. For such protection it is always possible to make provision with small
payments at regular intervals. Therefore the provident man delays not in
expectation of a large sum becoming available for such a wise purpose.
“Counsel with wise men. Seek the advice of men whose daily work is handling
money. Let them save you from such an error as I myself made in entrusting
my money to the judgment of Azmur, the brickmaker. A small return and a
safe one is far more desirable than risk.
“Enjoy life while you are here. Do not overstrain or try to save too much. If
one-tenth of all you earn is as much as you can comfortably keep, be content
to keep this portion. Live otherwise according to your income and let not
yourself get niggardly and afraid to spend. Life is good and life is rich with
things worthwhile and things to enjoy.”
“In this way did Arkad proceed to find out how each man labored to earn his
living. When he had done questioning them, he said: “Now, my students, ye can see that there are many trades and labors at which men may earn coins. Each of the ways of earning is a stream of gold from which the worker doth divert by his labors a portion to his own purse. Therefore into the purse of each of you flows a stream of coins large or small according to his ability. Is it not so?” Thereupon they agreed that it was so. “Then,” continued Arkad, “if each of you desireth to build for himself a fortune, is it not wise to start by utilizing that source of wealth which he already has established?”
“Deride not what I say because of its simplicity. Truth is always simple.”
“Now I will tell a strange truth, the reason for which I know not. When I
ceased to pay out more than nine-tenths of my earnings, I managed to get
along just as well. I was not shorter than before. Also, ere long, did coins
come to me more easily than before. Surely it is a law of the Gods that unto
him who keepeth and spendeth not a certain part of all his earnings, shall
gold come more easily. Likewise, him whose purse is empty does gold avoid.
“Which desirest thou the most? Is it the gratification of thy desires of each
day, a jewel, a bit of finery, better raiment, more food; things quickly gone
and forgotten? Or is it substantial belongings, gold, lands, herds, merchandise, income-bringing investments?”
“Now I will tell thee an unusual truth about men and sons of men. It is this; That
what each of us calls our ‘necessary expenses’ will always grow to equal our
incomes unless we protest to the contrary. “Confuse not the necessary expenses with thy desires. Each of you, together with your good families, have more desires than your earnings can gratify.”
“Therefore, engrave upon the clay each thing for which thou desireth to spend. Select those that are necessary and others that are possible through the expenditure of nine- tenths of thy income. Cross out the rest and consider them but a part of that great multitude of desires that must go unsatisfied and regret them not. “Budget then thy necessary expenses. Touch not the one- tenth that is fattening thy purse. Let this be thy great desire that is being fulfilled. Keep working with thy budget, keep adjusting it to help thee. Make it thy first assistant in defending thy fattening purse.”
“This, then, is the second cure for a lean purse. Budget thy expenses that thou mayest have coins to pay for thy necessities, to pay for thy enjoyments and to gratify thy worthwhile desires without spending more than nine-tenths of thy earnings.”
“Gold in a purse is gratifying to own and satisfieth a miserly soul but earns nothing. The gold we may retain from our earnings is but the start. The earnings it will make shall build our fortunes.”
“I tell you, my students, 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. That is what every man
desireth. That is what thou, each one of thee desireth; an income that
continueth to come whether thou work or travel.
“This, then, is the third cure for a lean purse: to put each coin to laboring
that it may reproduce its kind even as the flocks of the field and help bring to
thee income, a stream of wealth that shall flow constantly into thy purse.”
“The first sound principle of investment is security for thy principal. Is it wise
to be intrigued by larger earnings when thy principal may be lost? I say not.
The penalty of risk is probable 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.”
“All too many of our men of Babylon do raise their families in unseemly
quarters. They do pay to exacting landlords liberal rentals for rooms where
their wives have not a spot to raise the blooms that gladden a woman’s heart
and their children have no place to play their games except in the unclean
alleys.
“No man’s family can fully enjoy life unless they do have a plot of ground
wherein children can play in the clean earth and where the wife may raise
not only blossoms but good rich herbs to feed her family.
“To a man’s heart it brings gladness to eat the figs from his own trees and the
grapes of his own vines. To own his own domicile and to have it a place he is
proud to care for, putteth confidence in his heart and greater effort behind
all his endeavors. Therefore, do I recommend that every man own the roof
that sheltereth him and his.
“Nor is it beyond the ability of any well intentioned man to own his home.
Hath not our great king so widely extended the walls of Babylon that within
them much land is now 48unused and may be purchased at sums most
reasonable?”
“Then will thy heart be glad because thou wilt own in thy own right a valuable
property and thy only cost will be the king’s taxes.
“Thus come many blessings to the man who owneth his own house. And
greatly will it reduce his cost of living, making available more of his earnings
for pleasures and the gratification of his desires. This, then, is the fifth cure
for a lean purse: Own thy own home”
“The man who, because of his understanding of the laws of wealth, acquireth
a growing surplus, should give thought to those future days. He should plan
certain investments or provision that may endure safely for many years, yet
will be available when the time arrives which he has so wisely anticipated.
“A man may buy houses or lands for this purpose. If wisely chosen as to their
usefulness and value in the future, they are permanent in their value and
their earnings or their sale will provide well for his purpose.
“This, then, is the sixth cure for a lean purse. Provide in advance for the
needs of thy growing age and the protection of thy family.”
“Not long ago came to me a young man seeking to borrow. When I questioned
him the cause of his necessity, he complained that his earnings were
insufficient to pay his expenses. Thereupon I explained to him, this being the
case, he was a poor customer for the money lender, as he possessed no
surplus earning capacity to repay the loan.
“What you need, young man,’ I told him, ‘is to earn more coins. What dost
thou to increase thy capacity to earn?”
“Preceding accomplishment must be desire. Thy desires must be strong and
definite. General desires are but weak longings. For a man to wish to be rich
is of little purpose. For a man to desire five pieces of gold is a tangible desire
which he can press to fulfillment. After he has backed his desire for five
pieces of gold with strength of purpose to secure it, next he can find similar
ways to obtain ten pieces and then twenty pieces and later a thousand pieces
and, behold, he has become wealthy. In learning to secure his one definite
small desire, he hath trained himself to secure a larger one. This is the
process by which wealth is accumulated: first in small sums, then in larger
ones as a man learns and becomes more capable.”
“Desires must be simple and definite. They defeat their own purpose should
they be too many, too confusing, or beyond a man’s training to accomplish.”
“The more of wisdom we know, the more we may earn. That man who seeks
to learn more of his craft shall be richly rewarded. If he is an artisan, he may
seek to learn the methods and the tools of those most skillful in the same
line. If he laboreth at the law or at healing, he may consult and exchange
knowledge with others of his calling. If he be a merchant, he may continually
seek better goods that can be purchased at lower prices.”
“Such things as the following, a man must do if he respect himself:
“He must pay his debts with all the promptness within his power, not
purchasing that for which he is unable to pay.
“He must take care of his family that they may think and speak well of him.
“He must make a will of record that, in case the Gods call him, proper and
honorable division of his property be accomplished.
“He must have compassion upon those who are injured and smitten by
misfortune and aid them within reasonable limits. He must do deeds of
thoughtfulness to those dear to him.
“Thus the seventh and last 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. Thereby shalt thou acquire confidence in thy self to achieve
thy carefully considered desires.”
“If a man be lucky, there is no foretelling the possible extent of his good
fortune. Pitch him into the Euphrates and like as not he will swim out with
a pearl in his hand.”
—Babylonian Proverb.
“In tilling the soil, in honest trading, in all of man’s occupations, there is
opportunity to make a profit upon his efforts and his transactions. Perhaps
not all the time will he be rewarded because sometimes his judgment may be
faulty and other times the winds and the weather may defeat his efforts. Yet,
if he persists, he may usually expect to realize his profit. This is so because
the chances of profit are always in his favor.
“But, when a man playeth the games, the situation is reversed for the chances
of profit are always against him and always in favor of the game keeper.”
“Then, this do I advise. Do what I should have done at thy age. From thy
earnings keep out one-tenth to put into favorable investments. With this one-
tenth of thy earnings and what it will also earn, thou canst, before thou art
my age, accumulate for thyself a valuable estate.”
“To take his first start to building an estate is as good luck as can come to any
man. With all men, that first step, which changes them from men who earn
from their own labor to men who draw dividends from the earnings of their
gold, is important. Some, fortunately, take it when young and thereby
outstrip in financial success those who do take it later or those unfortunate
men, like the father of this merchant, who never take it.”
“The wisdom of making a payment immediately when we are convinced our
bargain is wise,” suggested a venerable saddle maker. “If the bargain be good,
then dost thou need protection against thy own weaknesses as much as
against any other man. We mortals are changeable. Alas, I must say more apt
to change our minds when right than wrong. Wrong, we are stubborn indeed.
Right, we are prone to vacillate and let opportunity escape. My first
judgment is my best. Yet always have I found it difficult to compel myself to
proceed with a good bargain when made. Therefore, as a protection against
my own weaknesses, I do make a prompt deposit thereon. This doth save me
from later regrets for the good luck that should have been mine.”
“Good luck fled from procrastination in both these tales. Yet, this is not unusual. The spirit of procrastination is within all men. We desire riches; yet, how often when
opportunity doth appear before us, that spirit of procrastination from within
doth urge various delays in our acceptance.”
“Good luck can be enticed by accepting opportunity. “Those eager to grasp opportunities for their betterment, do attract the interest of the good goddess. She is ever anxious to aid those who please her. Men of action please her best.
“Action will lead thee forward to the successes thou dost desire.”
“MEN OF ACTION ARE FAVORED BY THE GODDESS OF GOOD LUCK.”
THE FIVE LAWS OF GOLD
“I. Gold cometh gladly and in increasing quantity to any man who will put
by not less than one-tenth of his earngs to create an estate for his
future and that of his family.
II. Gold laboreth diligently and contentedly for the wise owner who finds
for it profitable employment, multiplying even as the flocks of the
field.
III. Gold clingeth to the protection of the cautious owner who invests it
under the advice of men wise in its handling.
IV. 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.
V. 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.”
“Gold laboreth diligently and contentedly for the wise owner who finds for it
profitable employment, multiplying even as the flocks of the field.”
“Gold bringeth unto its possessor responsibility and a changed position with his fellow men. It bringeth fear lest he lose it or it be tricked away from him. It bringeth a feeling of power and ability to do good. Likewise, it bringeth opportunities whereby his very good intentions may bring him into difficulties.”
“We traded together with much success until out of the east he brought a woman to wed, beautiful, but not like our women. A dazzling creature. He spent his gold lavishly to gratify her desires. The chest tells you, Rodan, that humans in the throes of great emotions are not safe risks for the gold lender.”
“I do not discourage borrowing gold. I encourage it. I recommend it if it
be for a wise purpose. I myself made my first real success as a merchant with
borrowed gold.”
“Merchants must learn their trade. His ambition, though worthy, is not practical and I would not lend him any gold.”
“I like not idle gold, even less I like too much of risk.”
“Better a little caution than a great regret.”
“In this day, behind the impregnable walls of insurance, savings accounts and
dependable investments, we can guard ourselves against the unexpected
tragedies that may enter any door and seat themselves before any fireside.”
“The hungrier one becomes, the clearer one’s mind works— also the more
sensitive one becomes to the odors of food.”
“I did not know that he who spends more than he earns is sowing the winds of
needless self-indulgence from which he is sure to reap the whirlwinds of
trouble and humiliation.”
“How can you call yourself a free man when your weakness has brought you
to this? If a man has in himself the soul of a slave will he not become one no
matter what his birth, even as water seeks its level? If a man has within him
the soul of a free man, will he not become respected and honored in his own
city in spite of his misfortune?”
“One day Sira asked me, ‘In the eventime when the other slaves can mingle
and enjoy the society of each other, why dost thou sit in thy tent alone?’
“To which I responded, ‘I am pondering what you have said to me. I wonder if
I have the soul of a slave. I cannot join them, so I must sit apart.’
“Happiness,’ she responded, ‘awaits not the runaway wife who seeks it in far lands among strange people. Go thy own way and may the gods of the desert protect thee for the way is far and barren of food or water.”
‘What mattered hunger? What mattered thirst?
They were but incidents on the road to Babylon. Within me surged the soul of
a free man going back to conquer his enemies and reward his friends. I
thrilled with the great resolve.”
“We found water. We passed into a more fertile country where were grass and
fruit. We found the trail to Babylon because 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 who am but a slave?”
“WHERE THE DETERMINATION IS, THE WAY CAN BE FOUND.”
“That man who keepeth in his purse both gold and silver that he need not
spend is good to his family and loyal to his king.
“The man who hath but a few coppers in his purse is indifferent to his family
and indifferent to his king.
“But the man who hath naught in his purse is unkind to his family and is
disloyal to his king, for his own heart is bitter.
“Therefore, the man who wisheth 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 doth provide that I shall support and clothe my good wife
who hath returned to me with loyalty from the house of her father. For
Mathon doth say that to take good care of a faithful wife putteth self-respect
into the heart of a man and addeth strength and determination to his purposes.”
“Thou wert once a piece of soft clay to be pressed and moulded by any hand that touched thee, but now thou art a piece of bronze capable of holding an edge. If thou needst silver or gold at any time come to me.”
“My good wife looketh upon me with a light in her eyes that doth make a man
have confidence in himself.”
There is more pleasure in running up such a surplus than there could be in
spending it.
We are determined never again to permit our living expenses to exceed
seventy percent of our income. Now you can understand why we would
like to extend our personal thanks to that old chap whose plan saved
us from our “Hell on Earth
“Thou can’t get ahead by shirking,’ Megiddo protested. If thou plow a hectare,
that’s a good day’s work and any master knows it. But when thou plow only a
half, that’s shirking. I don’t shirk. I like to work and I like to do good work, for
work is the best friend I’ve ever known. It has brought me all the good things
I’ve had, my farm and cows and crops, everything.’
Don’t mind because it is hard. If thou thinkest
about what a good house thou build, then who cares if the beams are heavy
and it is far from the well to carry the water for the plaster. Promise me,
boy, if thou get a master, work for him as hard as thou canst. If he does not
appreciate all thou do, never mind. Remember, work, well-done, does good
to the man who does it. It makes him a better man.
Cling no longer to thy master. Get once again the feeling of being a free man. Act like a free man and succeed like one! Decide what thou desirest to accomplish and then work will aid thee to achieve it!’ He went on his way saying he was glad I had shamed him for his cowardice.