The Richest Man in Babylon
The Richest Man In Babylon - A Summary
In the style of an earlier era, ‘The Richest Man in Babylon’ tells the story, supposedly “inscribed on ancient tablets”, of young Arkad and the richest man in a city of fabulous wealth. It is the story of this rich man’s advice to a class of one hundred on the subject of gathering riches.
We learn that Arkad, employed as a scribe in the hall of records, had asked Algamish, an aged and wealthy man, how he too could attain the security and comfort that comes with prosperity. Over a few short years he learned the golden rule of wealth creation:
“A part of what you earn is yours to keep.”
What percentage of your total income that part will be, will vary from one individual to another and from time to time; but try to make it no less than 10%, and set aside that chosen amount before any other expenditures are made.
“Say it in the morning when first you rise. Say it at noon. Say it each hour of every day. Say it to yourself until the words stand out like letters of fire across the sky…
‘A part of all I earn is mine to keep.”
Then “learn to make your treasure work for you”.
Why do many people never start this process?
Because of fear, apathy, ignorance of circumstances or a combination of these. Because, they say, they have no spare cash.
Arkad tells us how to “cure this lean purse”.
CURE 1 Start saving by “fattening your purse”
Into our “purse”, or bank account, goes the money we earn week by week. What happens if, for every ten dollars we bank, only nine are withdrawn? Or if the gratification of our desire for a bit of extra clothing or jewelry or a restaurant meal is curbed? The answer’s obvious, isn’t it? That “purse” gets heavier. Strange as it may seem, when the payments are curtailed, we seem to be able to get along just as well as before!
The first cure then, is to leave one dollar unspent for every ten we earn.
CURE 2 “Control your expenditures”
Control your expenditures by distinguishing between necessary outlays and those that are optional. Carefully assess the latter and trim them so that only 90% of income is spent. It’s too easy to give free rein to desirables – it makes sense to find that 10% saving amongst some of these not-quite essentials.
Budget. Note the things you would like to buy. Select those that are necessary and others that are possible through the expenditure of nine-tenths of income. Cross out the rest and consider them as a part of those desires that must be unsatisfied – and don’t regret them.
CURE 3 “Make thy gold multiply”
Invest savings so that their earnings are continually re-invested and both capital and income are constantly increasing.
“Beget a hoard of golden slaves, each labouring and earning more gold. As they labour, so their children labour, and their children’s children, until great is the income from their continued efforts”.
Choose profitable investments where capital value and income are subject to compounding increase and continually re-invest your excess funds.
CURE 4 “Guard thy treasures from loss”
The first principle of investment is security. Don’t be tempted by promised profits from risky ventures.
Take sound advice; acquaint yourself with possible dangers.
“Invest only where thy principal can be reclaimed if desirable and where it will not fail to collect a fair rental. Consult with wise men, experienced in the profitable handling of gold”.
CURE 5 “Make of thy dwelling”, Arkad tells us, “a profitable investment”
An essential item in the 90% expenditure list is accommodation and, in most cases, at least for families, an owned home is the best choice. For them it provides a degree of continuity and security not offered by rental accommodation.
It should be paid off as soon as possible. This will establish a capital base and a good credit rating, thus facilitating the procuring of future loans for investment purposes and converting the non-tax deductibility of home repayments when an investment loan is acquired. (I am not sure that this same rule applied in Babylon!)
CURE 6 “Provide for future income”
“Therefore do I say that it behoves a man to make preparation for a suitable income in the days to come when he is no longer young and to make preparations for his family should he be no longer with them to comfort and support them”.
How can these desirable goals be met?
By starting early on an investment plan that ensures safe, satisfactory and compounding levels of income and capital appreciation. By providing “in advance for the needs of thy growing age and the protection of thy family.”
CURE 7 “Increase your ability to earn”
We must cultivate the powers, skills and talents with which we have been endowed. Continued study and self-improvement will open the doors of advancement and secure the raised rates of remuneration that make investment a realisable goal.
“As a man perfecteth himself in his calling even so doth his ability to earn increase ~ the more of wisdom we know, the more we may earn.”
Artisans may seek to learn the methods and tools of those most skillful in their trade. Lawyers and physicians can consult and exchange knowledge with others of their profession. Merchants should continually seek better goods that can be purchased at lower prices.
“Thus the seventh cure of a lean purse is to cultivate thy own powers, to study and become wiser and more skillful, to so act as to respect thyself.”
Is there any luck in financial security?
In one of his classes, Arkad discusses the subject of good luck and its contribution to the attainment of financial security. Was there some way to ensure the Goddess of Luck would smile favorably on one of her subjects? Could her favours become part of a wealth-gathering system?
One of his classes told of a lucky find – a purse full of gold! But of the other ninety-nine, none had been similarly enriched.
An analysis of gaming houses and horse racing revealed that consistent winning was confined to those who had the odds tilted in their favour – the dealers and bookmakers, not the punters.
Good luck, we are told, “waits to come to that man who accepts opportunity.” It tends to by-pass procrastinators in whom hesitation has become a habit. As has been said in recent times:
“I am a firm believer in luck. And the harder I work the luckier I become”.
Arkad sums it up for his class in these words:
“Those eager to grasp the opportunities for their betterment do attract the interest of the Goddess of Luck. She is ever anxious to aid those who please her. Men of action please her best.”
Again, I respectfully urge you to read this insightful masterpiece.
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