I recently asked this question on Twitter:
What finance book has had the greatest influence on your life?— Josh (@moneylifewax) May 5, 2020
Over 67 people replied and after 1500 engagement, one comment that stood out to me was the mention of the financial “The Richest Man in Babylon.”
I had heard of the book before and actually just a few weeks prior a friend had even messaged me on Instagram to ask if I had read the book. To his surprise, I had never done so.
With time on my hands, I decided to order The Richest Man in Babylon on Amazon and dive in. The result? My book review here:
The Richest Man In Babylon in 25 Words:
This story is set in the ancient times of Babylon where a wealthy man teaches the different rules of wealth to a younger boy.
The Richest Man in Babylon summary:
The Babylonians established many important lessons of wealth, many that still apply today. Their three main lessons were: never take on debt, work hard to be lucky and always live below your means. Here are a few more lessons that can be learned from the book:
7 Rules of Money
- Start Thy Purse To Fattening: Save money and learn to pay yourself first
- Control Thy Expenditures: Don’t spend more than you need to
- Make Thy Gold Multiply: Invest carefully
- Guard Thy Treasure From Loss: Don’t invest in something that sounds too good to be true
- Make Of Thy Dwelling A Profitable Investment: Own your home
- Insure a Future Income: Make sure you have enough for retirementHave life insurance
- Increase Thy Ability To Earn: Work on your life skills
These 7 rules are applicable to any individual, and can pretty much be put into practice at any time in history.
5 Laws of Gold
Clason also mentions the 5 laws of gold:
- 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 1/10th of your earnings.
- Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field: work hard and you’ll always be making money
- Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling: Money comes to those who invest with wise people
- 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: Money slips away to those who don’t know what they’re investing in.
- 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: Money disappears from those who try to force it into imposible earnings.
Never take on debt
A strong message that echoes throughout the book is the importance of never getting into debt. This is mainly for people who justify purchases and believe that debt is a way of living rather than a liability.
The Richest Man in Babylon explains that if you cannot afford something that is expensive, then you simply cannot afford it – nor should you get it.
Getting into debt will only delay your journey to wealth because instead of saving money, you’ll need to spend extra on something that does not build wealth.
Debt only creates more problems, it doesn’t solve any!
Invest in your ability to earn more
The richest man in Babylon talks a lot about the importance of investing in yourself. This basically means working on improving your own skills, your knowledge and your ability to make money.
This is mostly because people think education ends when they finish university.
However, the Babylonian wants to make it clear that those who keep learning and improving will always have a huge competitive advantage over others.
>> See Also: How to Make More Money Fast
Only take advice from those who know what they are doing
Straight from the book:
“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 in the judgment of Azmur, the brickmaker. A small return and a safe one is far more desirable than risk.”
Which basically means: do your due diligence when getting into business with someone. It’s good to get advice from others, but always make sure it’s coming from a place of wisdom and not treachery.
Everyone has advice, but very few know your personal situation. It's best to always assess their “Fruit on the tree.” You wouldn't take health advice from an unhealthy trainer, just like you wouldn't take personal finance advice from someone who doesn't have much financial success.
It's best to seek wise counsel, keyword from The Richest Man in Babylon is Wise.
>> Similar: Financial Mentorship
Track your wealth
If you want to know how you’re doing financially, what your goals are and what you need to do to get there, then tracking is paramount. By facing the truth of how much you earn, how much you spend and how much you save, you get a better sense of where you’re heading.
Wealthy people constantly track and are aware of their net worth, whereas the poor don’t, and use excuses such as “I don’t care about money” or say things like, “I am not money hungry,” to get rid of their finanical concerns.
Tracking wealth can be as simple as creating a Google Spreadsheet with all the month’s earnings and expenses, and then learning how to save and invest the difference.
Tracking your net worth is as simple as subtracting your liabilities from your assets. Doing this exercise will help you build a plan to get where you want to be with your wealth.
>> Track Your Net Worth with Personal Capital which is a net worth tracking app!
Perhaps my favorite quote from The Richest Man in Babylon is:
“Advice is one thing that is freely given away, but watch that you only take what is worth having.”– George S. Clason
When you read books, you give yourself the ability to learn new things and open your mind to new ideas.
Whether it's new vocabulary or new financial wisdom, reading is something almost all millionaires do, so it's a great habit to start!
I always emphasize that when it comes to personal finance and money, it is personal. So with any advice on the internet, or in a book – it's up to you to take what you need and apply it.
The Richest Man in Babylon was a great read, that is super quick and not hard to conceptualize.
Grab a copy of the book here and get to reading so you can start to absorb the timeless wisdom!
Have you ever read The Richest Man in Babylon?
Josh writes about ways to make money, pay off debt, and improve yourself. After paying off $300,000 in student loans with his wife in less than five years, Josh started Money Life Wax and has been featured on Forbes, Business Insider, Huffington Post, and many more! In addition to being a life-long entrepreneur, Josh and his wife enjoy spending time with their newborn son, their chocolate lab named Morgan, working out, being outside, traveling, and helping others with their finances! In case you were wondering, Josh uses Personal Capital to track his net worth and his first investment account ever was an Acorns account 😎