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This book is perfect if you learn by reading the experiences of others. The entire book is
told in a story-like format, so it often goes down much like reading a collection of short
stories. The language is a bit strange, as the author attempts to sound like this is an
authentic tale from the ancient days, but the messages are as clear as sunlight.
Seven Cures for a Lean Purse
Since The Richest Man in Babylon is divided up into several short stories of varying
degrees of quality, I thought I would review in great detail the one story that I found the
The tale “Seven Cures for a Lean Purse” relates a story about Arkad, the titular richest
man in Babylon. He is requested by the king to teach a class to anyone who wishes to
attend on the methods he used to build his wealth. He divides this class across seven
days, with each day focusing on a particular method for saving money. Here are the
Start thy purse to fattening Take one-tenth of what you bring in and save it for the
future. The book uses a coin analogy: for every nine coins you spend, take one and put it
away for yourself. This is very sensible; a goal all of us should have.
Control thy expenditures Don’t buy frivolous things even if you have enough money to
pay for them. Instead, make sure that you can continue to save one-tenth of what you
bring in. For this reason, I write about frugality on The Simple Dollar.
Make thy gold multiply Once you start to build up some savings, invest that money so
that it will make more money for you. Another pretty clear point; if you start saving
money, it shouldn’t just sit in a mattress. Even a high-yield savings account is much
better than that, and it can double your principal in about fifteen years.
Guard thy treasure from loss This one is interesting: you should only invest in things
where the principal is safe. In other words, the book seems to discourage stock investing.
I found this to be particularly interesting given that it was written in 1927, right in the
midst of the first big American stock market boom. Of course, 1929 proved the author
Make of thy dwelling a profitable investment One should own their own home rather
than renting because then money can be invested in the home or invested in other things
rather than handed over to the landlord. Something tells me that this lesson applied better
before people were looking at homes that were three or four times their annual income.
Insure a future income In other words, invest for retirement and your family’s well
being after your passing. You should be dropping some Hamiltons right into your
retirement account if you can possibly afford it.
Increase thy ability to earn Work hard, look for opportunities, and educate yourself.
Today, a college education is one of the best investments you can make; I’m not saying
that it’s a requirement to be successful, but it opens the door to greater possibilities.
The Five Laws of Gold
Another story central to The Richest Man in Babylon is the tale of the five laws of gold, a
five-point philosophy handed down to later generations by Arkad, the titular richest man
in Babylon. Here are the five laws, with discussion of what they mean in a modern
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. In other words, a person should put away 10% of his or her income for the future
as a bare minimum. This rule is so incredibly fundamental, yet only a small minority
even bother to follow it.
2. Gold laboreth diligently and contentedly for the wise owner who finds for it
profitable employment, multiplying even as the flocks of the field. If you invest your
money well, your money will simply make more money. Again, a very simple and
obvious rule, but one that many people never get to because they didn’t follow the first
3. Gold clingeth to the protection of the cautious owner who invests it under the
advice of men wise in its handling. This rule encourages cautious investing, or at least
encourages the investor to at least be informed. In today’s era, one can turn to the internet
for plenty of investing information.
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 who are skilled in its
keep. This goes hand in hand with the third rule: if you invest in stuff you don’t
understand, you’re likely to lose money. Don’t buy the latest hot stock from your
stockbroker; investigate and invest where you want.
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. The worst option is to invest in anything that
promises absurdly good returns, or anything that you’re heavily pressured into buying.
These investments are scams and won’t stand up to serious research.
The five rules really are all you need to know: save some money, do some research, and
only invest in the fruits of that research. Anything else is a sure way to fall behind.
The remainder of the book is loaded with similar tales, teaching basic principles of
personal finance using stories from Old Babylon. Here are some of the other teachings
found in the book:
A Part Of All You Earn Is Yours To Keep This is a hard lesson for many of us to
learn, as most of us are ardent consumerists who are trained to spend from earliest
childhood. The truth is that we need to learn to always pay ourselves before we pay our
debtors – once we do that, we’ll be on the road to financial success.
Men Of Action Are Favored By The Goddess Of Good Luck I found this principle to
be quite interesting, but also quite accurate. At first, you might take it to think that people
who gamble sometimes end up big winners, but that’s not what this is all about. What the
rule is saying is that people who succeed are the ones that do something. Even the most
conservative of investments will pay better than cash stuffed in a mattress for a rainy day.
If you do something, something will happen.
Better A Little Caution Than A Great Regret On the other hand, if you push too hard,
you can get burnt. Highly speculative investments can turn around and bite you hard,
leaving you as if you had never invested at all. Respect your principal and it will respect
you by earning well; toss it to the wolves and you may get nothing back.
We Cannot Afford To Be Without Adequate Protection Retirement savings and
insurance are both vital to ensuring that major accidents don’t derail everything that we
do. If you don’t have these tools, a disaster can befall you, leaving you completely
Where The Determination Is, The Way Can Be Found Don’t give up on investing just
because the road is bumpy. If you keep at it, eventually you will find a path to success.
This is true no matter what you’re doing – persistence pays off time and time again
14 of 14 people found this review helpful
It seems like there are a few books that stand out as favorites that I invariably end up reading over and again. When in comes to managing money and personal finance this is my hands down favorite. Not only is it easy and fun to read, but the simple lessons taught in this short book really work.
The book is a compilation of several somewhat interwoven short stories that use the ancient city of Babylon as the backdrop. It begins with two friends lamenting their financial problems. They decide to seek out the advice of their old friend (now the richest man in Babylon). Each story teaches an important common sense lesson on wealth and happiness.
I doubt that anyone will learn anything they don’t already know by reading this book (i.e. working hard can be beneficial, save your money, don’t make risky investments, etc.), but who can’t benefit from a reminder of these rules every once in a while? One of my favorite parts involves a father who gives his son a sum of money and a list of recommendations about how it should be handled. Predictably the son disregards the advice and learns some hard lessons. Yet in the end, he learns to follow the advice and earn back all he lost and more.
In my work as an estate attorney, I have met lots of individuals who have accumulated amazing sums of wealth. To my knowledge, few of them became and stayed wealthy through get rich quick schemes. Most of them became wealthy using basically the principles taught in this book.
The first time I read this book I felt somewhat embarrassed because I had made so many (errr, all) of the mistakes as the characters in the book. Unlike some recent books on wealth management, this book doesn’t make you feel too guilty, and it actually offers easy to follow common sense ways to immediately improve your financial situation. By the way, this is also a great book to give to teenagers. I would not hesitate to recommend it to someone as young as 12 or 13.
13 of 13 people found this review helpful