Everybody should be taught personal finance as part of our curriculum. Earning an income is very different from building wealth which sustains for generations. We are all skilled to become active income generators but not as “wealth creators”. The book, Richest Man in Babylon by George S. Clason is your guide to knowing the secrets of wealth from the richest city in the human civilization, Babylon.
The main character in the novel is Arkad, who is the richest man in Babylon. He has some very genuine advice for anybody who comes to him and asks how he earned his fortunes. There are stories about the 7 cures for lean pursue, five laws of gold, the goddess of good luck and the luckiest man in Babylon.
This post will be a summary of points discussed in the chapter, “7 cures for a lean purse”. If you are interested in the Minireads review of the book, I would say it is a must-read if you want to learn more about managing personal finance and becoming the wealthiest man out there.
About the author – George Samuel Clason
George Samuel Clason was a soldier, writer and businessman who served in US Army during the Spanish-American war. He started two companies: The Clason Map Company of Denver Colorado and Clason Publishing Company. He wrote a number of informational pamphlets dispensing advice on money management and on achieving financial success. His most famous lessons have been compiled as “The Richest Man in Babylon”.
7 Cures for Gaining Maximum Wealth
The king of Babylon is concerned that the riches of Babylon are concentrated in the hands of few. All the citizens are unable to enjoy the wealth that Babylon has to offer. Worried by this fact, he asks the richest man in Babylon, Arkad to educate the men in Babylon on amassing wealth. Arkad willfully agrees and promises to deliver his lectures of “7 cures for a lean purse” and teach every individual who seeks help in maximizing their wealth.
#1 Start thy purse to fattening
“For every ten coins, thou placest within thy purse take out for use but nine. Thy purse will start to fatten at once and its increasing weight will feel good in thy hand and bring satisfaction to thy soul.”
Arkad in The Richest Man in Babylon
Arkad begins by giving his first cure towards building an empire. It is a simple rule, start saving 10% of your income every month. He advises to compromise the comforts of today for the wealth of tomorrow and he says that because its just 10% of your income, you might not face major inconvenience.
Well, his advice seems legit!
#2 Control thy expenditure
“Confuse not the necessary expenses with thy desires.
Each of you, together with your good families, have more desires than your earning can gratify. Therefore, control thy desires.”
Arkad from Ruchest Man in Babylon
Arkad advises all the wise men present, seeking an advice on gaining wealth to maintain a budget. He asks them to mention all their expenses on their budgest, cross off the ones which are not “Necessary expenditures” and focus only on buying things which are essential. This will fatten their purse even more without giving them a sense of regret.
Spending wisely is a choice that everyone must make everyday by controlling their extra expenditures.
#3 Make thy gold multiply
“Behold thy lean purse is fattening. Thou hast disciplined thyself to leave therein one-tenth of all thou earneth. Thou hast controlled thy expenditures to protect thy growing treasures.
Next, we will consider means to put thy treasures to labor and to increase.”
Arkad from Ruchest Man in Babylon
A man’s wealth is not built by the coins he carries in purse. It is made by the gold which earns him more and more money. To enable this, this is the time to now invest your savings into ventures which will provide you benefits with zero work of yours. Basically, it is like putting your money to work and enjoying its labour.
This is what modern finance gurus call “Passive income”.
But, only invest in ventures which you are confident about and in people who are masters in that venture. Arkad gave his gold to a blacksmith to buy jewelry. This investment was a poor one as the blacksmith did not know about jewels and he was easily duped.
#4 Guard thy treasures from loss
“Every owner of gold is tempted by opportunities whereby it would seem that he could make large sums by its investments in most plausible projects.
Gold in a man’s purse must be guided with firmness, else it be lost”
Arkad from Richest Man in Babylon
After gaining some wealth, Arkad’s next advice is to guard the returns that you have been getting Arkad says invest only those projects where your principal is completely safe and it can be reclaimed as and when required. He wants investors to consult with wise men to check about the viability of the project before investing.
Let them guard your investment with their experience!
#5 Make of thy dwelling a profitable investment
“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.
Own thy home.”
Arkad from Richest Man in Babylon
Arkad’s next advice is to buy a home after you have ensured that your purse is fattening, your gold is secure and your wealth is hedged against risks. This will help your family grow under a secure roof, grow your own herbs, let kids play on your soil, and top of all that, you will find a safe investment in the form of a home. This will also reduce the liability of paying your landlord every month.
This advice is actually debatable. Considered how expensive properties are in big cities and how volatile everyone’s income is. If you want this advice, take it with a pinch of salt.
#6 Insure a future income
“Provide in advance for the needs of thy growing age and the protection of thy family”
Arkad from Richest Man in Babylon
Arkad envisioned life insurance with this advice of his. Under this, you will keep aside a fixed sum every month and if any unfortunate incidents hurts you, your family will be safe.
Take his words, buy an insurance for yourself!
#7 Increase thy ability to earn
COVID times has warned us yet again to up-skill ourselves and also ensure multiple sources of income. So, Arkad’s advice is very relevant today. Even after you have substantial income to your name, it is necessary that you focus on growing your tree of income.
Income can be increased by learning new skills, entrepreneurship or investing in an established firm.
These are the 7 cures from Richest Man in Babylon which shall help you become a wealthy and wise investor. Hope you will follow them to the core.
The Minireads ‘The Richest Man in Babylon’ by George S. Clason Review
I like reading books which help us earn and grow our income. Personally, I have been trying to generate multiple sources of income for myself and most of it, passive. This is the modern version of “Making your Gold work for you”, words of Arkad, the richest man in Babylon. I have started trusting the words of experts while making an investment and understanding the returns I can get.
I would highly recommend this book. It is one of the very concise resources you will find to maximize your wealth, while everybody else is focusing only their income.
If you have read George S Clason’s ‘The Richest Man in Babylon’, I am keen to know your thoughts of this book.