The Richest Man in Babylon

The Richest Man in Babylon

Erik Book Review, Thoughts of a Mastermind, Wealth Creation 19 Comments

The Richest Man in BabylonThe Richest Man in Babylon, by George S. Clason is a timeless classic.Β The Richest Man in Babylon teaches the value of saving, overcoming poor habits, such as procrastination and getting into a mindset to take advantage of opportunities.

I was drawn to read The Richest Man in Babylon because many people and bloggers recommended it as one of the top 10 personal finance books. I finally got around to it and I’m glad I read it! It was a quick and enjoyable read.

The rest of this post includes a summary of the book, my takeaways, and my recommendation for you. Enjoy!

 

Summary of The Richest Man in Babylon

The Richest Man in BabylonΒ is a series of parables about personal finance. The parables take place in Ancient Babylon. The main story is about how an average man became the richest man in Babylon. He accumulated wealth by being disciplined with his spending, investing his savings, and working to increase his income.

Each story has a lesson and a moral. The lessons and principles in The Richest Man in Babylon are simple and easy to understand.

In addition to the many principles and lessons in The Richest Man in Babylon, The Five Laws of Gold are presented. The Five Laws of Gold form the foundation for your relationship and mindset with personal finance. Everyone should follow these laws:

The Five Laws of Gold

  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.
  2. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks in the field.
  3. Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
  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 skilled in its keep.
  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.

These laws of gold are more important than gold itself. By following each of the laws, you will become wealthy. Translating into layman’s terms:

  1. Save a minimum of 10% of your income
  2. Your investments will grow and the returns will compound over time.
  3. Always have insurance (FDIC insurance for a bank, for example) for your money
  4. Don’t invest in things you don’t know about
  5. Understand the balance between risk and reward. If you try for 50% returns, you won’t last long.

My Takeaways

Personal finance is about being disciplined in your approach to your finances. If you want to have money, learn to discipline yourself now and not later. Most lottery winners are bankrupt within a few years and mostly because they lacked self discipline. Therefore, the problem is not the lack of money, but how it is managed.

Currently, I track my income, expenses, and net worth over time. I’m saving roughly 45% of my income – I’m doing well on the saving and investing front. This could change in an instant if I leave my job and scratch the entrepreneurial itch!

One area of improvement I could work on is being properly insured. I chatted with my insurance agent last week and she suggested I get an umbrella policy and more life insurance. While I understood what she was selling me on, but I didn’t feel it warranted the monthly expense. I will check into this some more.

My Recommendation

Yes, please read The Richest Man in Babylon. If you like storybooks, books written in old time language, or personal finance books, The Richest Man in Babylon is the book for you.Β  The Richest Man in Babylon teaches the values of saving, overcoming poor habits, such as procrastination, and getting into a mindset to take advantage of opportunities! Give it a shot. The lessons in The Richest Man in Babylon will change your financial life!

The Richest Man in Babylon

Buy this Book!

Thanks for stopping by. I’m glad I could share my thoughts with you.

Do you like story books or instruction manuals? Are you saving at least 10% of your income? What are your thoughts on umbrella policies?

Erik

Comments 19

  1. I love story books! We saved closer to 50% of our income when we were working. And I totally believe in umbrella policies. Ours costs $110 a year.

    I can’t believe I still have not read The Richest Man in Babylon. I’m about to rectify that as I just put it on hold in my library. Thanks for the review and the reminder.

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  2. I definitely enjoy story books. Saving well over 10%, roughly 45% like you. We added an umbrella policy about 9 months ago as our net worth grew to a point that it made sense. Our cost is comparable to Mrs. Groovy’s.

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      Nice Amy – 45% savings rate gets you to financial freedom pretty quickly! Do you have any recommendations for me for books to read?

      1. I could come up with a few I’m sure! πŸ™‚ Did you mean story books or finance books or?

        The Enlightened Gardener Revisited by Sydney Banks – is a ‘self-help’ storybook

        Have you read Atlas Shrugged? Massive book but I felt there were many life lessons in it.

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          Any books which have been influential on your life are welcomed! Thanks for stopping by again and leaving some recommendations. I haven’t read or heard of those books you suggested. I’ll check them out… though I have about 30 books on my desk I need to get through first!!!

          1. Yes, you have quite the list of books! I remembered some easier reads this morning – books by Mitch Albom. I’ve read his Tuesdays with Morrie, The Five People You Meet in Heaven, and For One More Day, all good.

  3. My high school math teacher told us that since schools weren’t making us take personal finance classes, he was taking it upon himself to teach us. So he assigned this as required reading. Well worth it.

    BTW, how far along are you on your reading goal? It seems like you’re churning through them, but I’ve lost count. Keep it up!

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      I’m through 19 books so far… another update coming Aptil 3rd. I’ve slowed down in March because I’ve been putting in a lot of work behind the scenes. Excited to have more time coming up!

  4. I’ve been a fan of The Richest Man in Babylon for years. It’s such a timeless classic – well written, easily understood, and full of good, practical advice. I had my oldest son read it last year when he was 12, and he still remembers the lessons it taught today.

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      Nice – teaching them young. I love it! That’s awesome.

      The lessons of the book will help him throughout his entire life.

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  5. Thank you for the reminder that I have to finally read The Richest Man in Babylon! It is one of those ones that gets recommended all the time and never seems to get to the top of my reading list.

    By the way, the new site layout looks awesome and your 30-day challenge freebie is great!

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      Yeah, same here. I figured I should just read it and get it over with! πŸ™‚

      Thanks for the compliment on the site. I’m very happy with it! πŸ™‚

  6. I started this book last summer and got busy doing other things. From the few pages I read so far, it was a good read.

    Thanks for the summary. Some lessons are timeless.

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