The Richest Man in Babylon, by George S. Clason is a timeless classic. 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 Babylon 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
- 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.
- Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks in the field.
- Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
- 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.
- 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:
- Save a minimum of 10% of your income
- Your investments will grow and the returns will compound over time.
- Always have insurance (FDIC insurance for a bank, for example) for your money
- Don’t invest in things you don’t know about
- Understand the balance between risk and reward. If you try for 50% returns, you won’t last long.
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.
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. 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!
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?