Book Review, Debt, Making Money

Book Review: The Richest Man in Babylon by George S. Clason

Why does hard work come to nothing? This is a question that has plagued mankind since people realized that they could not have everything they wanted in the time allotted to them. It is also the topic of conversation between Bansir the chariot builder and his musician friend Kabba in George S. Clason’s work “The Richest Man in Babylon”. They decide that the best course of action would be to ask their childhood friend Arkad, who had become the eponymous richest man in Babylon, for the secrets of wealth. HIs response is one for the ages about why anybody should learn how money works:

“I saw all the good things there were to bring happiness and contentment. And I realized that wealth increased the potency of all of these. Wealth is power. With wealth, many things are possible.”

Clason’s book is a classic of the personal finance genre and for good reason. It takes complex subjects and conveys them to readers in simple language, colorful metaphors, and interesting stories. The tales of the gold lender, the camel trader and the luckiest man in Babylon stick with readers long after putting the book down. I’ve rarely heard anyone talk about concepts like loans and collateral, the connection between financial and social integrity, and the rewards of hard work without wanting to fall asleep, but Clason makes it exciting.

I will not discuss the book’s Seven Cures for a Lean Purse and the Five Laws of Gold here*, though it’s a testament to Truth with a capital ‘T’ that the same financial principles that worked a century ago (and more) apply equally well today.  Save your money; spend less than you earn; invest it; don’t take stupid risks. Like the Book of Ecclesiastes, or the Book of Job, in the Bible, his words strike to the core of human experience regardless of time or place.

This is not to say that the book is the embodiment of perfection.  I for one would have preferred if Clason had fewer characters and instead followed the story of Bansir and Kabba for longer.  Moreover, later in the book he takes a step back from life in Babylon to the life of archeologists studying the ruins of Babylon.  While this shifting of times and settings make sense in the flow of the book, Clason’s modern world isn’t half as captivating as his ancient world, and he would have been better served staying the course.

These quibbles aside, I highly recommend that everyone read this book and….shockingly enough….even buy it for their own collection! It rewards re-reading; is exciting enough to give to children; and is a good book to have on hand to give away to friends, family, or anyone else who needs to learn more about how to make and save money. With luck, they’ll have the wisdom to heed its words, and yet another generation can grow to become “the richest in Babylon.”

*Though of course I’ll list them here at the bottom.

Seven Cures for a Lean Purse

  1. Start thy purse to fattening (save 1/10 of your income)
  2. Control thy expenditures
  3. Make thy gold multiple (through good investments)
  4. Guard thy treasure from loss (don’t gamble everything on risky adventures, or those proposed by incompetent men)
  5. Make of thy dwelling a profitable investment (own a home)
  6. Insure a future income (a passive income stream is more important than networth)
  7. Increase thy ability to earn (study hard and become a well paid specialist)

Five Laws of Gold

  1. Gold comes to those who save 10% of their earnings
  2. Gold labors diligently for wise owners who give it employment
  3. Gold grows when it is protected & invested in wise areas
  4. Gold leaves someone who invests it in things they’re not familiar with, or are not approved of by other wealthy people.
  5. Gold leaves those who ask it to do the impossible, or is invested with schemers
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