Book Review: The Richest Man in Babylon

Written by George Cleasson

This book is a collection of short stories written by a wealthy money lender in Ancient Babylon, possibly 5000 years ago. The stories were meant to teach the friends of the merchant how he became wealthy, and thus how they could become wealthy also.

There are 12 chapters and each teaches values, which are often summed up as these rules:

Pay yourself First Set aside 10% of each months earnings for your savings. This is for you to save and later invest. Pay your bills owed to creditors with 20% of your earnings and use 70% for daily living expenses like food, shelter, clothing and transportation.

Communicate with your creditors regularly.
Be always mindful of the anxiety of your creditors over the return of their capitol. Reassure them with timely payments and frequent communications reminding them of your intent to pay in full and your strong belief in paying all your debts.

Live below your means.
Many spend 100% of what they earn each month and also borrow more. By establishing how much you will save, pay to creditors and for living expenses you establish a budget where you no longer increase your debt, you pay down your existing debts and start to accrue savings. Now you are spending less then you make or below your total earnings or means.

Save all salary increases.
Once you establish the above plan, you will be living within or below your means. But that’s the first step. The second step is not to increase your living expenses when you get a salary increase, but to save it. While you may want a new car, bigger house or other things which are nice to have, they are not necessities and those expenditures undermine your plan. Paying your creditors extra is an nice idea, but it’s an extravagance, not a necessity. As long as you honor your original payment plan they will be content. Increasing your savings puts time on your side and benefits you more in the long run. Save the lion share of all pay increases.

Invest your savings.
Invest your money in things which increase in value and produce income. You work hard for your money, now make it work hard for you.

Guard your savings.
Invest in things you understand well, or seek advice from those with great experience in that area. Or invest upon the advice of a successful money lender. Always make sure those you lend provide security worth the value of the money lent. So you are assured of the return of your capitol. Otherwise if the venture fails your capitol representing years of hard work will be lost.

Avoid helping others in ways which their troubles become yours, as your friendship will be lost along with your capitol. Don’t inadvertently assume others debts or problems to help them because inevitably your assistance is under appreciated and resentment poisons your relationship.

Always remember that your savings or capitol represents years or time you can never get back, do enter every investment with caution and seek guarantees of return of capitol.

There were 12 chapters and twelve lessons about becoming rich in wealth, as well as character. The book was a pleasure to read, but a greater pleasure to listen to as an audio book. I recommend this book for its rare combination of ideas and plans. The ideas were easy to grasp and the plan clearly laid out and easy to follow.

Enjoy.
@shortsegments

Book Review: The Richest Man in Babylon

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