Book review: The Richest Man in Babylon
If there is a gold standard of personal finance…
if there is one book that I hear wealthy people recommend again and again to those who would aspire to wealth themselves…
it is The Richest Man in Babylon, by George S. Clason.
Published in 1926, way back during the “roaring 20s” boom, the book is an easy read: 151 pages, large print, and consisting of a series of short stories. All stories are set in the days of ancient Babylon of around 600 B.C. Several characters make appearances in multiple stories, giving it a flow of continuity. Best of all, it does not use any complicated financial, CPA lingo.
I cannot overstate how much of an impact this one little book has had on the formation of my priorities in life. There are very few moments in my life that I would consider to be game-changers. But I readily acknowledge this book as a game-changer, without hesitation.
Don’t worry, this review is generally spoiler-free, as far as the stories are concerned; you will thank me later for this, as they are good stories.
The first chapter is entitled, “The man who desired gold.” This sums up where it all begins: desire. You cannot become wealthy without having some kind of desire to be so. Even the non-capitalist technology entrepreneurs who became wealthy, such as Steve Wosniak and Craig Newmark, became extremely forceful when opportunity presented itself, and just as forceful when threat presented itself. So you have to have the desire, and this chapter represents the mindsets around that desire, very well.
The rock star of this book is named Arkad, reputed to be the wealthiest man in the world. Yet he treats both king and commoner, much the same: offering wise counsel, encouraging others with optimism, and facilitating a sense of community so that masses of people may benefit.
There are so many valuable lessons in this book that I cannot commentate on them all. However, here is a summary:
|Lesson:||Story or commentary:|
|Save 10% of all you earn.||Algamish, the mentor: "I found the road to wealth when I decided that a part of all I earn is mine to keep."
Arkad, the student: "But all I earn is mine to keep, is it not?"
Algamish: "Far from it. Do you not pay the garment-maker? Do you not pay for the things you eat? Can you live without spending? What have you to show for your earnings of the past month? What for the past year? Fool! You pay to everyone but yourself."
|Invest in profitable undertakings.||Several stories describe opportunities for sound investments and partnership through a friendship made while earning an honest living.|
|Avoid risky investments||"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."|
|Beware friends in need||Rodan, the benefactor of sudden wealth: "I am beseeched every hour the sun doth travel across the sky by those who would share it with me. To many I can say no, yet sometimes it would be easier to say yes."|
|Beware enemies||Today's equivalents are insurance, legal contracts and accounting: "We cannot afford to be without adequate protection."|
|Pay off your debts||Two chapters tell the story of Dabasir, a wealthy man who fell into poverty and slavery, and then fought to clear his own name. A great system for getting out of debt.|
|The virtue of work||"Some make it their enemy. Better to treat it like a friend, make thyself like it. Don't mind because it is hard. Remember, work, well-done, does good to the man who does it. It makes him a better man."|
If you can adhere to these seven principles during your life, you greatly increase the chances of being financially happy.
Impact on me
I first read this book in 2003, when I was living in a room in a basement of a house share. It took me four full evenings, and I think a Friday night until 3am, to finish this very small book.
It was so new to me, but yet so resonant. I had never felt real desire to accumulate money or riches, and I certainly treated other things in life as more important. However, from the moment I read the Arkad/Algamish exchange in the table above, I got it. That’s the only way I can put it… I understood the flow of slowly accumulating wealth over a long period of time, and the advantage of this approach over flaming in and burning out like a rock star. Starting that night… I got it. And ever since then, entrepreneurism has been my primary focus—it has become my new spirituality! Because I know what it is capable of doing for the world (another topic for another time).
To say that many books copy the principles and lessons from this book would be an understatement. In fact, every save-and-become-rich book is an almost exact regurgitation of one or more of these chapters. And while I like many of them, even the authors would have to admit that much of what they say is already represented in the original, all-time classic.
Of course, even The Richest Man in Babylon may be a rip-off of a book that was published in the 1800′s. Or of a clay tablet that was dug up from around 600 B.C. somewhere in the sand dunes of the Middle East…
I don’t particularly care for some of the newer editions coming out. They rearranged the order of chapters, edited phrasings that were just fine the way they were, and in come cases completely removed chapters that were of great value.
If you want to read this book right, then don’t buy any edition whose cover looks like an artist’s rendering of another solar system with multiple large planets in the sky, or the one containing a bunch of poorly-photoshopped $20 bills in front of a blue-green landscape. Keep it simple.
If you have trouble finding the edition I recommend, you can always find it here.
Ultimately it comes down to heart
A few chapters in The Richest Man in Babylon mention heart; dost thou have the heart of a moneylender, of a sheep-herder, of an entrepreneur, of a worker or of a slave? Because ultimately it does largely come down to heart.
So, the most important question to ask yourself is this:
Do you have the heart of a free person, or the heart of a slave?