The Richest Man in Babylon – Part 3
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The Richest Many in Babylon by George S. Clason
This is by far my favorite book on money. I love how the author writes in Shakespearian English and tells stories to illustrate his points. There have been many reviews of this book since it was first printed back in 1926! I do want to share my different take and perspective on it and include it in my book series.
This book is for those seeking to better their financial position. It won’t provide the reader any specific ideas on what companies to invest in or what budgeting software to use. The author does give easy-to-handle rules and guidelines to follow in a general sense that still hold true almost 100 years later!
This is the third post in the review series of the book where I will go over the lessons that can be gained from the stories of specific individuals who lived in Babylon. Before you read this review, I highly recommend you start with the first post and the second post in this book review series.
The rest of this book gives great lessons and applications of the guidelines and laws described in the previous posts in this series. They illustrate the time-value of money, how important insurance is, why you shouldn’t fail due to lack of effort because hard work takes no skill and how even the most knowledgeable people can still learn about personal finance.
The Gold Lender of Babylon
Better a little caution than a great regret
This is a fun story about a spearmaker who happened to be rewarded for his hard work with 50 pieces of gold, above what he expected his total payment would be. This unforeseen event was a great surprise to the spearmaker and he did not know what to do with the extra gold.
I am beseeched each hour the sun doth travel across the sky by those who would share it with me.
This could be the same as receiving a bonus at work, finally getting a payout for your startup, or hitting the lottery. Once people know you have money, they will come asking for some of it because they know you have so much. This is one reason I like the stealth wealth philosophy.
The spearmaker consults with a gold lender who retails him of stories about all of the people he has lent money to. The gold lender talks about those that have paid him back, those that haven’t paid him back, and why each group of people have/haven’t.
If they borrow for purposes that bring money back to them, I find it so. But if they borrow because of their indiscretions, I warn thee to be cautious if thou wouldst ever have thy gold back in hand again.
Then the gold lender helped the spearmaker calculate his yearly savings and compared it to the 50 pieces of gold he just received. This comparison is a critical realization as it puts into perspective how long it would take to make back those 50 pieces of gold if he were to lose it. That would be to just get back to where he is today.
Each year that thou hast labored thou has denied thyself good things to save from thine earnings one piece of gold?… Then mightiest save in fifty years of labor fifty pieces of gold by thy self-denial?
The time-value of money calculation is easy for us to do in today’s world. How much is your hourly wage? That is how much your employer values your time. If you would like to do another activity other than your job, you need to make sure you can make just as much if not more than your hourly wage.
The Walls of Babylon
We cannot afford to be without adequate protection
This is a short story about how the first thing the king did was build a wall around the innermost part of the city, then a bigger wall, then an even bigger wall around the entire city. The stories tell us that Babylon was known for its giant walls that were never penetrated.
This is the old form of insurance. How else could a king in those times protect his city and his people? In those times people built fences and hired guards to watch their homes. All in the name of protection for their safety and for their riches. The lesson here is to make sure to have the correct level of insurance for what you plan on protecting.
The Camel Trader of Babylon
Where the determination is, the way can be found
This is an interesting story about a man who could not repay his debts. He overindulged and spent more than he made. Eventually, it caught up to him and he had to flee the city and became a slave because of his financial troubles.
The story talks about he had a change of heart and realized his mistakes. He also realized the steep climb he had to make if he ever wanted to be a respected man again in Babylon. Ultimately, he escaped from slavery and found work but could not repay all of his debts at once.
He went to each debtor and asked about a payment plan. They agreed and by the end, he was able to pay them all back and have enough money saved to win back his wife who had left him. He wrote each of his debts down on clay tablets and kept track of each piece of money that came in and out.
This story is a tougher read than the others because it drags on a bit and continues into the next chapter but can be summed up into one simple lesson: if you can’t control your impulses, keep a budget.
When I was just starting out in my financial journey, I kept extremely detailed budgets that broke my expenses out into categories and marked every transaction down to the dollar. This was helpful to teach me the basics and learn how quickly money can leave my bank account. Now I use Personal Capital to keep track of everything since I have learned how to control my emotions and do not need an exhaustive budget anymore.
The Luckiest Man in Babylon
Find pleasure in hard work
This last story is one of my favorites. It also talks about a man who was sold into slavery because he got into a fight protecting his brother. He then was sold to a baker where he learned how to bake cakes. Not only did he bake enough for the store, but, in his free time, he baked extra that he sold by walking the streets.
His master agreed to split the sales of the extra cakes and this slave started acquiring his own money. Over time he began to do quite well and the extra money made his master richer.
Some men hate it. They 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.
The slave continues and eventually buys his freedom with the help of another slave. This thought process shows how hard work pays off. If most people don’t like to do the hard work and you make yourself enjoy it, then you have set yourself up for success.
There is a reason hard work is hard and why people don’t want to do it. Don’t expect it to be easy for you if others have struggled but try to enjoy the struggle. Doing that will make the work your friend and people will come to you to solve your problems.
There is a reason that this book has been and will continue to be so popular. Actually, there are many reasons and I’ve only pointed out some of them in these posts. Even if you have read it before, the lessons packed into this 144-page book are impactful and life-changing.
