The Richest Man in Babylon by George S. Clayson is one of the greatest personal finance books I have ever read, and i am glad to share this knowledge with all my readers. Should we follow the rules outlined in this book it will have a great positive impact on our lives and the lives of our generation and economy as a whole, as the number of awareness increases.
The book is about a man called Arkad, who was the richest man in Babylon during his time. This man was once a poor man who worked as a scribe and laboured daily on clay tablets, and in the book he talks about how he became the richest man, the ideology he developed, and how possible it is for everyone no matter the background to become rich. This man taught the citizens of Babylon these lessons and his life experiences, and through that there were more rich men thereafter and Babylon became the one of the wealthiest cities.
Keep these great phrases at the back of your mind:
“A Part of All I Earn Is Mine To Keep”
This phrase simply means that as employees, business owners, freelancers, or even students, a portion of every money you earn is yours to keep. Being yours to keep means it is money you have to save aside for your purse, for your wealth’s sake. The standard advised is saving 10% of every money you earn first, before budgeting and spending the remaining 90% of the earnings.
Some people may argue saying that “what I’m getting is not even satisfactory, how do i reduce it?”. And this was also addressed by Arkad. When you deduct 10% off your earnings, it is hardly recognizable if you put your mind to it. As humans our needs grow as our incomes grow, and we always adjust to increase in earnings and suddenly feel we cannot live without the exact amount and that is not true. Someone earning ghs1000 will say their money is exactly what he feeds himself and family with. Someone with ghs500 will also say the same thing, and so is another person earning ghs10,000. Increase these salaries to ghs1000, ghs1500, and ghs15,000 respectively, and these same individuals will quickly adjust their lifestyles to the increase in earnings, and can still not save because the money finishes after feeding and clothing.
To be able to save this minimum of 10%, make sure you deduct this amount from your earnings first thing before you begin to make any plans with your earnings. Gradually, if it is 50ghs you saved, in a year you will have 600ghs. It may not look enough to some people but mind you, it is better than having nothing in your “purse” or what I call your “wealth account”.
The next point is to invest this money to make it work for you, and this is what a finance person like myself will call “investment”. Invest the money in your “wealth account” and let this money also earn more money for you.
“Where The Determination Is, The Way Can Be Found”
This point is quite straightforward, once you are determined and you put your mind to it, you can achieve anything you want to in life. When you read the book you will realize that it is determination that made Arkad take the first step to acquire knowledge on wealth making. In his first year he lost all he had made from savings because he trusted the advice of the wrong person who was not an expert in making money. This first blow could be a setback for a lot of people, but he was still determined that since he had made up his mind to make wealth for himself and family, nothing could stop him…and nothing did.
The Five (5) Laws of Gold
Arkad, the then richest man in Babylon, outlined what he called “The Five Laws of Gold”, and these are the rules I want all readers to take note of and make a part of our lives as well. It refers to Gold since at their time buying and selling was done using silver, copper, and gold, for which we now use paper money and coin money.
1. 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. This is an emphasis on the point that “a part of all you earn is yours to keep”. He advises that we always save for our future and for our family when we are no more a part of this world.
2. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field. When you are able to gather a minimum of 10% of your earnings in your wealth account, the next step is to find a profitable investment for this money. He refers to this as employment because once you invest your money, the money makes more money due to rise in interest rates, capital gains, etc. and this is how you employ the sums of 10% money to work for you.
3. Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling. In the book Arkad spoke of his first investment after his first one year savings where he gave his money to the wrong person to buy jewelery for him, so they could sell and make profit. This person brought nothing but pieces of glass to him, throwing away his money. The lesson from the story is that in investing you have to make sure you accept advice only from experts or people with experience in wealth making, and do not rely on the hearsay of friends or the public.
4. 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. Stemming from the previous point, this point means that you should only invest in investments that you are familiar with or investments you completely understand, no matter how small the returns. He advises that we make sure not to lose the principal and so we can make satisfactory returns.
5. 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 to investment. This means that when we follow mere hearsay and the noise of people because we seek some fast wealth, we are prone to fall into the hands of tricksters who will take advantage of our inexperience and we will lose all our money. According to him keeping such practices will cause you to always have an empty purse because money always leaves you due to the way you handle your savings.
By Jill Boafo
Thanks for reading this blog to the end, I hope that you will keep these rules and lessons with you. Comments are of course always welcome. Good luck and see you in my next blog.