In 1926, George Clason published a series of 8 parables set in the ancient city of Babylon, which later became this classic financial literature. This edition of the book is updated in modern English. In this summary of The Richest Man in Babylon, we’ll give an overview of 8 timeless principles and tips on wealth gleaned from the stories. These are still applicable after almost a century, and can be used by anyone to build massive wealth and riches.
In our complete book summary bundle, we’ll also provide an outline of the 8 parables, with more details of these finance and wealth tips. For the full fables do get a copy of the book.
Most of the parables centre around Arkad, the richest man in Babylon, and his teachings. Despite spending liberally and giving generously to charity, Arkad seemed to have an endless amount of gold and his wealth kept growing.
Each of the 8 stories helps to explain and reinforce the key wealth principles that he adopted, and how others could likewise apply them. We’ve consolidated the insights from the fables into 8 key tips or financial principles. Here’s a quick overview. Do get more details from our full version of The Richest Man in Babylon summary [get full 11-page book summary here.]
The Richest Man in Babylon: Key Lessons
These tips are inter-related and work together to build your financial wisdom. We have also added references to modern-day financial terms and concepts.
Pay Yourself First
No matter how much or how little you earn, set aside at least 10% of your earnings, before you spend on anything else.
Live within your means
If you pay yourself at least 10% of what you earn, it means you must control your expenses and spend 90% or less of your income.
Make your money work for you
The principles above help you to accumulate funds that you can invest. Every dollar invested is like a worker who works tireless for you. Invest your savings, and also the returns from those savings, to build an army of workers earning money for you.
Protect your Wealth
It’s easy to lose your hard-earned money to poor investments, swindlers, or misfortune. Get advice only from people who have successfully saved and built their wealth. Ensure your capital is protected, the returns are reasonable, and you can reclaim both principle and interest safely. In complete version of The Richest Man in Babylon summary (click here for full summary), we cover (a) several rules you must observe to protect your wealth and assets, and (b) safeguards and factors to consider when evaluating if you should offer a loan or invest.
Make your home a profitable investment
Rather than pay their landlord a high rent every month, it’s better to pay a monthly mortgage and own a home that you can be proud of at the end of several years.
Secure your future income
Plan in advance for unforeseen circumstances, e.g. death or the inability to work, by leveraging on compounding and insurance/investment options.
Invest in yourself
Increase your wealth by improving your earning ability. In full summary, we touch on what it takes to increase your earning capacity, and how you can concurrently pay off your debts and build wealth, no matter how bad your current financial circumstances.
Get luck on your side
Luck = Preparation + Action. Opportunity waits for no man; the points above will help you to be prepared, so you can act decisively when opportunities surface.
Other Details in The Richest Man in Babylon
Wealth is like a tree, which grows slowly from a seed. The key is to plant the seed as early as possible, and then water/nourish it regularly.
Wealth is also an infinite resource, and can multiply to benefit everyone. For example, when you spend money to build an office building, the money you have invested is not lost. The building is valuable and can be rented, used, or sold for a profit. The same money spent on the building also benefits the building contractors, materials seller, and workers, to allow them to buy things or invest. The same dollar can touch an unlimited number of people.
By learning, applying and sharing these financial principles, you can grow your personal wealth as well as that of others around you. Do get a copy of the book for the full details, get our The Richest Man In Babylon summary bundle for an overview of the stories, ideas and tips.
Learn timeless financial principles to create, build and protect your wealth!