Hi, my name is Earl, and welcome to Earl’s Library.
Today I am sharing the lessons I took away from my recent reading of the book “The Richest Man In Babylon” by George Clason.
I was fortunate enough to receive this book as a Christmas gift from My Daughter Madison. It turned out to be the final book I read for 2019. I must say, it was a great way to finish off my reading list for the year!
The particular version of the book she give me also included “The Magic Story” by Frederick Van Rensselaer Dey, so it was a double feature! Let me tell you about both stories…
The Richest Man In Babylon
The book begins with a little history of Babylon to frame the stories told about some of the people who lived there. From there it tells us about Bansir, the chariot builder and his best friend Kobbi, the musician. Both of these men are skilled in their trade yet both are barely earning enough to survive in what was the most wealthy city at the time. They lament their situation and discuss what they might do to rectify it. Ultimately, they decide to speak to their old acquaintance Arkad who is the richest man in Babylon. They plan to ask him how he has come to be so rich. One of the insights that they have while forming their plan is this:
“A man’s wealth is not in the purse he carries. A fat purse quickly empties if there is no golden stream to refill it.”
That means that wealth is not a one time thing, like winning the lotto, but requires having continuous incoming cash flow from things like investments and royalties.
When Bansir and Kobbi meet with Arkad, they realize that all three of them started out with the same resources and limitations. Basically saying that the environment and opportunities they experienced were all basically the same. It was what they did with their opportunities that made all the difference.
One thing that I noticed in the stories is that in all cases, the difference between those who became rich, and those who remained poor is that those who became rich started with a decision to do so.
“I decided to myself that I would claim my share of the good things in life.” -Arkad
Arkad realized early on in his life that he needed two things to become rich: time and study. Everyone has the same time to work with, so the distinguishing factor is study. We all have the same 24 hours a day. How we spend those 24 hours makes all the difference. Arkad took a job as a scribe to have the opportunity to learn.
One day the money lender Algamish came to have tablets duplicated and Arkad was assigned the task. Arkad struck a deal with Algamish to get the tablets ready quickly in exchange for lessons on how to become wealthy. The first lesson was this
“I found the road to wealth when I decided that a part of all I earned was mine to keep.” -Algamish
Again, notice that Algamish “decided”.
Algamish goes on to point out that that while we think all we earn is ours to keep, it is not actually the case. We pay everyone but ourselves. We give a portion of what we earn for our lodging, for our clothes, for our food, for taxes, etc. If we review all that we are spending our income on, well see that there is none left over for us to keep. We do not pay ourselves first, and that is why we are not wealthy.
Algamish teaches Arkad that he needs to set aside the first 10 percent of his income (at least), to be put to work to grow his fortune. He should be investing the first 10 percent of his income.
“A part of all you earn is yours to keep. It should be not less than a tenth no matter how little you earn. It can be as much more as you can afford.” -Algamish
He further teaches Arkad that all of the proceeds, or “the children of his investments” need to be reinvested so they too can work for you. This creates compound returns.
The next big lesson that Algamish teaches Arkad comes after Arkad loses all of the money he set aside for a year. Arkad made an investment that turned out to be bad.
“He who takes advice about his savings from one who is inexperienced in such matters, shall pay with his savings for proving the falsity of their opinions.” -Algamish
Algamish is advising Arkad to make smart investments. Do not invest in gems with a brick maker. If you want to invest in bread, do so with a baker, if you want to invest in sheep, do so with a herdsman, etc.
After sharing the lessons learned from Algamish, Arkad advises his friends to take the wisdom of Algamish and say to yourselves ‘A part of all I earn is mine to keep.’ Say that in the morning, at noon, and at night, repeat it every hour of every day until the words stand out like letters of fire across the sky. He then reminds them to invest wisely:
“Therefore invest thy treasure with greatest caution that it be not lost. Usurious rates of return are deceitful sirens that sing but to lure the unwary upon the rocks of loss and remorse.” -Arkad
“The Richest Man In Babylon” continues to impart this wisdom with the stories of several other people who lived in Babylon. It also talks about the “Cures for a lean purse”, “The Goddess of good luck”, “The five laws of gold”.
Additional lessons teach that “Better a little caution than a great regret” and “We cannon afford to be without adequate protection“. This reminds us to prepare for our future, prepare for retirement, and protect our families in case we are taken from life early.
To summarize the lessons I learned from “The Richest Man in Babylon”:
- A part of all you earn is yours to keep – set aside the first 10 percent or more of your income. Learn to live on the remaining portion by cutting the fat and waste from your spending
- Invest you money and reinvest the proceeds to create compounding to grow your fortune
- Choose your investments wisely – avoid the get rich quick schemes and make sure your investments are secure to minimize your risk. Learn about what you plan to invest in, or be sure that the person you get advice from is an expert in that type of investment
- Prepare for your retirement, knowing that there will come a time when your earning potential will fade.
- Have insurance and other protections in place to make sure your family is going to be taken care of properly
- Begin where you are
“Action will lead thee forward to the successes thou dost desire.” -Arkad
The Magic Story
“The Magic Story” details the contents of a secret manuscript discovered by a man named Sturtevant. The simple act of reading the story in the manuscript transforms Sturtevant from a man down on his luck, with little resources and hope for improvement into a man with direction, purpose and limitless opportunities.
“The Magic Story” recounts how Sturtevant, transformed by the magic story, tries to share it with is friend Mr. Currier on several occasions but is interrupted each time. Mr. Currier who is also struggling financially is very eager to hear the story that has completely changed Sturtevant.
Over the course of a few months, Currier crosses paths with others who, having heard the magic story from Sturtevant and are likewise transformed into successful men. Finally, almost in a fit of desperation, Currier demands that Sturtevant share the story with him. Sturtevant, now so successful and busy, is again called away right at that moment. However this time he sends Currier to his apartment to find and read the manuscript on his own.
The short manuscript shares the story of a person who learned many important lessons throughout his life, but was still so down that he was considering ending it all. In his darkest moments he makes a discovery that totally transforms him into a person capable of living life at his full potential, and goes on to become very successful.
The lessons and discovery are transformation, but if you want to know what the magic story says, you are going to have to read the book yourself!
Here’s a link to get it on Amazon: https://amzn.to/36KmMmR. I can tell you it will be $6 well spent.
Until next time, have a Superfantastic day!
-Earl
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