Dear daughter,
Today I want to write to you about an awesome book that was published for the first time in the 1920s: The richest man in Babylon by George S. Clason.
The author of this book shares the “secrets” of financial success as a story. Interesting enough, these “secrets” are evergreen. What some call secrets I’ll call principles. If you follow them, you will achieve everything you want to achieve in life.
Let me start with some statements the author made:
- “Money makes possible the enjoyment of the best the earth affords.”
- “Money is plentiful for those who understand the simple laws which govern its acquisition.”
- “Money is governed today by the same laws which controlled it when prosperous men thronged the streets of Babylon, six thousand years ago.”
Let me clarify something here because you are seeing the word money a lot, and you will keep seeing it throughout this summary, it does not mean that it is all about money. Remember the myth about money? This is about having freedom, financial freedom. This will allow you to do what you want to do, where you want to do it, and with whom you want to do it.
On the first pages of the book, you can find a summary of the whole book:
“MONEY IS PLENTIFUL FOR THOSE WHO UNDERSTAND THE SIMPLE RULES OF ITS ACQUISITION”
- Start thy purse to fattening
- Control thy expenditures
- Make thy gold multiply
- Guard thy treasures from loss
- Make of thy dwelling a profitable investment
- Insure a future income
- Increase thy ability to earn
Even though I’m tempted to add a comment after each of the previous points to letters I wrote to you before, I won’t do it. I’ll explain how this is somehow the same I’ve been writing to you with the examples in the book.
The Man Who Desired Gold
This is the first chapter of the book.
One of the characters talks about a dream he had. He said it should be a torment coming from the gods. The guy dreamed he was rich, he was giving money to the beggars, bought things for his wife, etc.
The guy was so “tormented” by that dream, that he was sitting and thinking, instead of doing the job he had to do. He was tormented because he had no money even though he worked very hard. This story is a nowadays story, many people share this story daily. Some act the same way as the character in the book, some don’t.
In a dialog, the main character asks his friend: “Why cannot we acquire silver and gold more than enough for food and robes?”
He had many questions, but no answers.
He wanted to be more successful, financially speaking, be he didn’t know how to achieve that goal.
The two friends spent time talking about their lives, how the money they earn was “disappearing” and, most of the time, they had nothing in their purses.
After a long conversation, they started asking themselves if they could find out the secret to having money from those who knew it, from those who always have money. Then they started talking about his old friend, who happens to be the richest man in Babylon.
After many thoughts and a long conversation, they decided to go to the old friend, that knows the secrets to make money, and ask for his advice.
As to here, you can see the first advice, principle, and law. Ask those who already achieved what you want to achieve, also known as getting a mentor. As rich dad, and many others, say in his book Cashflow quadrants.
The Richest Man in Babylon
In the second chapter, the two characters I mentioned before, go to meet the richest man in Babylon.
This guy was known for being generous to everyone. He will give money to charity, his family, beggars, etc. Still, his fortune will grow every year. It seems to me that this guy truly knew the secrets of making and keeping money.
The author gives us at the beginning of this chapter great insight. He mentions that some friends come to the riches guy and will tell him how fortunate he is, that he is rich and can afford everything he wants. Then, the friends use to say, but we are struggling.
They also said this:
“Yet, once we were equal. We studied under the same master. We played in the same games. And in neither the studies nor the games did you outshine us. And in the years since, you have been no more an honourable citizen than we.”
Can you see the message? If they were equal, grew up doing the same, learning the same, why there is such a difference, financially speaking, among them?
Here is the answer from the wealthy man.
“If you have not acquired more than a bare existence in the years since we were youths, it is because you either have failed to learn the laws that govern the building of wealth, or else you do not observe them.”
What a great lesson. I’ll add here that in everything we do, like in nature, there are laws. Some of them are obvious, some not.
A funny thing with laws and principles, is they don’t care about you. It does not mean anything to the law if you don’t know it. In the end, the law will be applied.
Just to give you an example. Let’s say some do not know the law of physics related to the gravity of the earth and the weight of objects on the earth. This person walks out of the roof of a 16-story building. What do you think will happen? The person will fall very hard. It doesn’t matter that the person doesn’t know the law of physics that will make him/her fall.
The same happens in our financial lives. The laws of wealth creation don’t care if we know them or not. They just apply to all of us.
Sometimes I hear ignorance is a blessing. Well, as you can see, it is not. Better to be educated than ignorant.
Now, the richest man started to tell the story of how he learned the secrets of wealth creation.
He took two steps. First, he learned all he could, he became educated in something. Then, he asked someone who was already wealthy. Again, he was telling the story, to those who asked him, how he asked someone else.
As you can see, we all need to learn from someone else. Interestingly, the same principles apply now, about a century later than when this story was written.
Here is what the wealthy old man answers to the know richest man in Babylon:
“I found the road to wealth when I decided that a part of all I earned was mine to keep. And so will you.”
This one is the first rule of money acquisition: “Start thy purse to fattening”
And he continues by saying that decision “was enough to change the heart of a sheep herder into the heart of a money lender.”
What a great thought. You find this thought over and over again. In rich dad poor dad book, and others, you will read it as pay yourself first.
This is what I mentioned to you in some of my previous letters. Pay yourself first. But don’t get confused. This money is not for you to spend, it is for you to invest. As the rich old man from this story will say: “every gold piece you save is a slave to work for you”.
So, the first thing is to pay ourselves first and invest that money, so it works for us, instead of us working for the money.
So, how much should you pay yourself before you start spending? The story of this book tells us that it should be no less than 10%. So, starting with 10% should be a good starting point.
How do you know that you won’t need later the 10% you saved to spend on food or anything else? Easy, make a budget and stick to it.
This advice is also in the book “The total money makeover by Dave Ramsey“, he just advises investing 15% instead of 10%.
This one is the second rule of money acquisition: “Control thy expenditures”.
Seven Cures for a Lean Purse
In this chapter, the richest man in Babylon should explain to everyone in the city how to become wealthy.
This was a request from the king. The king wanted Babylon to be a prosperous city. Then, he understood that for that to happen, there should be many wealthy people, not just a few. After he asked the richest man in Babylon how this can be done, he got his answer: every skill is teachable.
So, in the explanation to everyone how to be wealthy, the richest man explained the seven cures for a lean purse:
- Start thy purse to fattening
- Control thy expenditures
- Make thy gold multiply
- Guard thy treasures from loss
- Make of thy dwelling a profitable investment
- Insure a future income
- Increase thy ability to earn
Dear daughter, I cannot tell how fulfilling is reading this book. Everything is so well explained, and so simple, that even a child can follow the advice in this book.
There are several more chapters in this book, each of them giving insight on how, even a slave became rich, step by step, working hard every day and learning how money works. It also shows how someone lost money because he didn’t follow a simple principle, something that can happen to us easily.
I encourage you to read the book as I cannot give you the same feeling with my own words as the feeling I get when I read the book. Which I read two times, and soon a third time will come.
Love you, Dad.
I share the letters I write to my daughter so more people can benefit from them. If you want to buy this book, you can check it out on Amazon using this link.