Richest Man in Babylon

 The rischest man in Bablyon is one of my favourites to manage finances. Hi, This is salik and i am back with BooksBracket, today's book summary is "The Richest Man in Babylon"

Richest Man in Babylon:

A book written in 1920s tell modern investors about their finances’? a whole lot if it’s George clason delightful set of parables that explain the basic of money. This is a great gift for a graduate or anyone who seems baffled by the world of finance and a wonderful, refreshing read for even the most experienced investors.

                                                                                                                                  -Los Angeles Times

 

 This book dispenses financial advice through a collection of stories set 4,000 years ago in ancient Babylon. The book remains in print almost a century after the parables were originally published, and is regarded as a classic of personal financial advice.

These stories are told by fictional character called Arkad, a poor scribe who become the richest man in Babylon. We will show here only main points of this book.

the original 1926 book groups the parables into general themes of advice, and particularly "The Seven Cures" and the "Five Laws of Gold".

The Seven Cures of Lean Purse:

1.      Start the purse to fattening

2.      Control the expenditures

3.      Make the gold multiply

4.      Guard the treasures from loss

5.      Make of the dwelling a profitable investment

6.      Insure the future income

7.      Increase the ability to earn

 

Start the purse to fattening:

In this point author says that everyone should save 10% of his income every month. This is first step towards the cure for your lean purse. As per book “For every ten coins thou placest within thy purse take out for use but nine. Thy purse will start to fatten at once and its increasing weight will feel good in thy hand and bring satisfaction to thy soul".

Control the expenditures:

Author says in order to save 10% one should control the expenses. It is this “what each of us calls ‘necessary expenses’ will always grow to equal our incomes unless we protest the contrary”. To control the expenses, write down each thing for which you want to spend. Select those are necessary and others that are possible through the 90% of income. Cross out the rest and consider them the sacrifice for biggest desires. By this way everyone can save 90%

 

Make Gold Multiply:

“This, then is the third cure of lean purse: to put each coin to laboring that it may reproduce its kind even as the flocks of the field and help bring to thee income, a stream of wealth that shall flow constantly into thy purse”

Arkad advises to invest and to compound the investment return from these savings: "The earnings it will make shall build our fortunes ... Learn to make your treasure work for you. Make it your slave. Make its children and its children's children work for you.

Guard the treasure from loss:

“Guard thy treasure from loss by investing only where thy principle is safe, where it may be reclaimed if desirable and where thou will not fail to collect fair rental. Consult with wise men, Secure the advice of those experienced in the profitable handling of Gold. Let their wisdom protect the treasure from unsafe investments.”

Arkad advices to compound the investments of this savings but take advice from wise men. Don’t give your money to cloth trader to trade for jewels it will give you loss. So, invest your money wisely and take advice of those who are experienced.

Make of the dwelling a profitable investment

Arkad advises buying versus renting your principal residence, and to use your residence to establish a business: "I recommend that every man own the roof that sheltered him and his", and, "Nor is it beyond the ability of any well-intentioned man to own his home".

Insure the future income:

“It behooves a man to make preparation for suitable income in the days to come, when he is no longer young, and to make preparations for his family should be no longer with the to comfort and support them.”

Arkad advises to have a future income or pension plan that can serve you when you are retired, he says “no man can afford not to ensure a treasure for his old age and protection of his family, no matter how prosperous his business and his investments may be”

Increase the ability to earn:

“Thus, the seventh and last remedy for lean purse is to cultivate thy own powers, to study and become wiser, to become more skillful, to so act as respect thyself”

Arkad gives last advise to learn till the end. To be more skillful every day and increase your wisdom and ability to earn.

 

After seven cures arkad told the secret about good luck in chapter “MEET THE GODESS OF GOODLUCK”. He says “in order to attract Goodluck to oneself, it is necessary to take the advantage of opportunity. Men of action are favored by goddess of Goodluck”

In order to be Goodluck you have to be the man of action.

Five Laws of Gold:

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

2.      Gold labored diligently and contentedly for the wise owner who finds for its profitable employment, multiplying even as the flocks of the field.

3.      Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.

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.

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 in investment.

 

Afterwards Arkad gives a secret of becoming rich for anyone. He tells story of himself that once he was very poor and had very high debt. And he was always running away for the lenders. but one day one lender caught him and he told him a secret, he says he should face his lenders and talk to them and tell them that he will return their loans in this timeframe. And after this advice he started to work, he saved 20% every month, 10% he returns loans and 10% he saved and invested. In 3 years of time, he has returned all of his loans and he was having a wealth in investment. And afterwards compounding effect take care of his money and now he is the richest man in Babylon.

 

This book gives a good advice to how to manage your finances and how to keep money buildup.

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