Referred to as the ”Financial Freedom Bible”, Richest Man in Babylon is indeed one of the greatest financial lessons books any individual can ever read in their lifetime. It is creatively depicted as a series of short stories, teaching direct lessons whose purpose is to show that the secrets to building wealth which are basically unchanging and remain the same throughout history. The one theme that cuts across all tales is that a person can indeed work hard and become wealthy while learning from everything that goes wrong.
The story is about Arkad, the supposed richest man in Babylon. Upon the King’s request, Arkad teaches his “seven cures to a lean purse” to individuals and society as a whole so that it can reap the benefits of what he has learned in his wealth-building journey.
Here are Arkad’s seven principles for wealth creation:
Start to fatten thy purse. (Saving)
This is actually the ignition key of the wealth-building journey. The classic principle of paying yourself first from your earnings. Clason, through Arkad, encourages paying yourself at least 10% of all the income that you earn. Even for those who are paying off debt, he still encourages setting aside this one-tenth from what you earn all for yourself. You can’t possibly be working but then spend all your fortunes paying other individuals and ignoring yourself.
Control thy expenditures. (Live below your means)
Basically, Clarson here teaches us the importance of living below your means and avoiding lifestyle inflation if you are ever to accumulate wealth. Arkad famously says to his students ‘”I say to you that just as weeds grow in a field wherever the farmer leaves space for their roots, even so freely do desires grow in men whenever there is a possibility of their being gratified. Thy desires are a multitude and those that thou mayest gratify are but few.‘
Make thy gold multiply. (Invest)
Your wealth streams have to extend beyond your income if you are ever to become financially stable. Put your money to work by making smart investments that pay off in a stable and consistent way. Also, take advantage of time and compounding interest when saving to ensure your money does not sit idly without growth.
Guard thy treasures from loss. (Protect your money from unsound investments)
Here, Arkad encourages the protection of your principle savings from loss. In as much as an investment such as stocks is a risk as prices may fall, it is very vital to make sound investment decisions backed by professionals and those with experience to protect you from loss. It is better to have little profits than have a larger risk that could potentially sink your entire amount. You know, those too good to be true deals!
Make of thy dwelling a profitable investment. (Own a home)
Clarson declares here that it makes more sense to make payments that will eventually become equity in terms of owning a home rather than giving money to a landlord. Though this point is debatable, this is one of those instances where Arkad’s argument makes perfect sense; for it is beautiful to pay towards owning rather than just paying to stay.
Insure a future income.
This is basically having a plan for retirement, insurance, and having enough for the tough days. It is very vital, according to Arkad, that you have enough wealth accumulated to sustain you and your family during the tougher days or just in case you cross over into the darkness (die)
Increase thy ability to earn.
Ensure you always find ways to make more money by improving your skillet thereby yourself more valuable even to employers. Go for classes, train yourself, take side jobs; whatever you can, set SMART performance goals, and start working to earn more money as soon as possible.
A beautiful book for anyone who desires to break away from the shackles of financial slavery.