The Richest Man in Babylon summary

Welcome to the richest man in Babylon summary. This book is often presented as “The Bible of Financial Freedom”. George Clason shares here a set of timeless principles.

His goal is to give keys to “those who are ambitious and wish for financial success”.  This goal is easily achieved, thanks to a simple and effective narration.


the richest man in babylon summary


The man who desired gold

In the form of short stories, the book gives simple lessons that aim to show the secrets of wealth. Wealth creation secrets are immutable and remain applicable throughout history.

The common theme of these stories is that a person can work hard, learn from their mistakes and become rich.

In this book, you will find the fundamental principles that are at the basis of money management.

The first lesson comes from Arkad, the richest man in Babylon.

The seven remedies for a thin purse

As part of the king’s legacy, Arkad shares his “Seven Remedies for a Thin Purse” so that individuals and society as a whole will be able to reap the benefits of his experience.

THE FIRST CURE. Start your purse to fattening

This is in fact the central point of the book: the classic principle of pay yourself first.

Clason recommends saving at least 10% of all earned income.

Even in an example of debt repayment, he always recommends saving 10%.

THE SECOND CURE. Control your expenditures

It’s all about learning to live within your means and avoiding lifestyle inflation.

Clason believes that lifestyle inflation is an “immutable truth” of humanity and states that “what each of us calls our ‘necessary expenses'”….

THE THIRD CURE. Make your gold multiply

Your wealth must extend beyond your income.

Make your money work by making smart investments and by taking advantage of time and compound interest.

THE FOURTH CURE. Guard your treasures from loss

Here, the book encourages protection from loss. Most of us believe that investments that have the potential to lose value, like stocks, are essential elements of a balanced portfolio.

The level of risk is the potential for loss.

Analyze in depth and understand the risks in your portfolio.

THE FIFTH CURE: Make your home a profitable investment

Clason’s argument is that it makes more sense to make payments that will eventually become equity rather than giving money to a landlord.

This is a very well-known and widespread argument: it is better to pay back the bank and become a homeowner in the end, than to pay rent indefinitely.

THE SIXTH CURE. Insure a future income

Take the time to plan for your retirement and think about insuring yourself against loss from a life accident that could ruin you.

THE SEVENTH CURE. Increase your ability to earn money

Position yourself to earn more money by improving your skills.

Train, take courses, take jobs on the side;

Whatever you choose, set specific and measurable performance goals and start working to earn more money now.

The Richest Man in Babylon summary: The five laws of Gold

The other main lesson in the book is the “Five Laws of Gold” that Arkad teaches his son.

The first three laws

The first three laws are about how to create wealth.

These laws require that one must first pay oneself, invest one’s money well, and then one must be able to earn more money and to make informed investment decisions (with knowledge of the risks).

The other two laws

The other two laws describe the means by which money and wealth will be lost.

They include avoiding investments we don’t know about, and not to trust our “romantic desires” when it comes to investments.

Overly complicated portfolios are likely to fail. Sexy investment strategies don’t win, because it is the investments that are often the least understood and the most risky.

The rest of the book is full of lessons and reflections.

Choose wisdom over money.

Borrow wisely, because the unintelligent use of debt will undoubtedly become a burden later on.

Bring good luck by working hard and accepting opportunities,

and not waiting for punctual successes.

“Where there is determination, there is luck”.

Commit yourself, keep up your efforts and enjoy your successes.

George S. Clason explains the keys to investing well in order to achieve financial independence. Here is how you can apply these keys to your personal finances:

1. Learn more to prosper more

Everything starts with learning. Whether it is in investment, sports, food, meditation, etc., it’s all about learning. In order to do things well, you have to start by learning first.

Tony Robbins also insists a lot on this, one of his sentences is the following: “If you want something, make it a study!”

Learning can take the form of reading a book, attending seminars or training courses, or even discussions with experts in the field. All of this will save you a lot of time and can also save you from making “beginner’s” mistakes.

2. Save 10% of your salary

Whether it is “The richest man in Babylon” or “Rich Dad, poor Dad”, the idea of paying oneself first comes up all the time. Before starting to invest, one must first start by saving. Personally, I consider 10% to be a minimum, if you have a salary or income that allows you to put more than 10% while maintaining a good quality of life, do it.

3. Spend less than you earn

No need to explain this point as the title is quite telling. Having said that, pay attention to the fact that the more you earn, the more you spend. It’s very easy to fall into this trap.

4. Have a specific goal

You must have a specific goal to achieve. Investing for the sake of investing won’t get you very far. Wanting to become rich without a clear, quantified goal is the best way to avoid becoming rich. You need to be clear about your goal. Ask yourself these questions:

How much money do I want to reach?

What does the word “rich” mean to me? 50 000$, 100 000$, 1 million, 100 million, 1 billion?

By defining your goal you will achieve 2 things:

a) You will send clear signals to your brain which will start looking for solutions and strategies to implement to reach this clear and quantified objective.

b) You will avoid the trap of “the more you have, the more you want to have”.

Money is not an end in itself. It opens the doors to many things, but having money to have money doesn’t mean anything. Have clear goals and you will see that things will come together more easily.

5. Pay yourself first and then invest 10% of your earnings

It’s so simple and obvious, yet most people don’t do it. Invest 10% of your salary every month and then reinvest the earnings and so on. It doesn’t matter if your earnings are small or not, they’re going to be small at first but if you apply this method correctly, they’ll quickly become huge.

The mistake to avoid at all costs is spending your earnings. Otherwise, you’ll stay at the same point… it’s mathematical.

A safe investment with a low return is always better than nothing or a high-risk investment. Maybe you can invest in real estate because it is the safest investment and especially the one that allows you to become financially independent in a quasi-automatic way.

6. Make money your slave and not the opposite

Let’s be clear here, the idea is to escape from the classic scheme of exchanging time for money: basically, the idea of working in a company to get a salary at the end of the month. Having a fixed salary can be a good start to be able to save.

Make the money work for you and not the other way around. Tim Ferris’s book “The 4-Hour Work Week” is a great way to find out what strategy to implement.

7. Pay off your debts

Never go into debt to pay for your hobbies, a car or other liabilities. If you have borrowed to pay off a “liability”, pay off your debts first before you start investing.

The Richest Man in Babylon summary: Conclusion

This book is very relevant, although simple, and reminds us of the fundamentals of personal finance management.

In addition to inspiring new ideas, it gives concrete keys to building wealth and wealth.

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