Ever wonder how the ancient city of Babylon became the wealthiest of its time? And how would you like to learn from the richest man in that city? Today, we’re diving into ‘The Richest Man in Babylon’, a 1926 book by George Samuel Clason that dispenses financial advice through a collection of parables set 4,097 years earlier, in ancient Babylon. The book remains in print almost a century after these parables were originally published and is regarded as a classic of personal financial advice.

While the stories are fictional, the principles they teach are timeless and offer practical guidance on building wealth. So, what can we learn from these ancient parables?

Our story begins in Babylon, one of the wealthiest and most prosperous cities in ancient history. The central character, Arkad, is the richest man in Babylon. But Arkad wasn’t born rich—far from it. He started out as a humble scribe, earning just enough to get by. So, how did he become Babylon’s wealthiest citizen?

One day, Arkad realized that despite working hard and earning a decent wage, he wasn’t building any real wealth. Many of his friends were in the same boat—earning but never accumulating wealth. Frustrated, Arkad sought advice from a wealthy man in Babylon, who taught him the key principles of wealth-building. Arkad applied these lessons to his life, and over time, he transformed himself into the richest man in the city.

The lessons Arkad learned are known as The Seven Cures for a Lean Purse, a step-by-step guide to accumulating and managing wealth. These cures are simple yet powerful principles that anyone can apply to improve their financial situation.

What are these lessons, and how can they help us achieve financial freedom today? Let’s explore them.

The First Cure – Start Thy Purse to Fattening

The first lesson Arkad learned is that to build wealth, you must start thy purse to fattening. This old phrase simply means that you need to start saving money. Most people, when they receive their paycheck, immediately spend it on bills, food, and other expenses. By the end of the month, there’s nothing left to save.

Arkad advises that at least 10% of everything you earn should be set aside and saved. This money isn’t to be spent—it’s the foundation of your future wealth. As Arkad says, “A part of all you earn is yours to keep.” By paying yourself first, you ensure that you’ll have money to invest and grow.

This principle is just as true today. Whether you earn a little or a lot, always save at least 10% of your income. Over time, this consistency will lead to financial independence.

The Second Cure – Control Thy Expenditures

The second lesson Arkad learned is the importance of controlling thy expenditures, which in modern terms means living below your means. Many people believe they can’t save because their expenses are too high, but Arkad teaches that our desires are endless, and if we don’t control them, they’ll consume all of our income.

In ‘The Richest Man in Babylon’, Arkad points out that many people confuse their necessary expenses with their desires. Just because you want something doesn’t mean you need it. By distinguishing between necessities and desires, you can reduce unnecessary spending and save more.

Arkad’s advice is simple: create a budget and stick to it. Prioritize essential expenses but ensure you’re still saving at least 10%. This discipline will prevent lifestyle inflation, where your expenses rise as your income grows.

The Third Cure – Make Thy Gold Multiply

The third lesson is perhaps the most critical for growing wealth: make thy gold multiply, which means invest your savings wisely so they grow. Arkad learned early on that simply saving money isn’t enough—you have to put your savings to work by investing them.

In the book, Arkad gives the example of investing his saved gold with a skilled shield maker. The shield maker used the investment to buy materials, create more shields, and sell them at a profit. As the business grew, so did Arkad’s return on his investment. This is a clear illustration of how investing in ventures with growth potential allows your money to multiply over time.

In modern terms, this means putting your money into profitable investments like stocks, real estate, or businesses. The goal is to make your money work for you by generating returns, so it grows over time through the power of compounding. As Arkad wisely said, “Gold in a purse is gratifying to own but earns nothing.” You need to make your money work for you by investing it.

The Fourth Cure – Guard Thy Treasures from Loss

Once you’ve started accumulating wealth, the next lesson is to guard thy treasures from loss, which translates to protect your investments. Arkad learned this lesson the hard way after making a poor investment with a brickmaker. He entrusted his gold to the brickmaker, who promised to travel and buy jewels for a profitable sale. However, the brickmaker knew nothing about jewels, and Arkad lost his entire investment.

This story illustrates the danger of investing in areas you don’t fully understand or trusting people who aren’t skilled in the ventures they’re pursuing. Arkad realized that protecting his wealth meant seeking advice from those with experience and making well-informed decisions.

In the modern world, this lesson is equally relevant. There are countless investment opportunities, but without proper knowledge, you risk losing your hard-earned money. The key is to invest in ventures you understand and trust experts to guide you. Always protect your wealth by doing thorough research and avoiding risky or unwise ventures.

The Fifth Cure – Make of Thy Dwelling a Profitable Investment

Arkad’s fifth lesson is to make of thy dwelling a profitable investment, which means own your home. He explains that renting only enriches the landlord, while owning your own home reduces living expenses and allows you to build equity over time. By purchasing a home, you create a long-term investment that not only provides security but also contributes to your wealth as the value of the property increases.

In modern terms, this means looking for opportunities to buy a home when it’s financially feasible, ensuring that it’s an asset rather than a burden. The key takeaway is that your dwelling should not just be a place to live, but an investment that helps grow your wealth and reduces your financial obligations in the long run.

The Sixth Cure – Insure a Future Income

The sixth cure Arkad learned is to insure a future income, which means planning for your future and ensuring you’ll have income even when you’re no longer working. Arkad advises that once you have wealth, you should invest it in ways that will provide steady income even in old age.

In today’s world, this might involve creating passive income streams through investments, rental properties, or retirement accounts. The idea is to build income sources that don’t rely on your direct labor, so you can enjoy financial security in the future.

The Seventh Cure – Increase Thy Ability to Earn

Finally, the seventh cure Arkad teaches is to increase thy ability to earn, which means to continually improve your skills and knowledge to increase your earning potential. Arkad recognized that education and self-improvement are key to financial success.

In ancient Babylon, Arkad continued to learn and improve his financial literacy, allowing him to spot new opportunities. Today, this means acquiring new skills, certifications, or learning more about finance and investing. Investing in yourself is one of the best ways to increase your earning potential and build lasting wealth.

The Five Laws of Gold

In addition to the seven cures, Arkad shares The Five Laws of Gold, which further emphasize the rules of wealth:

1. Gold comes 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 labors diligently for the wise owner who finds profitable employment for it, multiplying even as the flocks of the field.

3. Gold clings to the protection of the cautious owner who invests it under the advice of wise men.

4. Gold slips away from the man who invests in ventures he is not familiar with or that are not recommended by experts.

5. Gold flees from the man who tries to force it into impossible earnings or follows the advice of tricksters and schemers.

Conclusion

So, what did we learn from ‘The Richest Man in Babylon’? The principles of wealth-building are simple but require discipline and patience. Pay yourself first, control your expenses, make wise investments, protect your wealth, and continually increase your ability to earn. These lessons are timeless, and if applied consistently, they can lead to financial freedom.

Remember, wealth isn’t just about accumulating money—it’s about building a life of abundance, freedom, and generosity. The choice is yours: will you follow the path of Arkad and become the richest person in your own Babylon?