Ancient Secrets to Success: The Richest Man in Babylon and His ‘Seven Cures for a Lean Purse’
Babylon became the wealthiest city of the ancient world because its citizens were the richest people of their time. They appreciated the value of money. They practiced sound financial principles in acquiring money, keeping money and making their money earn more money. They provided for themselves what we all desire . . . incomes for the future. – George Samuel Clason
What can a book that is first published in 1926 offer about modern finance? Why is the book “The Richest Man in Babylon” being “hailed by millions of readers as the greatest of all inspirational works on the subject of thrift, financial planning, and personal wealth“?
Considered a modern-day classic, this book offers its readers an understanding of and a solution to personal financial issues. The author, George S. Clason, is a successful businessman who founded the Clason Map Company of Denver, Colorado and published the first road atlas of the United States and Canada.
Having read this book recently, I would like to share with you the hidden treasures that I was able to gather from it and why I believe this book must be a required reading for every young adult.
The book itself consists of several parables of varying degrees of quality and length. In this short review, I will be focusing on the story of Arkad, who was known not only for being the wealthiest man in old Babylon, but also for his liberality, charity, and generosity.
In the story “Seven Cures for a Lean Purse,” Arkad was summoned by the King of Babylon to share his wisdom to a group of 100 Babylonians on how he acquired his vast wealth. He taught them for seven days, with each day focusing on one cure to make one’s purse fatter.
Listed below are the seven cures as expounded by Arkad during his class.
Start thy purse to fattening. The assumption here is you have a source of income. From whatever you earn, you pay yourself first by taking in one-tenth (1/10) and saving it. A part of what you earn is yours to keep. The book uses coins for analogy: For each ten coins I put in, to spend but nine. In my previous article, The Habit of Saving, I mentioned about setting aside 20% of your income for savings and investments and 10% for tithing. Both cases emphasize the need to set aside a fixed portion of your income on a regular basis for savings. Isn’t this a wonderful goal for all of us to have?
Control thy expenditures. Budget your expenses so that you may have enough money to pay for the necessities, to pay for the enjoyments, and to gratify your worthwhile desires without spending more than nine-tenths of your income. Be frugal and not spendthrift. Discern what are necessary expenses and not. Make a budget for necessary expenses. Do not buy what you do not really need, even if you have more than enough money to pay for it. Live within your means and avoid bad debts. Life is good and life is rich with things worthwhile and things to enjoy.
Make thy gold multiply. Arkad mentions that each one of us desires an income that continues to come whether you work or travel. After some time of regularly saving a fixed portion of your income, you will already have some amount that you can now invest. One thing I want to emphasize though, is to make sure you are not just keeping your savings by putting the money inside a piggy bank or under your secret compartment at home. If you are just starting to save, it is better to put your money in a savings account after choosing a bank with the best interest rates. Now, on the topic of investment, there are many options: stocks, mutual funds, real estate, etc. The idea is to find an investment vehicle which takes advantage of the power of compounding while providing a safe and steady income. Nowadays, the concept of passive income is booming and has helped many people achieve financial independence.
Guard thy treasures from loss. I really appreciate this line from the book: It is wise that we must first secure small amounts and learn to protect them before the Gods entrust us with larger. Invest only where the principal is safe. Take care not to be swindled or scammed by cheaters. If you are investing in stocks, do not be a trader unless you have years of professional study or experience on how to be one. Invest only on good and strong companies. Another important point in this cure, is to find wise men or mentors who have the experience of living a profitable life. Their wisdom will help you protect your treasure from unsafe investments. In my case, I am a member of Bo Sanchez’s Truly Rich Club, which offers guidance on which Philippine companies and mutual funds are good for long term investment while enriching its member’s spiritual life on his way to becoming truly rich.
Make of thy dwelling a profitable investment. This one is quite simple: own your own home instead of renting so that you can use the money for savings and investment. If you are looking for a home to own, consider your income properly.
Insure a future income. In short, invest for your retirement, old age, and your family’s future after your passing. Provide in advance for the needs of your growing age and the protection of your family. In the modern society, this translates to health and life insurances and retirement funds (through long-term investments, for one).
Increase thy ability to earn. This focuses on cultivating one’s strengths and educating one’s self to become wiser, more skillful, and more confident. In short, add value to yourself. Try your best to find a job that you love that working hard does not seem to matter to you at all. Never say never to opportunities, and look for them yourself. And as I have mentioned above, having passive income in addition to your regular job earnings is one way to increase your ability to earn.
I definitely find this book a great read for learning more about becoming wealthy. The tales are interesting and make the book easier to understand. The edition I read though uses old English which made it a little bit difficult for me to understand the first portions of the book. But as I continued reading, the book made a little more sense. (For the latest edition of this book, you can purchase a copy of “The Richest Man in Babylon: Now Revised and Updated for the 21st Century”.)
To close this review, I would like to borrow this line from the book itself: LO, MONEY IS PLENTIFUL FOR THOSE WHO UNDERSTAND THE SIMPLE RULES OF ITS ACQUISITION. In addition, it is ACTION that will lead you to the success you so desire. Just reading this article or the book won’t make sense unless you put your learning into action.
Marj Baynosa is a chemical engineer and educator, who loves reading and writing in her spare time, especially on finance, faith, and other seemingly mundane things.