Book Summary – The Richest Man in Babylon – The Secrets of Success of the Ancients – By George Clason

Strategies come and go, but principles are timeless. Do not create new principles. Either you follow them or you don’t. This time, the proven wealth principles are over 6,000 years old. I enjoy reading financial and business books, but I understand that most of you would rather go to the dentist and have your teeth pulled. If you fit that bill, do me a favor and read just one financial book: The Richest Man in Babylon. Dave Ramsey, the financial personality you may have seen on TV, makes a living preaching the principles outlined in this little book. Again, do yourself a favor and read it. You won’t regret doing it.

Why is this important to me? Let’s answer this with a few more questions. Are you financially secure today? Do you stress about money and the future? Do you run out of money before you run out of month? If any of these questions ring true for you, or better yet, you’re on the road to financial security and want to reinforce what you’re doing, then this book is a must read and will help. For what money? The love of money is a bad thing and I am not preaching that here. Money is a tool to help acquire things that can aid in security, happiness, and fun, as well as help you build and own. Money is the means by which initial success is measured. Money makes it possible to enjoy the best that the earth has to offer. Money is abundant for those who understand the simple laws that govern its acquisition. (Note: SIMPLE – that’s true!!!!!) Money is governed today by the same laws that controlled it when prosperous men thronged the streets of Babylon six thousand years ago.

Here are the simple rules for acquiring money:

1. The wallet begins to fatten

2. Control your expenses

3. Make your gold multiply

4. Protect your treasures from loss

5. Make your home a profitable investment

6. Secure a future income

7. Increase your ability to earn

-The richest man in Babylon

The interesting thing about these 7 laws is that you can use them for more than money. That’s another topic for another review……….. Let’s delve into more details and bring Old English to current meaning.

This book is a short book that is packed with powerful principles. This summary may be a bit longer than others just because these principles need to be shared as soon as possible. If you’re looking at financial collapse around the world, you need to be educated and protect your future with sound principles.

1. Plus, everything you earn is yours. It shouldn’t be less than a tenth, no matter how little you earn. In short, you pay first. This LAW creates great habits. If your bills outlast your money after paying yourself, that leads to the second basic principle.

2. For every ten coins I put in, spend only nine. This is such an easy principle but for some reason 90% of the population can’t follow it. You only need to spend what you have after paying yourself first. First you pay yourself so that the compounding LAW works for you and you only spend the other 9/10. This doesn’t mean charging up the credit card and buying junk because you HAVE TO HAVE IT NOW. We are not 2-year-olds and we need to stop acting like this. (I have been guilty of this and I understand that discipline is needed, but your loved ones deserve no less……….)

3. Put each coin to work to reproduce its kind like the herds of the field and help bring you income, a stream of wealth that will constantly flow into your pocket. OK, enough with speaking encrypted. Basically what this means is that your money should work HARDER than you do. This principle eludes many people and you need to think it through. People thought they were rich before the 2008 housing crash. This is not uncommon because their “NET WORTH” was high. NET WORTH means nothing without monthly money flowing into your pocket. Understand cash flow and make your money work harder than you as your primary goal.

4. Protect your treasures by investing only where your principal is safe, where you can claim it if you wish, and where you will not fail to collect a fair rent. Unfortunately, I can write the stuff of an encyclopedia with my mistakes in this area. This LAW is simply Warren Buffett’s RULE #1 and that is – don’t lose money. You need to protect your main amount of money from mistreatment, suspicious people and swimming with sharks. If you’re intrigued by the next big investment, then do me a favor and go play golf and forget about it. I’ve endured enough butt chafing and I want to protect you from having to go through the pain. This is where financial education comes into play. The only safe investment for true growth is in yourself and the things you understand.

5. Own your home: This one is pretty self explanatory and comes with some controversy. I think your house is a liability because it’s not spitting out cash flow. This does not mean that you should not own it. Right now is the best time to buy houses because the housing bubble is over and prices are very depressed. Home ownership has some rewards and provides security.

6. Provide in advance for the needs of your growing age and the protection of your family. This is basically savings on steroids. Now that you have some savings and know that your money should work harder than you do, then you can use this principle to solidify it and be DISCIPLINED in your execution. Keep saving for cash flow investment opportunities.

7. Increase your ability to win – Cultivate your own powers, to study and become wise, to become more skillful, to act in such a way that you respect yourself. IMHO this has to be number 1. The best investment you can make is in your own gray matter. You need to keep learning and educating yourself. A self-taught financial education will teach you the power of saving for cash flow investments, protecting yourself from shady deals, people and circumstances, and harnessing the power of compounding.

The Richest Man in Babylon should be required reading and study for all. This book lays out everything he needs to be successful when it comes to money. Buy this book and share it with the people closest to you.

I must admit that I am lucky because I grew up with these principles instilled in my HARD HEAD. Unfortunately, most people are not so lucky. This book will help.

I hope you have found this brief summary useful. The key to any new idea is to work it into your daily routine until it becomes a habit. Habits are formed in as little as 21 days.

One thing you can take away from this book today is to schedule 15 minutes every day and study something of financial value. This can be a video, blog, article, or book, but use your time wisely. Your loved ones deserve no less.