Book Recap Series: The Richest Man in Babylon by George S. Clason

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These book recap series posts are simply my way of jotting down important takeaways from the book.

The books I have decided to focus on are topics that are of interest to me including personal finance, wealth building, business management, leadership, investing, and real estate. If you have business book recommendations, reach out to me on Twitter or Instagram @omgmymoney or contact me.

You can see the list of the book recap series at the bottom of this post. Check the business book recommendations section for a list of all the books.

An Historical Sketch of Babylon

Babylon is an example of man’s ability to achieve great objectives using whatever means are at his disposal. All resources in the city were man developed
One of the greatest engineering accomplishments – Babylonian engineers diverted water by means of dams and irrigation canals
[OMG My Money commentary] no key takeaways here. Just an intro to the book to give some context on Babylon

The Man Who Desired Gold

No one lends his entire fortune not even to his best friend. [OMG My Money commentary] my approach to lending money is that I never expect it back. I will use it as an opportunity to give back to a person in need, but will make it clear that I am lending the money expecting them to repay. In reality, if they do not repay, then I must be comfortable with knowing I will not be getting it back in the worst case scenario.
A man’s wealth is not in the purse he carries, a fat purse quickly empties if there be no golden stream to refill it. Income is the thing. [OMG My Money commentary] aka multiple streams of income
It costs nothing to ask wise advice from a good friend. [OMG My Money commentary] so true and that wise advice can be a friend, family member, mentor, braintrust or mastermind groups, peers
The reason why we have never found any measure of wealth, we never sought it. [OMG My Money commentary] I have a wealth target goal along with the age in which I am I aiming to be independently wealthy

The Richest Man in Babylon

In all Babylon there once lived a certain very rich man. Far and wide he was famed for his great wealth. Also was he famed for his liberality. He was generous in his charities, he was generous with his family, he was liberal with his own expenses, but never the less each year his wealth increased more rapidly then he spent it.
If you have not acquired more than a bare existence, it is because you either have failed to learn the laws that govern the building of wealth or else you do not observe them. [OMG My Money commentary] most of the principles of building wealth such as saving X% of your income was originated from this book
Wealth is power, with wealth many things are possible. [OMG My Money commentary] money does not buy happiness, but it sure as hell eases concerns and relieves stress from finances. Being wealthy opens many more doors and opportunities than if you were not as wealthy
I decided that if I was to achieve what I desired, time and study would be required. As for time, all men have it in abundance. As for study, learning was of two kinds. The one kind being the things we learned and knew and the other being the training that taught us how to find out what we did not know. [OMG My Money commentary] I have the unfortunate pleasure of going through countless money moron moments especially during my 20’s that made me hyper focused on building wealth. All the blog posts I read, the books I read, and the podcasts I listen to are the continual learning habits I have.
An old tongue loves to wag and when youth comes to aid for advice, he receives the wisdom of years, but too often does youth think that age knows only the wisdom of days that are gone and therefore profits not. [OMG My Money commentary] I think we are all guilty of this at some point. When we are younger, we often see elders as this dinosaur. However, as you grow older and become that age, you realize you act or impart similar wisdom as they once did.
I found the road to wealth when I decided that a part of all I earned was mine to keep. That was sufficient to change the heart of a sheep herder into the heart of a money lender. [OMG My Money commentary] how can one build wealth if you are living paycheck to paycheck regardless of your income. I was making $100,000+ in my 20’s and lived paycheck to paycheck and DID NOT contribute to a company match 401k.
You labor for others. If you did not keep for 1/10 (10%) of all you earn, how much would you have in 10 years? Every gold piece you save is a slave to work for you. If you would become wealthy, then what you save must earn and its children must earn. [OMG My Money commentary] whether you call your earnings and savings a slave that works for you or you call this your army of dollar bills, the beauty of compounding is exactly this.
A part of what you earn is yours to keep. It should not be less than a 1/10 (10%) no matter how little you earn. It can be as much more as you can afford. [OMG My Money commentary] I realize for some this is extremely difficult. Couple things to keep in mind. 1) it is never too late to start and 2) start small…start at 1% and work your way up to 10%+. You just need to start.
Pay yourself first. [OMG My Money commentary] I like the approach of paying myself first whether through retirement accounts or transferring to a savings account. After I then allocate money to living expenses rather than the other way around. I noticed that if I focus on my expenses first, then I tended to allocate more than needed.
Wealth like a tree grows from a tiny seed. The first copper you save is the seed from which your tree of wealth shall grow. The sooner you plant that seed, the sooner shall the tree grow. The more faithful you nourish and water that tree with consistent savings, the sooner may you bask in contentment. [OMG My Money commentary] start as early as you can, which is now, and be consistent. Being consistent can be as simple as automated deposits into your investment vehicles.
Advice is one thing that is freely given away, but watch that you take only what is worth having. He who takes advice about his savings from one who is inexperienced in such matters shall pay with his savings for proving the falsity of their opinions. [OMG My Money commentary] I seek advice from those who are more experienced. this could mean they have accumulated more wealth than me, more properties than me, etc.
You do eat the children of your savings then how do you expect them to work for you and how can they have children who will also work for you
You first learned to live upon less than you can earn, next you learned to seek advice from those who are competent through their own experiences to give it, and lastly, you have learned to make gold work for you. You have taught yourself how to acquire money, how to keep it, how to use it; therefore, you are competent for a responsible position. The 3 laws of successfully handling wealth.
When I set a task for myself, I complete it; therefore, I am careful not to start difficult and impractical tasks because I love leisure
A part of all I earn is mine to keep. Say it in the morning, say it at noon, say it at night, say it each hour of every day. Impress yourself with the idea, fill yourself with the thought, then take whatever portion seems wise, let it be not less than 1/10 (10%) and lay it by. Lay by that portion first. Soon you will realize what a rich feeling it is to own a treasure upon which you will own have claim. As it grows, it will stimulate you. A new joy of life will thrill you. Greater efforts will come to you to earn more and then learn to make your treasure work for you. Make it your slave, make its children and its children’s children work for you. Insure an income for thy future. [OMG My Money commentary] I will tell those from experience that when I got out of my $80,000 student loan debt and really started focusing on my wealth building, the motivation changed, my priorities changed, my stress decreased dramatically, and my mental and physical health improved.
Luxurious rates of return are deceitful sirens that sing but to lure the unwary upon the rocks of lost and remorse. [OMG My Money commentary] if you hear anyone guaranteeing rates of return in any investment vehicle, run away. If it’s too good to be true, then….
Council with wise men. Seek the advice of men whose daily work is handling money. [OMG My Money commentary] I have not taken the step to seek a financial advisor or a CPA, but this is on my list. Obviously be careful with those who do not have a fiduciary responsibility because then you are dealing with someone who does not have your best financial interest.
A small return and a safe one is far more desirable than risk [OMG My Money commentary] this is a very personal decision. My stock:bond ratio is more in the 95:5 ratio so clearly riskier. As I have accelerated my wealth especially after becoming debt free, I have branched out to much riskier alternative investments such as cryptocurrency. That said I do like to keep these much riskier assets to a certain percentage of my net worth and the mindset of if I lose it all, I will be OK.
Enjoy life while you are here. Do not overstrain nor try to save too much. [OMG My Money commentary] I have gone back and forth on this one. Over the past several years, I have settled on saving aggressively but not as much as before because my priorities are on enjoying time I have with family. If there is an opportunity to take my family on a weekend trip, I will not hesitate to spend the travel expenses. These are memories I will forever cherish. I also like to celebrate mini wins along the way to achieving a goal. For example, I celebrated certain milestones I set for myself as I was getting out of my $80,000 student loan debt. If you do not enjoy the journey and celebrate mini wins, then you will notice that at the end of achieving that big goal, you will feel some emptiness inside.
If 1/10 (10%) of all you earn is as much as you can comfortably keep, be content to keep this portion
Live otherwise according to your income and let not yourself to spend

Seven Cures For A Lean Purse

The First Cure – Start they purse to fattening

For every 10 coins, take out for use but 9. Thy purse will start to fatten at once. Truth is always simple. [OMG My Money commentary] you will see this as one of the main themes. If saving 10% is too aggressive, then start at 1%. Anyone can do 1%. Once you have done this for a month or two, start increasing another 1%.

The Second Cure – Control thy expenditures

What each of us calls our necessary expenses will always grow to equal our incomes unless we protest to the contrary
Confuse not the necessary expenses with thy desires [OMG My Money commentary] I can attest to this as a consumer of luxury designer brands. Although I still have those desires, delaying gratification is a muscle that I have to continuing developing.
All men are burdened with more desires than they can gratify
Budget thy necessary expenses. Touch not the 1/10 that is fattening thy purse, let this be thy great desire that is being fulfilled. [OMG My Money commentary] I started with tracking my expenses for a bit, which helped me understand where my money was going. After a while I had a really good understanding of what my monthly expenses were. Without first keeping track of my expenses, I would not have an idea of how much of my income was allocated to certain expenses such as food and going out to eat. This was the biggest eye opener for me.
The purpose of a budget is to help thy purse to fatten. It is to assist thee to have thy necessities. It is to enable thee to realize thy most cherished desires by defending them from thy casual wishes. [OMG My Money commentary] the purpose of a budget for me was to clearly see where my money was going and what percentage of my money was going to certain expenses. The budget exercise then made me realize where my leaks were especially being able to shift from some of the money I was spending going out to eat to savings.

The Third Cure – Make thy gold multiply

Gold in a purse is gratifying to own and satisfy the miserly soul but earns nothing. The earnings it will make shall build our fortunes. [OMG My Money commentary] I take this as an emergency fund because although it does not earn much interest, I get the comfort of knowing I have this fund as a backup. The money I put into various investment vehicles gives me comfort of knowing that my long term wealth is secured since this money will continue to grow.
A man’s wealth is not in the coins he carries in his purse, it is the income he buildeth
To put each coin to laboring and that it may reproduce its kind and help bring to thee income a stream of wealth that shall flow constantly into thy purse

The Fourth Cure – Guard thy treasures from loss

Gold in a man’s purse must be guarded with firmness else it be loss thus it is wise that we must first secure small amounts and learn to protect them before we are entrusted with larger
Be no be misled by thy known romantic desires to make wealth rapidly. [OMG My Money commentary] building wealth requires patience and consistency. Making money can take a matter of minutes, but will not guarantee in helping you build wealth
Before thou entrust in an investment in any field, acquaint thyself with the dangers which may beset it. [OMG My Money commentary] a personal example of this is crypto. I am the furthest from a crypto expert despite reading as much as I can without falling asleep. However, I purchased bitcoin and ethereum with the mentality that if I were to lose it all, I will be OK. The same goes for my post tax investment account. Both accounts have grown exponentially, but my mindset has not changed.
Guard thy treasure from loss by investing only where thy principle is safe. Consult with wise men. Secure the wisdom of those experienced in the profitable handling of gold. Let their wisdom protect thy treasure from unsafe investments

The Fifth Cure – Make of thy dwelling a profitable investment

Own thy own home. [OMG My Money commentary] this is controversial. in some cases, you might be better off renting than owning. In many cases, owning a home might not be the best investment choice. I own investment properties including one that is a primary residence, which was a live and flip. After a couple years (to fulfill the live in your primary 2 out of the 5 years), I will move, rent the place or sell it, and do it again.

The Sixth Cure – Insure a future income

Provide an advance for the needs of thy growing age and the protection of thy family

The Seventh Cure – Increase thy ability to earn

Preceding accomplishment must be desire. Thy desires must be strong and definite. General desires are but weak longings. For a man to wish to be rich is of little purpose. For a man to desire 5 pieces of gold is a tangible desire, which he can press to fulfillment. [OMG My Money commentary] as I have continued my wealth building journey, my wealth goals have gotten more specific. The number I want to obtain by what age and when are actual numbers that I wrote down.
In learning to secure his one definite small desire, he has trained himself to secure a larger one
Desires must be simple and definite. They defeat their own purpose should they be too many, too confusing, or beyond a man’s training to accomplish
The more of wisdom we know, the more we may earn. [OMG My Money commentary] continual learning and improving has opened lots of doors and opportunities for me
That man who seeks to learn more of his craft shall be richly rewarded
I urge all men to be in the front rank of progress and not to stand still lest they be left behind
Cultivate thy own powers to study and become wiser, to become more skillful, to so act as to respect thyself thereby shalt thy acquire confidence in thyself to achieve thy carefully considered desires

Meet the Goddess of Good Luck

The desire to be lucky is universal
From thy earnings, keep out 1/10 (10%) to put into favorable investments. With this 1/10 of thy earnings and what it will also earn, accumulate for thyself a valuable estate
Opportunity waits for no man
With all man that first step which changes them from men who earn from their own labor to men who draw dividends from their earnings of their gold is important. [OMG My Money commentary] the shift from active to passive income is a goal of mine, but is very difficult to set up. My main passive income vehicle is real estate, but certainly not enough to be even close to get by on
Every man must master his own spirit of procrastination before he can expect to share in the rich treasures. [OMG My Money commentary] as a self proclaimed procrastinator, I have accepted that procrastination is not as negative as people make it out to be. Some of the best and/or most efficient work comes from procrastinating. That said, I have realized that there are opportunities (such as when I bought individual stocks or crypto) in which if I had procrastinated buying, I would not be anywhere near where I am today financially.
To attract good luck to oneself, it is necessary to take advantage of opportunities
Good luck we do find often follows opportunity but seldom comes otherwise
Good luck can be enticed by accepting opportunity
Men of action are favored by the goddess of good luck. [OMG My Money commentary] when someone says one is lucky, I automatically think about what this person did to get them in that position. Taking action has always resulted in me getting “lucky”.

The Five Laws of Gold

The First Law of Gold

Gold cometh gladly and in increasing quantity to any man who will put by not less than 1/10 (10%) of his earnings to create an estate for his future and his family
The more gold I accumulate, the more readily it comes to me and in increased quantities. The gold which I save earns more and its earnings earn more. [OMG My Money commentary] this comes in the form of compounding or reinvesting into yourself or reinvesting into your business

The Second Law of Gold

Gold is a willing worker. It is ever eager to multiply when opportunity presents itself

The Third Law of Gold

Gold clingeth to the cautious owner even as it flees its careless owner. The man who seeks the advice of men wise in handling gold soon learneth not to jeopardize his treasure but to preserve and safety and to enjoy in the contentment its consistent increase

The Fourth Law of Gold

Gold slipeth away from the man who invests it in businesses or purposes for which he is not familiar. [OMG My Money commentary] one of the many wise investment advices especially for those who want to invest in the stock market is to invest in what you know and understand. This is an approach I took as I started to invest in individual stocks (holding more than 10 years per Warren Buffet rule).
Wise indeed is he who invests his treasure under the advice of men skilled in the ways of gold

The Fifth Law of Gold

Gold flees the man who would force it to impossible earnings or who trusts it to his own inexperience or romantic desires and investments

The Gold Lender of Babylon

If you desire to help thy friend do so in a way that will not bring thy friend’s burdens upon thyself. [OMG My Money commentary] as mentioned previously, I only lend assuming I will not get it back so this naturally results in me not lending any money. I think this is the mindset to keep if you do need to lend money because of the impact money can have on the relationship.
The safest loans are to those whose possessions are of more value than the one they design. They own lands or jewels or camels or other things which can be sold to repay the loan. In another class are those who have the capacity to earn. They have income.
Humans in the throws of great emotions are not safe risks for the gold lender
To secure wealth quickly, youth often borrows unwisely. Hopeless debt is like a deep pit into one which may descend quickly and where one may struggle vainly for many days. It is a pit of sorrow and regrets. [OMG My Money commentary] I can tell you from personal experience with both student loan debt and credit card debt that it is so easy to spend money on credit only to realize you have mountains of debt you cannot possibly pay back within a reasonable amount of time.
The wise lender wishes not the risk of the undertaking but the guarantee of safe repayment. [OMG My Money commentary] this is basically what all institutional lenders follow
Help must be given wisely lest in our desire to help we but take upon ourselves the burden that belongs to another
The first desire (of gold/money) is for safety. Let it earn more gold
Be conservative in what thou expected to earn thou mayest keep and enjoy thy treasure. To hire it out with the promise of luxurious returns is to invite loss. Seek to associate thyself with men and enterprises whose success is established.
Better a little caution than a great regret. [OMG My Money commentary] this usually goes in line with getting a smaller return on a safer bet or investment

The Walls of Babylon

Behind the impregnatable walls of insurance, savings accounts, and dependable investments, we can guard ourselves against the unexpected tragedies. We cannot afford to be without adequate protection. [OMG My Money commentary] homeowner’s insurance, car insurance, emergency funds, total stock market fund are all examples

The Camel Trader of Bablyon

The hungrier one becomes the clearer one’s mind works. Also the more sensitive one becomes to the odors of food

Tablet #1

1/10 (10%) of all I earn shall be set aside as my own to keep. That man who keepeth in his purse both gold and silver that he need not spend is good to his family
7/10 (70%) of all I earn shall be used to provide a home, clothes to wear, and food to eat with a bit extra to spend that our lives be not liking in pleasure and enjoyment. I must live upon on this portion and never use more nor buy what I may not pay for out of this portion

Tablet #2

Out of my earnings, my debts shall be paid. 2/10 (20%) of all I have earned shall be divided honorably and fairly among those who have trusted me in to whom I am indebted.

Tablet #3

It is easier to pay one’s just debts than to avoid them. [OMG My Money commentary] I avoided my student loan debt for years and ended up going into default. What woke me up was the threat of wage garnishment. You can avoid debt as long as you want, but it will eventually come find you and affect you in ways you probably never thought was possible

Tablet #4

Great is the plan for leadeth us out of debt and giveth us wealth which is ours to keep

Tablet #5

It is the real fun to start accumulating money that you do not want to spend. There is more pleasure in running up such a surplus than there could be spending it. [OMG My Money commentary] not only does it give me more comfort accumulating money, this completely eliminates my stress over finances. Additionally when you create your net worth statement and realize the impact accumulating money has, you get motivated and reminds you of what you are trying to achieve.
There is a most gratifying sense of security to know that our investments is growing steadily [OMG My Money commentary] this takes patience and consistency, but seeing my net worth grow has given me a sense of accomplishment and more importantly security over my future.
Who would believe there is such a difference in results between following a financial plan and just drifting along. [OMG My Money commentary] my financial plan is not a formal plan, but I do keep track of my net worth with a written reminder of what my financial goal is and at what age. I have a target financial goal by each age to see if I am on track. I also keep track of what percent of each asset class represents my total net worth to see if I am overweighed in certain asset classes.
We are determined never again to permit our living expenses to exceed 70% of our income

The Luckiest Man in Babylon

Work well done does good to the man who does it. It makes him a better man
Decide what thou desire as to accomplish and then work will aid thee to achieve it

You can check out the entire business book recap series below:

The Richest Man in Babylon book recap – George S. Clason
How to Win Friends and Influence People book recap – Dale Carnegie
Think and Grow Rich book recap – Napoleon Hill