7 Minute Book Summary: The Richest Man In Babylon

The Richest Man In Babylon Summary

The Richest Man in Babylon, written by George S. Clason in 1926, continues offering valuable personal finance lessons nearly a century after its publication. It’s one of the best-selling personal finance books set in the ancient city of Babylon, the book shares financial wisdom through a collection of parables and stories that convey simple but powerful concepts for building wealth and financial security.

Covering a range of topics such as saving, investing, debt management, and financial planning, the book contains useful strategies for accumulating wealth and ensuring a stable income stream. One of its fundamental teachings is to save at least 10% of earnings while distinguishing between necessary expenses and desires.

The book has remained relevant and influential through these timeless principles, inspiring generations to pursue a path toward financial well-being.

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Background – The Richest Man In Babylon

Ancient Babylon

Babylon was once the wealthiest city in the world, known for its lavish houses and palaces, all protected behind massive walls. It was founded around 2300 B.C. and is located along the Euphrates River in present-day Iraq.

It created fertile farmland where once there had been a desert through irrigation. All forms of lending and borrowing within the city were highly developed, thus making it extremely prosperous. Most people living there, including slaves, were allowed to make money freely.

The success of Babylon inspired Clason to write several stories, including what’s become known as the original book The Richest Man In Babylon. Many of his stories discussed finance management principles and were distributed by banks, insurance companies, and other employers to teach the benefits of saving and hard work.

The story is about two friends, Bansir, a chariot builder, and Kobbi, a musician. They both were good at their trade but had no money. One day Kobbi had an idea to visit childhood friends such as Arkad, the richest man in Babylon.

The two set out on a journey and eventually met with Arkad. During their time together, they asked him why he thought they had no money to show for all the hard labor they’d performed all their lives.

Arkad’s lessons, which he calls the seven cures to a lean purse, are wealth-building habits and wise advice that anyone can follow to build a solid financial foundation.

George S. Clason

George Clason was an accomplished American author, soldier, and businessman. Born in 1874, Clason served in the United States Army during the Spanish-American War.

After his military service, Clason established the Clason Map Company of Denver, which gained significant recognition for creating the first road atlas of the United States.

The Richest Man in Babylon, published in 1926, became Clason’s most popular work, consisting of numerous parables, metaphors, and stories set in ancient Babylon. As a financial self-help author, Clason utilized these tales for communicating essential financial lessons to a wide audience effectively.

Throughout the book, Clason emphasizes key financial principles still relevant today, such as saving at least 10% of your income, improving your skills to ensure a stable income, and understanding the difference between necessary expenses and desires (wants).

Despite being nearly a century old, the advice presented in the book remains relevant.

Timeless Principles

Laws of Gold – “Make Thy Gold Multiply”

The first lesson, which is one of the book’s main principles, is the “Laws of Gold.” Arkad recommended investing in things he was knowledgeable about to get his money working for him. 

Too many busy professionals lose money in high-risk investments. They typically claim that “everybody” is investing in them even though they don’t understand how they work.

If you want to invest in index funds, learn about them first. If you’re interested in real estate, meet with others who can teach you about it, such as our Passive Investors Circle.

You don’t have to become a professional, but at least learn enough to ask intelligent questions before investing.

By understanding and applying these laws, you can ensure that your hard-earned money is being put to good use.

Control Thy Expenditures – “Live Below Your Means”

As part of this financial advice, individuals must learn to live within their means and be mindful of the value of money. Proper management of spending habits ensures that money is not wasted on frivolous or unnecessary items and contributes to overall financial success.

This is one of the issues that young, high-income professionals struggle with. Unfortunately, social media makes it easy for anyone to access how the wealthy or want-to-be wealthy live. And for this reason, they try to live a lifestyle they “think” everyone is living but find out it’s financially impossible. 

By controlling one’s expenses and budgeting wisely, wealth accumulation becomes a much more achievable goal.

Profitable Investment

The book suggests selecting profitable investments with a reasonable balance of risk and reward. This takes into account the importance of hard work, as well as the impact of good luck on financial success.

By seeking profitable investments, individuals can make their money work for them, multiplying their wealth over time.

Have a retirement plan. (“Ensure a future income.”)

The next lesson has to do about ensuring one’s future income. A 25-year-old earning an annual salary of $40,000 with a yearly raise of, say 3% will have earned an estimated $3 million if they retire by age 65. That’s about 40 years of working and earning.

We should have a retirement plan if we want to retire comfortably. We can do this with sound financial principles and by setting aside money to be invested for retirement. Many retirement investment opportunities include investing in the stock market via mutual funds in a 401K, Traditional IRA, Roth, etc.

The younger we can start putting money away for retirement, the sooner we can begin to take advantage of a magical concept called ‘compound interest.‘

Our net worth does not equal our self-worth. We need to keep them separated.

Compounding interest is known as the eighth wonder of the world, as once stated by Benjamin Franklin.

Did you know that he left 1,000 pounds (about $5,000 in today’s money) when he died in a trust? He bequeathed that trust and left it to his favorite cities, Philadelphia and Boston, with the provision that the money was to remain untouched for as long as 200 years.

After it grew, $2 million left in the trust was given to Philadelphia and $5 million to Boston. The lesson from this is to make time work for us when we plan for retirement by starting early. Time can be our retirement’s greatest friend.

Remember that money is of a prolific generating nature. Money can beget money, and its offspring can beget more.” – Benjamin Franklin

Achieving Wealth

The Lean Purse

A lean purse is a situation where an individual’s income is entirely spent on necessary expenses, leaving little to no money for saving or investing. Arkad learns overcoming this obstacle is the first step towards achieving wealth and financial independence.

The key to changing this financial circumstance is by adopting certain principles, such as paying oneself first. This involves setting aside at least 10% of one’s income before any expenses are deducted. By following this rule, Arkad can gradually accumulate wealth and move away from the confines of a lean purse.

Gaining Great Wealth

The Richest Man in Babylon teaches several valuable lessons to gain great wealth. These include living within one’s means, investing wisely, and safeguarding one’s investments.

  • Living within one’s means: To accumulate wealth, individuals must learn to spend less than they earn and avoid unnecessary expenses. By practicing frugality and only spending on necessities, individuals can put their saved money to better use, such as investments.
  • Investing wisely: Individuals should seek profitable investments with calculated risks to make their money work for them. This includes diversifying investments and seeking counsel from experts in the field.
  • Safeguarding investments: Protecting one’s assets is crucial to preserving the wealth that has been built. This can be done by avoiding investments that sound too good to be true, ensuring proper insurance coverage, and safeguarding against potential losses.

Financial Independence

Financial independence is the ultimate goal of the lessons taught in the book.

Achieving financial independence (FI) takes time, discipline, and consistency. It’s important to continue honing one’s skills and knowledge to increase earning potential and stay adaptable in an ever-changing economy.

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The Importance of Saving

Pay Yourself First (“Start thy purse to fattening.”)

The greatest lesson in the book is to pay yourself first. Arkad told a story of how he once was a scribe with little money and sought advice from a wealthy man. This man gave him the secret to wealth in exchange for his work on clay tablets.

The man found the road to wealth when he decided that a part of all he earned was his to keep. And that anyone can do that by simply paying themselves first before spending any money.

One group that understands this is our friends at the IRS. To get paid first, they have trained us to allow them to deduct taxes from our checks even before we see any of the income.

Even though Clason recommends paying ourselves at least 10%,  I suggest 20% or more. If you’re not diligent enough to do this yourself, have someone else set it up so it’s automated each month.

The difference between wealthy and poor people is knowing this first rule. Wealthy people pay themselves first, while poor people don’t.

Growing Rich

Achieving wealth involves more than just saving; the money saved should also be put to productive use through well-thought-out investments. The book presents several investment options, such as real estate (my favorite) and insurance.

Real estate investing is considered one of the main wealth-building strategies advised in “The Richest Man in Babylon.” Purchasing property can generate long-term financial benefits through appreciation in property value and potential rental income.

If you want to learn more about investing in real estate for passive income, check out this video:

Another book recommendation has to do with the protection of one’s wealth from loss. Unfortunately, many people wait until it’s too late to acquire the proper insurance coverage (i.e., disability and life insurance) as they focus on building wealth exclusively. Yet, adding adequate insurance policies will help mitigate potential financial losses from unforeseen events.

There are many types of policies that you should consider. Research different insurance companies and choose those you need, or find an agent to guide you.


The Richest Man in Babylon is a timeless classic by George S. Clason in 1926. It provides valuable financial advice through fictional parables set in the ancient Mesopotamian city of Babylon. Babylon, known as one of the wealthiest cities in the ancient world, is the perfect backdrop for these tales. The quality of life in Babylon was unmatched due to the ancient wisdom applied to maintain and grow wealth.

The book highlights several key concepts, such as the “Seven Cures” and the “Five Laws of Gold,” which outline how to generate and protect wealth. 

The Richest Man in Babylon offers financial advice and encourages readers to improve their skills, work hard, and plan for their future. Following the ancient wisdom shared in the book can achieve financial success and stability, leading to a better quality of life.

Frequently Asked Questions

What are the main lessons from The Richest Man in Babylon?

The main lessons from The Richest Man in Babylon include saving at least 10% of your income, distinguishing between necessary expenses and desires, and working diligently to improve your skills and income stream. 

Is the book The Richest Man in Babylon easy to comprehend?

The Richest Man in Babylon is easy to comprehend as it shares its financial wisdom through simple parables and stories set in ancient Babylon.

What is the moral of the first story in the book?

The moral of the first story in the book is the importance of saving at least 10% of your income. By practicing this habit of saving consistently, individuals can develop financial security and accumulate wealth over time. 

How does the book inspire personal finance success?

The Richest Man in Babylon inspires personal finance success by providing actionable advice through relatable parables and memorable lessons. Readers can easily implement these principles in their lives, leading to improved financial habits and lasting wealth.

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