The Richest Man in Babylon

The Richest Man in Babylon is a 1926 financial self-help book by American author George S. Clason. In his work, Clason shares his financial advice with the reader through a series of fictional parables set in the ancient Mesopotamian city of Babylon. In these parables, Clason’s characters face obstacles to wealth and success, including low wages, poor spending habits, indebtedness, and even enslavement, but they overcome these challenges through hard work, discipline, and a structured system of saving and spending. Clason’s book is now considered a classic source on financial advice, and 21st century readers continue to discover its lessons. This guide refers to the 2019 Kindle edition of this book.

Summary

In Clason’s foreword, he introduces Babylon as the most prosperous ancient city in the world and claims that Babylonians were particularly gifted at managing finances. Ever since the Babylonians invented currency, there have been timeless laws of finance that remain relevant today. He promises to share these with the reader through parables that provide easy, actionable tips for increasing personal wealth.

In Chapter 1, “An Historical Sketch of Babylon,” Clason explains that Babylon is noteworthy for its contributions to engineering, math, astronomy, written language, agriculture, and finance. He claims that this Mesopotamian city was the first in the world to use money as well as private property and promissory notes or loans, making it significant from a financial point of view.

In the first parable, “The Man Who Desired Gold,” two friends named Bansir and Kobbi work tirelessly but are not financially secure. They decide to go to their old friend Arkad for advice. Arkad is renowned for his wealth in spite of his humble origins. The story continues in the next parable.

The second parable, “The Richest Man in Babylon,” Arkad greets his friends warmly and shares his knowledge with them. He explains that he was once a poor scribe who struggled to save his income. He sought advice from Algamish, a wealthy local, who told him to always save 10% of his income, and to make these savings multiply through investments. While Arkad makes a foolish investment and loses his first year of savings, he continues to follow Algamish’s advice and soon becomes financially secure. Later in life, Algamish is impressed by Arkad’s work ethic and sound financial management and invites him to manage his estate. As a reward for Arkad’s service, Algamish makes him one of his heirs. This secures Arkad’s status as a very wealthy man.

In “Seven Cures for a Lean Purse,” King Sargon of Babylon asks Arkad to share financial advice with groups of students so that his valuable knowledge is disseminated throughout the city. Arkad agrees and shares his “seven cures” for people lacking in funds. The first is to always save 10% of your income, and the second is to manage your spending by understanding the difference between needs and wants. The third cure is to grow your savings through well-researched and reliable investments, and the fourth is to carefully protect your savings from gambling or reckless investments. Arkad’s fifth cure is to own your own home instead of renting, arguing that this will pay off financially in the long term. His sixth cure is to make prudent investments to ensure that your income will continue even when you are elderly. Lastly, Arkad’s seventh cure is to develop your earning power by becoming “wiser” and “more skillful” in your trade (35).

In “Meet the Goddess of Good Luck,” Clason addresses the question of luck in finance. Arkad continues to be the main source of knowledge in this parable and discusses good and bad fortune with his students in the temple of learning. He argues that there are actions which are often unlucky, such as gambling, while working at a trade is likely to generate a profit. The discussion turns to lost opportunities, and the men agree that they felt unlucky when they procrastinated and wasted good chances. This discussion leads Arkad to conclude that the “Goddess of Good Luck” favors people who work hard, take initiative, and seize opportunities.

In Chapter 6, Clason shares “The Five Laws of Gold” through the story of Arkad’s son, Nomasir. Wanting his son to develop his own discipline and life experience before inheriting his estate, Arkad sends him away with a bag of gold and a clay tablet bearing his financial advice. Nomasir quickly wastes his gold on reckless investments and lives in poverty until he finds a job in Nineveh. Nomasir then studies his father’s “Five Laws of Gold” and carefully follows them. These include saving 10%of your income, investing money wisely and cautiously, never investing your money with unreliable professionals, and avoiding get-rich-quick schemes and con artists. These laws help Nomasir become wealthy, and he returns to his father Arkad triumphantly 10 years later with more gold than his father had given him.

In “The Gold Lender of Babylon,” Clason explores the anxiety, responsibility and sense of obligation that comes with wealth. He introduces the character Rodan, a spear maker who has recently been given 50 pieces of gold from the king. Rodan wants to save his money but feels obligated to share it with his brother-in-law, who does not have much financial knowledge. He consults with Mathon, a professional money lender, who warns him to never loan his money to people who cannot pay it back, even family members. Mathon emphasizes the importance of not taking on other people’s burdens in an effort to help them and advises Rodan to only loan part of his savings if his family can prove their reliability.

In “The Walls of Babylon,” Clason imagines the terror within the walled city as it is besieged by enemy forces. The warrior Banzar keeps watch as Babylonian soldiers prevent enemy troops from infiltrating the city. After days of vicious battle, Babylon is safe, and the people and army celebrate. Clason compares our finances to Babylon, arguing that it is essential to protect what one has earned.

“The Camel Trader of Babylon” tells the story of Tarkad, a youth living in poverty and subsisting on small loans from friends and acquaintances. An older man named Dabasir offers him advice, admitting that as a youth, he had crippling debts that prompted him to flee Babylon. After working as a thief, he was captured and enslaved and felt hopeless until his owner's wife helped him to escape and encouraged him to face up to his debts and regain his honor and reputation. Dabasir shares that through immense determination and hard work, he was able to pay back his creditors and become respected once more. Hearing his story, Tarkad is motivated to work his way out of his own impoverished situation.

In “The Clay Tablets from Babylon,” Clason invents a 20th-century letter from a British professor to an archaeologist that describes the contents of a clay tablet written by Dabasir, the character from the previous parable. The professor praises Dabasir’s financial habits, which include saving 10% of his income, using 20% to pay off loans, and living off of the remaining 70%. The professor reveals that he has successfully followed Dabasir’s plan himself and that he is now financially stable, which he says proves that this approach remains relevant and applicable.

“The Luckiest Man in Babylon” introduces two new characters: Sharru Nada, a successful elder, and his late friend’s grandson, Hadan Gula. After Hadan Gula admits that he has little financial knowledge and never plans to work, Sharru Nada tells him his dramatic life story and his secret key to wealth. Sharru Nada reveals that he and Hadan Gula’s grandfather, Arad Gula, had worked their way out of enslavement and into prosperity by dedicating themselves to their work and never shirking tasks or giving up. After bonding over their work ethic and becoming free from slavery, the two men forged a thriving business and enjoyed vast wealth. At the end of the parable, the young Hadan Gula recognizes the value of work and commits himself to becoming a self-made man like his grandfather.