I’m off on vacation this week, and my vacation is usually quite literal: I simply vacate. I’m not much of one for taking in the world’s largest ball of twine, or dumping more money into a mouse’s accounts at an amusement park… we usually just make it to the beach and do little to nothing for a week.
But little to nothing is hard to sustain for very long, and I generally read quite a lot. This week I’m re-re-reading a classic, George S. Clason’s The Richest Man in Babylon. It made me think about a project that I’d been wanting to do, which was to give a review of the lessons in the book – not a book review, mind you, but going through each of the lessons in the book in it’s entirety. I’m sure I won’t get all of this completed in the week, but will get a start on it here.
What’s very interesting about this book is that the lessons aren’t anything new. Perhaps it’s fanciful to assume that these very conversations were being had in ancient Babylon, but the basic lessons have been around for ages. Yes, there may be new tax legislation all the time, and from time to time a groundbreaking product may take the stage, but all in all the way to gather and maintain wealth is unchanged throughout the centuries…
The first installment of these lessons takes place in the the first two chapters: The Man Who Desired Gold, and The Richest Man in Babylon.
The Man Who Desired Gold
This first chapter sets the stage for the rest of the book; we are introduced to a chariotmaker, Bansir, and his friend Kobbi, a lyre-player. These two fellows are talking together as modern-day friends might, commiserating about their shared plight. Each man has spent his entire life working, working, working, but they have nothing to show for it. Kobbi finds Bansir sitting on a wall daydreaming, rather than finishing the chariot that is half-made in his workshop. He asks Bansir for a loan, since it appears that he must have plenty of money for his lack of industry.
Bansir tells his friend of his dream, where he had all the money he desired, enough to spend on everything his heart wanted. But he awoke, and found himself in his dire condition, living hand-to-mouth, with no savings, and no investments to provide him with an income.
Sharing the dream, both men wonder aloud how it is that some people eventually move beyond the situation that they find themselves in. They’ve hoped that hard work alone would be enough to magically transform their lives to ones of leisure. (to borrow a phrase “So how’s that working for you?”)
As they talk they come to the realization that most men are born into similar circumstances – they even observe a line of slaves being driven to work carrying water to the king’s gardens, noting that they could just as easily have traded fortunes with any one of them. Likewise, they discuss the great fortune of their old friend Arkad, who is known as the richest man in Babylon. How is it that Arkad has such a great fortune, yet they have nothing at all?
Together, they finally decide that the way to learn how to provide themselves with a fortune is to talk with their friend, Arkad, the rich merchant.
Lesson: To start yourself on the way to riches, it is important to learn from others who have experience in acquiring riches.
The Richest Man in Babylon
So Bansir and Kobbi, among other friends in similar situations, ask their friend Arkad, the richest man in Babylon, to share the secret of his great fortune. In answer, Arkad shares his story…
As a young man Arkad was in the same boat as Bansir, Kobbi and the others – working, working, working, and never getting anywhere financially. Through his job he became acquainted with a money lender, Algamash, who Arkad decides to ask the same question being asked of him now – how to become a rich man.
Algamash provides Arkad with the first lesson: part of all you earn is yours to keep. This is that age-old saying that we’ve all heard often – Pay yourself first. It’s simple enough, but if you don’t put it into practice you won’t know the vast benefit of such a habit. As Arkad learned, paying oneself a tenth of everything he earns teaches a man to live just as well with the remaining 90%.
Later on, as Arkad has gotten into the habit of putting away that tenth… we learn the second lesson. Arkad built up a bit of money and decided to take the advice of his friend the bricklayer, to invest in some gemstones. Algamash points out the folly of taking advice from a bricklayer about gemstones, as Arkad learns by losing all of his savings. Lesson two from Algamash: take advice only from those that are experienced in the matter of your questions.
After a time, Algamash returned again to check on Arkad. He had learned from his mistake and invested on the advice of business men who dealt in the goods, and earned nice dividends. When asked what he had done with the earnings from his savings, Arkad proudly told Algamash of the feast he had given, the clothing he had purchased for his wife, and his plans to buy a donkey for himself to ride upon. At this news Algamash admonished Arkad – if you take the children of your gold and make the children produce children, you’ll enjoy many a rich banquet without regret. The third lesson: take advantage of compounding of returns.
In our next installment, we’ll look at the next chapter - Seven Cures for a Lean Purse.
Click the link to pick up a copy of A Social Security Owner's Manual or if you'd prefer the Kindle version (and let's face it, ALL the cool kids do!), you can find that at this Kindle version link.
I can learn from you, you can learn from me - please leave your comments and links!Jim Blankenship, CFP®, EA, is an expert in personal retirement, IRAs, and tax issues, with more than 25 years of experience in the industry. Read more from this author
And if you've come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed "advisor's advisor".
I love that book! I was just thinking about it this morning, and wondering what box it’s hiding in up in my attic. The principle of not taking advice on a subject from people who know nothing about it is probably the most important thing I’ve ever learned.
I couldn’t agree more, Jon. It’s been an inspiration to many, many people over the years – and the truths never grow stale….
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