Self Help Book Review: The Richest Man in Babylon by George Clason

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There was a time, years ago, when I was seriously in debt – I mean tens of thousands of pounds in debt, with no prospect of ever paying it back. I was depressed and worried all the time, unable to enjoy life, struggling to pay for the basics, and taking on second jobs just to service my interest payments. Things were so bad that I was scared to read bank statements. This book played a big part in turning my life around. I first came across audiobook readings of it on YouTube, and played it over and over again while I did other things, in order to get the lessons internalised. Eventually I also bought a cheap paperback edition, which I try to read at least once a year. It's absolutely the best book on personal finance that I've ever read, and it has no graphs no technical jargon and very few numbers in it. The contents consists of a collection of short stories – parables about people overcoming their financial problems, getting out of debt and even becoming rich. Most of these stories are set thousands of years ago in ancient Babylon and the surrounding area, and are told in a pseudo-Biblical language. Presumably this was to reinforce the fact that the basic principles of earning and handling money never change, no matter what society or historical period you live in. The author, George Clason owned a couple of publishing companies, and starting in 1926 he published these parables in a series of pamphlets which were distributed by banks and insurance companies before being compiled into this book. I'll briefly describe the contents: Chapter 1: The History of Babylon A description of what was known at the time about ancient Babylon, and it's success as a centre of commerce and regional power. We know from thousands of clay tablets that have been excavated from the ruins that Babylonia had a very sophisticated technology, with contract law and systems of credit. The main difference between Babylon and the modern Western world, apart from the lower technology level, is that – like most of the classical world – slavery was an accepted institution, but even that was governed by systems of law. Chapter 2: The Man Who Desired Gold A conversation between Bansir, a chariot builder, and his friend Kobbie, a musician. Bansir is depressed, because he'd had a dream the previous night about being a rich, but woke up to the fact that he lives in near poverty. Both men are successful in their own fields, but have no money beyond what they need for day to day survival. They remember their old fried Arkad, who has gone on to become the riches man in Babylon, and agree to go to him to ask for advice on how they can improve their financial situation. The main lesson: To improve your situation, you first need the desire to change. Then you need to seek advice from someone who's already done what you want to do. Chapter 3: The Richest Man in Babylon Arkad tells his friends how he rose from being a badly-paid scribe to being a highly successful businessman. As a scribe, he sought advice from one of his clients, a successful merchant who taught him the three basic principles of handling money: Pay yourself first, invest what you save and make sure that you take advice from qualified people. The main lesson: The most important rule, the foundation, is to pay yourself first. Whenever you get paid, put at least 10% in savings, and pay necessary expenses, creditors etc out of what's left. That 10% is yours to keep. Just learning this one lesson was maybe the most important step in turning my finances around. I didn't think I'd be able to do it at first, but when I tried it I found it wasn't too hard to hold on to that money. And it felt good watching it grow, month after month, till I had a reasonable emergency fund – and after that, I could divert some of my money into paying my debts down faster. Life becomes a lot less stressful when you know you've got some money in reserve – and I can't think of anything more satisfying than paying off an old debt and knowing that it's gone forever. Chapters 4-11 – The Seven Cures For a Lean Purse The King of Babylon is concerned that the city is falling into recession, with the poor unable to find gainful employment and the rich hoarding whatever wealth there is. His advisors tell him that the reason most of the population is poor is because only a minority know how to handle money. The King therefore employs Arkad to pass on his knowledge to a cadre of teachers, who will then pass on the knowledge to others until everyone in Babylon has access to the skills to improve their finances. Chapters 5 to 11 are each dedicated to an individual “cure for a lean purse” - principles that Arkad has learned through experience. The main lesson: The rich are nothing special. They're just people who have learned the laws governing the generation of wealth, and apply those laws. And anyone can learn them. Chapter 12 – Meet the Goddess of Good Luck Still in his role as a teacher, Arkad discusses with his students whether some people are just naturally lucky. Through sharing anecdotes about their own experiences, the class concludes that good luck only comes to those who are ready for it. The main lesson: Seize the moment. If a good opportunity presents itself, don't hesitate to take advantage. Procrastination kills luck. Chapter 13-19 – The Five Laws of Gold The story of Nomasir, the son of Arkad, who travels to the neighbouring city of Nineveh to earn his own fortune. All Arkad gives him to help get established is a bag of gold and a clay tablet containing the Five Laws of Gold. He soon loses his gold through inexperience, but he then settles down to study the Five Laws of God, which he has previously neglected. By employing the lessons, he slowly builds up his own fortune, until he is able to return to his father as a rich man a decade later. The main lesson: Basically what's gone before, rephrased. A feature of this book is that the same lessons are delivered in several different way. This helps the reader understand them better, in my view. Chapter 20 – The Gold Lender of Babylon Rodan, a Babylonian spearmaker has had a big financial windfall, but is now worried about how to use it. His sister wants to borrow the money so her husband can set up as a merchant, but Rodan is worried about losing the money, and goes to his friend Mathon the moneylender for advice. Mathon tells Rodan several anecdotes about the people he's leant money to in the past, to illustrate the priniciple of exercising maximum caution. The main lessons: Seek financial advice from people with the relevant experience. Don't take unnecessary risks. It's good to help your loved ones, but not at the risk of your own financial wellbeing. Don't trust the judgement of people who don't have the right experience. Chapter 21 – The Wall of Babylon Banzar, a veteran soldier, observes while Babylon is under siege from an attacking army. He reassures various civilians that the walls are soundly built and will hold. The main lesson: Guard your wealth. Insurance policies, sound investments etc, will protect your money just the walls of a city protect against attack. Chapter 22-28 – The Camel Trader of Babylon A young man called Dabasir is overcome with debt, largely due to an extravagant lifestyle. Instead of facing his problems, he allows his wife to leave him and then himself leaves Babylon to seek his fortune elsewhere. Not doing any better, he eventually joins up with a gang of thieves, only to be captured and become a slave to a desert tribe. Employed as a camel tender, the wife of the tribe's chief challenges Dabasir and asks why he allowed himself to sink down to the level of a slave, despite that he obviously still thinks that he's better than that. She doesn't accept his excuses, and convinces him that he should have stayed and overcome his problems. Eventually she helps him to escape, and after nearly dying crossing the desert, Dabasir meets with his creditors and agrees on a scheme to pay them back in instalments, acting on a plan given to him by one of his creditors, Mathon the gold lender. Mathon also helps him to secure employment working as a camel trader, which is how he is able to earn the money to repay his debts. Eventually he is able to settle all his debts, earning back the respect of his creditors, his wife, and his own self-respect. Chapters 23-28 mostly consist of a record that Dabasir keeps of his plan and how much he is able to repay each month. The last chapter also includes a letter to a colleague from a modern-day academic who has translated the tablets and applied the lessons to his own financial situation. The main lessons: Face your problems. Running away solves nothing. If you face your problems, you'll see the world in a more positive light – if you try to avoid them, life just feels more and more like a prison. Your debts are your enemies, destroy them. Your creditors are your friends, pay them back as quickly as you can. The principles that a former slave in ancient Babylon employed to settle his debts are just as useful to a modern academic. Chapter 29 This is missing a chapter name in the edition I've got. It tells the story of Sharru Nada, who arrived in Babylon as a slave. Nada impresses a local baker with his work ethic and convinces him to buy him, thus avoiding the common fate of being worked to death constructing the walls of Babylon. Learning everything he can about the bakery trade, Nada is determined to earn money of his own so that he can eventually buy his freedom, and gets his master to agree to a scheme where they make some extra cakes which Nada can sell in the streets after his regular working hours, dividing the profits. Apparently deals like this between slaves and their masters weren't unusual in ancient Babylon. Of course things don't go perfectly, but Nada is eventually freed by the intervention of an acquaintance who is impressed by his work ethic. The main lesson: Learn to like working. It's almost always an essential component of your path to success, whatever situation you're starting from, so if you enjoy the work you do you'll have an advantage. Trying to avoid work can just make things worse. The summary above doesn't really do the book justice. As I said earlier, this book gets a big part of the credit for turning my finances – and therefore my life – around. Just by applying the simple principles in this book. Parts of it are repetitive, but sometimes reading the same principles expressed in different ways can help the learning process. I used to have no money, a terrible credit score, bank charges every month and no hope. Now I've at least got some modest savings and investments, a credit score that's way above both the local and national averages, something like a dozen credit cards which I settle in full every month, and a ridiculous overdraft facility. Most importantly, I've got hope. I'm still not where I want to be financially, but I'm at least on the way. I've even started saving up for a trip to Japan in a couple of years, something that would have been unthinkable not so long ago. I'd recommend this book to anyone who's in financial trouble, or even if you just generally want to improve your situation. If I could afford it, I'd donate a copy to every library in the country. The book's in the public domain, so there are multiple cheap paperback editions (complete with spelling mistakes). If you're at a point where you can't even afford to buy a book right now, it's available as an audiobook on Youtube, to listen to for free, so I recommend you do that.