Synopsis of The Richest Man in Babylon
The Richest Man in Babylon is a collection of short stories in the form of parables. These parables tell the story of Arkad, how he built his wealth and the others who follow in his footsteps. Arkad is the richest man in Babylon and he demonstrates that the path to wealth is simple. All you have to do is follow a limited set of rules and wealth will naturally follow.
How to Build Wealth – Seven Principals
- Save Money
- Control Expenses through use of a budget
- Invest Wisely
- Manage Risk
- Make your home a profitable investment
- Purchase health, life, and disability insurance
- Increase your earnings capability
These are great lessons with one exception. The 5th principle, make your home a profitable investment is bad advice. Your personal residence is never an investment. It’s a liability. That’s not to say that you can’t turn a profit by owning a home, or that you won’t build wealth by doing so, but it’s not an investment. Your house is a liability. Investments provide you with regular income. Your house, on the other hand, is often a money and time sink on an ongoing basis. You have to mow the lawn, paint the walls, repair appliances, etc…
Five Laws of Personal Finance
- Save at least 10% of your income.
- Invest it wisely
- Safety of principal is important
- Invest in what you know
- Get rich quick schemes are scams
General Personal Finance Advice
- It is important to take personal responsibility for your wealth building.
- Building wealth is not a matter of luck or gambling. “Luck” is simply another word for opportunity.
- Those who work hard and diligently attract “luck” to them.
- No matter where you start in life, no matter how poor or disadvantaged you are, you can still end up wealthy. All you have to do is follow the laws of personal finance and wealth.
- At the end of the day, George S. Clason has laid out a blueprint for how to become wealthy. He argues that you simply need to follow his steps and you’ll build wealth.
- The laws of wealth are timeless. They apply the same way in the 21st century as they did in ancient Babylon.
The Richest Man in Babylon Review
I found this book to be a great read. The author, George S. Clason, provides valuable personal finance lessons in an easy to digest format. His focus is to use storytelling to pass on the rules to building wealth. He is quite successful in this regard. The richest man in Babylon, Arkad, is easy to relate to as we learn about his beginnings as a humble scribe, and watch as he builds his wealth.
The book is a collection of parables. Consequently, the book is repetitive at times, as the same personal finance lessons are repeated over and over again. Instead of this being negative, I take this to be positive. Through repetition, the author is able to better communicate the importance of following his steps in order to achieve success.
What George Clason does well:
- Parables are great at allowing the reader to relate to those trying to build wealth. He highlights those who went from bad circumstances all the way to wealthy.
- He lays out a simple blueprint that anyone can follow. This is the BEST value that you can get out of this book. His steps are simple and easily replicated by anyone. Most importantly, they work.
What George Clason does poorly:
- George Clason focuses almost exclusively on general principles. This is not a book for detailed specific strategies. He basically prescribes some guidelines, and if you stay within those guidelines you’ll be successful. You’re not going to find advice about tax planning, 401ks, or what stocks to buy while investing.
- His language is purposefully dated. This can make it hard to read, and you really have to translate it into modern English to make it useful. I’ve already translated his principals for you so that it’s easier to understand.
Rating of the Richest Man in Babylon
The Richest Man in Babylon is a very good book for teaching basic personal finance lessons. The blueprint for wealth that he discusses is quite useful. I would highly recommend this book to anyone seeking a better understanding of personal finance and the key lessons around building wealth.
Learn more about my book review rating system.
One Sentence Summary
The only way to build wealth is to know and follow the laws of wealth building.
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