There’s a saying in French, “The more things change, the more they stay the same.” This is definitely true of “The Richest Man in Babylon” by George S. Clason. First written in 1926 as a series of parables set in ancient Babylon, the book is one of Penny Hoarder’s top-ranked finance books.
Clason believed that money came easily for those who understood the rules of its acquisition–sadly, this did not save his map business when the Great Depression hit. However, Clason’s words are still known today because they still apply–even if you’ve never heard of Clason you’ve probably heard his saying “Pay yourself first.” The book has several pieces of advice along these lines.
The book starts out when Sargon, the king of Babylon, realizes the city is struggling with horrific income inequality. A few have more than enough while the vast majority are living paycheck to paycheck. Rather than redistribute the wealth, the king decides to provide financial education. Arkad, the wealthiest man in Babylon, then sets out a guide for acquiring wealth–the secret is saying “Part of what I earn is mine to keep.” When the students ask if all they earn isn’t theirs to keep, Arkad points out that living life costs money, and only what they save is theirs to keep.
Arkad teaches his students the seven cures for a lean purse, with advice ranging from not making investments which can cost you your principal to saving ten percent of your income. After Arkad finishes teaching, Kalabab teaches the five laws of gold, which range from gold “cometh gladly and in increasing quantity” to people who set aside ten percent of their income, and that a fool and his money are soon parted. After Kalabab finishes his educational monologue, Mathon the moneylender mentors Rodan the spear maker, who has just come into a large sum of money and has no idea how to invest it, and Dabasir the camel trader, who is deep in debt. The book ends with the story of Sharru Nada, a merchant prince, who instructs wealthy heir Hadan Gula on how to avoid losing the money his grandfather made.
The book has much useful advice even though our world is more complex than it was in ancient Babylon or pre-Depression America. While poverty is not a moral failure, it is largely self-perpetuating. The paycheck to paycheck cycle is familiar to more than half of all Americans, and it is said most Americans are a paycheck away from homelessness. But setting aside ten percent of one’s income before living on the remaining ninety percent is doable with a minimal impact on one’s lifestyle. There are ways out of poverty for those with the drive, determination, and desire to learn.
On the whole, I enjoyed the book because it helped me understand more about the wise handling of money. I am on SSDI and work part-time in addition to several side hustles. I have learned that I can save up enough for my dream of going to Iceland by putting aside ten percent of my paycheck as soon as I get paid and investing it via Stash, an app designed by a Nobel Prize in Economics laureate. I also live below my means. Some advice is dated, like owning your own home–as we learned during the housing bubble. But other bits of advice are still relevant, like paying off your debts quickly and avoiding going back into debt. I recommend giving this book to every college graduate, everyone with outstanding loans, and anyone who wants to get ahead in life. I plan on re-reading the book every year as part of my financial check-up, because while our culture has changed, the truths behind finances haven’t.