A couple specific events have played a major role in shaping me and setting me on the path to financial independence. The first was meeting and marrying my frugal wife, the second was reading Richest Man in BabylonThe Richest Man in Babylon. When I first read this book back in 2014, I remember being glued to the pages. I finished 144 pages in 3 days… which is pretty good for me, seeing as I’m not a fast reader.

I like this book because it clearly articulates the basic principles of building wealth and investing. You don’t have to be a genius, take huge risks, or get lucky to amass wealth for yourself and your family. This book shows how simple it is for everyone to improve their financial station, using simple allegories taught by Arkad, the richest man in Babylon.

I want to walk you through some of the highlights of this book, and why I fell in love with it.

“A part of all you earn is yours to keep. It should be not less than a tenth no matter how little you earn. It can be as much more as you can afford. Pay yourself first. Do not buy from the clothes-maker and the sandal-maker more than you can pay out of the rest and still have enough for food and charity and penance to the gods.”

“Wealth, like a tree, grows from a tiny seed. The first copper you save is the seed from which your tree of wealth shall grow. The sooner you plant that seed the sooner shall the tree grow. And the more faithfully you nourish and water that tree with consistent savings, the sooner may you bask in contentment beneath its shade.” pg. 27

The first key that everyone needs to master in order to build wealth are the basics of budgeting and controlling your spending. Unless you have some form of income that is not dependent on you working (i.e. pension, annuity, current investments, business, royalties) then it’s important to save a portion of your income.

According to Debt.com, 43% of people struggle to pay their bills. The cycle of living paycheck-to-paycheck is not only bad for your psyche, but it’s also horrible for building wealth. As Arkad teaches, it’s essential to “pay yourself” a portion of everything you make; only then can you start to put that money to work for you. You should save no less than 10%, but the more you save, the faster your “tree” will grow.

“I tell you, my students, a man’s wealth is not in the coins he carries in his purse; it is the income he buildeth, the golden stream that continually floweth into his purse and keepeth it always bulging. That is what every man desireth. That is what thou, each one of thee desireth; an income that continueth to come whether thou work or travel.”

“Great income I have acquired. So great that I am called a very rich man. My loans to Aggar were my first training in profitable investment. Gaining wisdom from this experience, I extended my loans and investments as my capital increased. From a few sources at first, from many sources later, flowed into my purse a golden stream of wealth available for such wise uses as I should decide.”

“Behold, from my humble earnings I had begotten a hoard of golden slaves, each laboring and earning more gold. As they labored for me, so their children also labored and their children’s children until great was the income from their combined efforts.” pg. 45

As Warren Buffett said, “if you don’t find a way to make money in your sleep, you will work till you die.” Arkad knows this lesson well and teaches us that the goal is to establish income sources that do not tie our time to the money we earn.

Establishing multiple streams of income makes you less reliant on any individual source. If you rely on your current job 100% while living paycheck-to-paycheck, what happens when you are no longer bringing value to your company and they decide to let you go? Let’s just say you’re up a certain creek without a paddle.

You might have heard that the average millionaire has 7 income streams. I haven’t actually been able to back that up, but I think we can all agree that it’s more than 1. Now when I say 7 income streams, I’m not talking about working 7 different full or part-time jobs. Other avenues where you can make additional money are things like a side-hustle, spouse/partner’s job, stocks, bonds, real estate, consulting services, hard money lending, online business, or royalties.

The more sources you have, the less of an impact it will be to lose a single source. By setting up more income streams, you put yourself in the driver’s seat, with the ability to take a risk when a good opportunity arises.

“What progress have you made since last I saw you?”

“I have paid myself faithfully,’ I replied, ‘and my savings I have entrusted to Agger the shieldmaker, to buy bronze, and each fourth month he does pay me the rental.”

“That is good. And what do you do with the rental?”

“I do have a great feast with honey and fine wine and spiced cake. Also I have bought me a scarlet tunic. And some day I shall buy me a young ass upon which to ride.”

To which Algamish laughed, “You do eat the children of your savings. Then
how do you expect them to work for you? And how can they have children that will also work for you? First get thee an army of golden slaves and then many a rich banquet may you enjoy without regret.” pg. 29

The next lesson is a tough one to embrace. We live in a “treat yourself” society. A society that rewards and encourages immediate gratification. Arkad fell into this trap in his younger years but learned that he was prematurely cutting off the stream that would someday grow into a river of income.

I’m not encouraging you to forever hoard your money, but rather consider that there is a “time and season” for everything. If you are in a perpetual state of spending, then the income stream from your wealth will never be able to fully sustain your needs. Everything is a balance and you need to figure yours out.

“Those eager to grasp opportunities for their betterment, do attract the interest of the good goddess. She is ever anxious to aid those who please her. Men of action please her best.

“Action will lead thee forward to the successes thou dost desire.” pg. 70

We are encouraged to better ourselves through learning. Not only are we to continually seek learning, but when the time is right, apply what we’ve learned into action.

Lastly, the author sums up everything nicely with The Five Laws of Gold.

I. Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.
II. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
III. Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
IV. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.
V. Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment. pg. 77

No one wraps this up better than Arkad himself, “There is more gold in Babylon, my students, than thou dreamest of. There is abundance for all. Go thou forth and practice these truths that thou mayest prosper and grow wealthy, as is thy right.”

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