Key lessons you can learn from Arkad, the Richest Man in Babylon.
Photo credit: Ridwan
Authored by George S Clason, and published in 1926, The Richest Man in Babylon is an insightful book on principles of wealth creation. The book delves like a bulldozer in matters pertaining to financial planning, personal wealth, and redefining the purpose and meaning of wealth.
The book is set in Babylon, a city whose glory and reputation, like milk and honey, have endured the test of time. However, when King Sargon returned from war, he was saddened by the fact that Babylon was now characterized by high unemployment, low purchasing power and no demand for produce. Reason being that the gold and treasures of Babylon found their way to few rich men who mastered the art of wealth creation.
The King then summoned the richest man in Babylon, Arkad, to share his knowledge on wealth creation. To his response, Arkad asserted that opportunity is a haughty goddess who wastes no time with those who are unprepared. Therefore, if the Babylonians should desire to amass great wealth, then they have to thirst for its knowledge.
The King thus granted Arkad 7 days to share his knowledge. The teachings, which are wrapped into a collection of parables, focused on how to cure an empty account.
The following are key lessons you can learn from Arkad, the Richest Man in Babylon.
1. Start your purse to fatten / Start fattening your financial accounts
If you want your financial accounts to thrive, start by setting aside 10% of your income. The 10% income is a way of paying yourself first, and should never be used for expenses. When you set aside 10% of your income, you will automatically adjust your budget to fit the remaining 90%. If you do this more often, chances are that your account shall be holding a threshold amount for every payday.
The Richest Man in Babylon states that, “For every ten coins you place within your purse take out for use but nine. Your purse will start to fatten at once and its increasing weight will feel good in your hand and bring satisfaction to your soul.”
2. Control your expenses
One of the major reasons why you may find it difficult to set aside the 10% is because of unnecessary expenses, which are a result of insatiable desires.
The Richest Man in Babylon hints that desires grow in men so freely whenever there's a possibility of them being fulfilled. You are then tasked to thoughtfully study your habits of living for you to find expenses that could be reduced or eliminated completely.
A skillful way to do this is by creating a budget. The main purpose of drafting a budget is to identify leaks from your account, and also helps to control your spending.
Therefore, the lesson is that always budget for your expenses, so that you may have coins to pay for necessities, enjoyments and to grant your worthwhile desires without spending more than 90% of your earnings.
3. Make your savings multiply
Perhaps a person's wealth doesn't lie in the money he has in his account, but in the income, his profit generates over time.
Since every man desires a continuous flow of income, whether you're working or on vacation, you should employ your savings to work for you. Pick investments that you will earn for, and upon realization of profits, reinvest the profits so that every dime you earn makes for you money.
The richest man in Babylon advises to put each coin to laboring that it may reproduce a stream of wealth that shall flow constantly into your purse.
4. Guard your treasure against getting lost
Many rush into luxurious deals hoping to pluck back huge profits, only except that when you risk your money, you risk losing wealth. Do not be misguided by your own selfish romantic desires to amass wealth rapidly. When investing, do not take any advice from an inexperienced person, but make safe investment decisions.
The Richest Man in Babylon connotes that, he who takes advice about his savings from one who is inexperienced in such matters, shall pay with his savings for proving the falsity of their opinions.
5. Own a home
Make your dwelling place a profitable investment, says Arkad. Owning your own home increases the amount of money to be set aside since you save on rent.
The Richest Man in Babylon ignites the thought that, to a man's heart it brings gladness to eat the figs from his own trees and the grapes of his own vines. To own his own place that he is proud to care for, he puts confidence in his heart and greater effort behind all his endeavors.
6. Insure your future income
Every man must think of the days to come when you will no longer be young. When time has made you unable to learn, the best way to take care of your family is by making preparations for your retirement.
The Richest Man in Babylon says, provide in advance for the needs of your growing age and the protection of your family.
7. Increase your ability to earn
The last lesson in wealth creation by Arkad, the Richest Man in Babylon is to cultivate your own powers, to study and become wiser, and to become more skillful. Therefore, it is the burden of all men to acquire confidence so as to achieve the desired goals.
