The Richest Man in Babylon

The Richest Man in Babylon by George S. Clason, is a classic and is a great book when you starting out your financial journey. There is a lot information in the book, some now I look back and disagree with and some that have stuck with me.  The books start off by describing couple of guys one by the name of Bansir and the other Kobbi, who were lamenting how broke they were and how come their friend Arkad, was the richest man in Babylon and yet they started together. The author then takes us on a journey together with Bansir ,and company on how Arkad became very wealth and how we can do the same. The lessons from the book that have stuck with me the most are the Five laws of gold that George talks about. They are namely:

1.)    Gold comes gladly and in increasing quantity to any person who will put not less than a tenth of their earnings in order to create an estate for their future

2.)    Gold labors diligently for the wise owner who finds for it profitable employment, multiplying even like the flocks of the field.

3.)    Gold clings to the protection of the cautious owner who invests it under the advice of men wise in its handling.

4.)    Golds slips away from the man who invests it in businesses or purposes with which he is not familiar with.

5.)    Gold flees the man who would force it to impossible earning or who follows the advice of tricksters and schemers.

The laws are great when you are starting out your financial journey especially if you have just gotten a new job. The problem with the youth of today is that they have no financial plan…live today and forget about tomorrow. However, if you are smart and want to stay ahead, following these five simple laws is a great start. I want to go in deep and explain the five rules and how you can apply them in your life.

The First rule: Gold comes gladly and in increasing quantity to any person who will put not less than a tenth of their earnings in order to create an estate for their future

The author recommends setting aside a percentage of your money usually 10% when you get paid can go a long way. Depending on the person, the percentage of the money you save can vary from 10% to 60% provided that you can take care of your expenses. Your savings over time will grow and you will also learn to live below your means as most of the time you find you waste money buying dumb stuff.

The second rule: Gold labors diligently for the wise owner who finds for it profitable employment, multiplying even like the flocks of the field.

Basically this means investing. Great investments will yield great results. I cannot give you advice on what to invest as I have no expertise on the matter. The blind should not lead the blind. However, if you put in the time, you should research on investing on unit trusts like money market funds, balanced funds, equity funds etc. I am also considering them and will update my experiences on them. Another area to invest is on yourself. By investing in yourself by doing courses and gaining skills, you raise your market value in the job market. The more you know and apply, the higher the value you can bring to the table. Remember, it’s all about value. If you solve people’s problems...that’s value. No one cares about your background, people care about having their problems solved and that’s where you profit. Another area to invest is in your side hustle. If you do not want to work for the man years on end, starting a side hustle to generate a second source of income is one way to do this. Which business you start is up to you but make sure it solves a problem. That’s the easiest way to start a side hustle. Look for problems people have and offer services that solve them.

The third rule: Gold clings to the protection of the cautious owner who invests it under the advice of men wise in its handling.

We all know that guy who sells you odds for football and says that if you give him Ksh 1,000 you can make Ksh 30,000. Then you wonder why he is going for the 1,000 yet he can have the 30,000. Then you think this guy is dumb and you buy the odds only for them to backfire and for you to lose money. Most of us can relate to this and have fallen prey to it. What the author is advising us is to not put our money in areas where the wise people are not. If your financial savvy friend is not buying football odds there is a reason he is not. You have to be cautious and see where smart people are investing their and how they are doing it. You shouldn't invest in every little scheme your friends tell you about.

The fourth rule: Golds slips away from the man who invests it in businesses or purposes with which he is not familiar with.

Do not invest in Bitcoins. If you don’t know bitcoins, do not invest in Bitcoins. Even though it is selling like hot cake and the potential to make money is high, do not invest if you don’t know anything about it. This is when ego comes into play and you think because you are very smart, you buy Bitcoins only for it to fail and start calling it a scam yet it is you who did not know anything about the it. Even worse is when you take out a loan to finance a business because you saw on the news that it is very marketable. Remember quails? It came and it went. The guys who knew about quails and how to leverage them and make money, made their money and went. The guys who bought into the hype even though they did not know a thing about quails, bought quails and by the time they went to the market with the eggs, the demand wasn’t there.

The fifth rule: Gold flees the man who would force it to impossible earning or who follows the advice of tricksters and schemers.

Remember public likes? How we were all taken for a ride about how you can make insane amount of money by clicking some buttons after activating your account. For most of us, we remember it like it was yesterday. I admit I was one of them but I was greatly humbled and learnt my lesson. You cannot invest Ksh 5,000 and make  Ksh 100,000 by week’s end. Anyone who sells you this idea is a scam artist and should be locked up. The main problem is that people want to get rich easy without putting in the work. The only way this is possible is if you inherit the money from your parents. Any other way is a scam. You have to put in the work in whatever you do in order to profit.

So those are what I picked from the book. If you have not read the book, I highly recommend it, click the link below to grab a copy. If you have comment down below on what things you learnt from the book.

The Richest Man in Babylon