Book Review: The Richest Man in Babylon

18 10 2008

I read this – The Richest Man in Babylon, by George S. Clason – over the last couple of days, and I find the book both useful and a very easy read.

The theme of the book is on getting money – wealth, specifically, because money is what we use to pay for housing, food, clothing, etc., while wealth is the money we accumulate – and making it work for us. Related topics include budgeting, getting out of debt and home ownership, and in a very minor way insurances are addressed.

This information is shared by way of stories, parable-like, of people living in and around Babylon at the time it began flourishing. King Sargon, desirous of having a stronger city and nation, asks the wealthiest man in Babylon, Akbar, to share with the rest of the population his secrets on becoming wealthy. And the stories shared illustrate different facets of wealth creation and building.

I couldn’t help thinking, as I read some of the “secrets”, that if the traders on Wall Street, the whizzes in Fanny Mae and Freddie Mac and other banks, and the people on the Main Streets throughout the country could have read and taken to heart the secrets, the rules, for becoming wealthy, that we would not today be in the jamb facing our country and the world:

  • Pay yourself 10% of your income – would have helped people develop the fiscal discipline so they could make a reasonable down payment on their house, and the habit thus established would have carried through for the rest of their lives.
  • Make your money work to make more money – even interest in a bank account helps it grow, though today we have other mechanisms to help money grow faster through stocks in good companies, bonds, and other secure devices.
  • Put not your money into schemes promising great reward, because that carries with it great risk – well duh! Let’s see: the Savings and Loan scandal involving the Keating 7, World Quest, Enron, Lehman Brothers, AIG, Fannie Mae, Freddie Mac; how many of these would have been avoided by taking a bit more cautious approach? And if the people wanting the loans had been been saving and had a reasonable down payment, they would not have needed sub-prime loans. And venerable institutions of long and prestigious history would not have been trashed.
  • Every man, unless the gods take him early, progresses from youth to old age, and the wealth accumulated in one’s youth can take care of him and his family in old age. Well, that addresses issues with Social Security!

For a book written in 1926, this has some seriously useful and sound advice. I would go so far as to recommend it to every high school as a part of their life experience class. The principle are few and simple, the concepts are easy to grasp. Everyone may not become J. P. Morgan, but everyone can live a fiscally sound life, becoming reasonably wealthy – comfortably wealthy – into their old age.

Two items touched upon, but are not principles of gaining wealth, are that this requires self discipline and personal responsibility. People must understand that; we must understand that. Once we begin being personally responsible, we are able to take the steps to gain respectable wealth.

Obviously I recommend this book. The material and concepts are appropriate for all ages. The book is well written, is very readable, and the story format is entertaining. The chapters/sections are short, so this works well as a pick up/put down book.

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