Build Wealth: The Richest Man in Babylon

I wanted to share my view on what I believe is one of the most creative financial books on wealth that I have read. That book is George Clason’s Classic, The Richest Man and Babylon. This book takes the most basic financial principles and tells them in story form.

The thing that won me over with this book was how detailed the stories were. The stories have a very emotional backdrop that applies to financial hardships today. In the first story we are told about a chariot maker named Bansir who sits on his porch pondering why he has spent  all the years of his working life building chariots, all while making a nice income but has no wealth. His friend comes along and wonders why isn’t it working hard to finish a half built chariot on his land.

Bansir tells his friend that he is tired of doing the same thing over and over, only to find out that the money he earns disappears. As a result he ends up broke and can’t explain why. He goes further, as he looked enviously at the wealthy who ride his grand chariots and wonders how do they maintain such wealth.

Bansir asks his friend Kobbi why has he come over. The response was “to borrow 2 gold coins”.  Kobbi was a bit upset when he was told no. It was explained that it was all that Bansir had to his name. His net worth was in his pocket. Despite working for dozens of years and making a good salary with his skills, he has nothing in savings.

Today there are millions of people who are just like Bansir. It doesn’t matter what your salary is, what neighborhood you live in, or what social events you attend. If your savings are non-existent, you will never be wealthy. In fact you are one job loss or emergency away from financial ruin.

A checking account is not going to get us to wealth, a coin jar, mattress, nor a savings account. The only thing that can create wealth is to practice the habits of the wealthy. In this book, it is revealed that sound financial principles that have worked since biblical times are the key to wealth.

The path to financial freedom starts for Bansir and Kobbi with their exchanges of ideas. They simply asked “why don’t we ask someone who is rich how they did it.”

This is a great piece of information. Many ask what is the secret to being rich, losing weight, or purchasing a home. The best solution will always be to seek the advise of someone who is where you want to be and ask them how did they arrive at that place. Most successful people openly reveal what made them successful, I can’t think of a single success story where a successful people hide the key to their success. Becoming wealthy isn’t a secret, it isn’t obtained by the masses because it requires sacrifices most aren’t willing to make. Such as saving consistently without touching those savings and educating ourselves on sound financial principles with discipline to follow them. However the number one reason people don’t find wealth is the failure to sat and be counseled by someone who has walked the path before us.  Bansir and Kobbi figured the best way to achieve wealth would be to ask a wealthy person to teach them how to be wealthy. The sought out the richest man in Babylon and took study under his principles.

“The reason why we have never found measure of wealth. We never sought it.”

1. Start thy purse to fattening/Pay yourself first: In the story, the richest man in Babylon admits he was taught the principles of wealth in his youth. He was broke and disadvantaged like most and was not a scholar. He asked a customer of his labor to tell him the secret to how he had amassed vast wealth and the patron said “I found the road to wealth when I decided that a part of all I earned was mine to keep.” This is the first rule to gain wealth and is also the most important. It teaches us to set aside 10% of each dollar we earn. The way this principle can applied in modern-day, set up an automatic transfer of 10% of your take home pay to an account that is difficult to touch. Studies have proven that when automatic payments are set up, payments remain consistent and are less likely to be disrupted. The automatic transfer takes the problem out of the equation (your decision-making). This is why bill collectors suggest auto-pay so often. Think about this in deeper way, the principle is telling us to actually take ownership of a portion of our earnings as ours to keep. Notice that people are generally more open to share salaries, but not savings. Over the past few years the average American saves less than 5% of take home pay.

2. Control thy expenditures: As stated in the book, that what each of us calls our ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary. “Confuse not the necessary expenses with thy desires. Each of you, together with your good families, have more desires than your earnings can gratify. Our earnings and expenses always seem to “just make it”. Being broke can be viewed like a scale (expenses/income) with equal weight on each side. It is a natural occurrence to use resources as they become newly available. When pay raises, refund checks, promotions, and lump sums happen; we level the scale out with more spending, rather than taking the “surplus” and allocating it to savings. You can’t become wealthy without keeping a lid on expenses to no more than 90% of your earnings. I believe this is the biggest obstacle for American households, as 76% of earners are living from paycheck to paycheck. The biggest contributor being a failure to adequately manage expenses while not saving at all.

3. Make thy gold multiply (Investments): The book’s interpretation of investing was Arkad’s stated “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.” We can not just simply fill our accounts with funds via saving. We must also ensure that our wealth in-turn, creates wealth.

4. Guard thy treasures from loss: The book is quoted to say “Guard thy treasure from loss by investing only where thy principle is safe, where it may be reclaimed if desirable, and where thou will not fail to collect a fair rental.” Rental is another word for interest. Many believe this law is suggesting not to invest. However this law is stating to only invest things in which you have expert knowledge or the assistance of an expert. Passive investing in low no-load mutual funds does fit the fundamentals of this 4th principle. I could be added that term life insurance, health insurance, long-term care insurance (for those over age 60) and umbrella insurance be used to protect one’s wealth from loss.

5. Make of thy dwelling a profitable investment: Homes are excellent investments with appreciation hovering 2-3% annually. This law tells us to be wise in the purchase of our home so that it may appreciate over time. That means buying in good neighborhoods, updating, etc. Home ownership also locks in your fixed expenses, whereas rent always increases overtime.

6. Insure a future income: In the book it was said that a man’s wealth isn’t in the purse he carries. It is the golden stream of coins that refill the purse regularly that keeps it full. This law tells one to think long-term and protect yourself from a lean purse in old age. The best way to insure a future income is to participate in your employer’s 401k match, Roth IRA, and other long-term investments.

7. Increase thy ability to earn: I am a true believer that we can not improve our circumstances without improving ourselves. The only way to earn more, is to acquire skills that are needed in the market. As human capital, we are paid in accordance with our skill set, designations, certifications, experience, and credentials. Your salary will always match the difficulty of replacing your skills for the position you hold. Fast food pays poorly because it requires very little skill to perform job functions.

In summary, the book teaches us to save 10% of every dollar you earn. Eliminate unnecessary expenses, we often are awarded lump sums and pay raises, only to react by increasing our lifestyle to absorb those funds. We are also taught to invest wisely throughout our lives as to ensure an income in our futures. This includes the purchase of a primary residence. I will add that Investing doesn’t just end with monetary transactions. We must also invest in ourselves as to gain the ability to earn more. This book teaches us valuable lessons on a few questions many people never seek the richest man for answers. (how can I save more?/how can I earn more?/how can I become wealthy?) If you want to be wealthy, seek wealth.

“The reason why we have never found measure of wealth. We never sought it.”

The Richest Man in Babylon Purchase it here from


  • I love the information you gathered from the book. I gained that it is important to have money mentors or ones that can show you the way.

  • Big believer in the pay yourself first. Thanks for sharing this!

      / Reply

      Thanks for the comment, the audio version of this book is pretty entertaining as a story.

  • Dividendsdownunder
    / Reply

    Hey Ron, thanks for sharing. I hadn’t heard of the book but I enjoyed the lessons you shared from it. They read as like commandments on how to live a financially good life. 🙂


      / Reply

      I would encourage you to listen to audio version. It reads like a ancient story but is still applicable to modern day personal finance.

Leave a Reply

Your email address will not be published. Required fields are marked *