The Richest Man in Babylon: 10 Best Transformational Lessons

What is the link between personal finance and Babylon 4,000 years ago? Perhaps, nothing we know of. But a book written almost a century ago, The Richest Man in Babylon (1926), by US author George Samuel Clason, is still considered a must-read book in the realms of personal finance. Clason invoked Babylon, home to the […]

Manish Pandey Updated on: Jan 12, 2023 · 5 min. read
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What is the link between personal finance and Babylon 4,000 years ago? Perhaps, nothing we know of. But a book written almost a century ago, The Richest Man in Babylon (1926), by US author George Samuel Clason, is still considered a must-read book in the realms of personal finance.

Clason invoked Babylon, home to the Hanging Gardens of Babylon, among the seven wonders of the ancient world, to come out with a collection of parables depicting mainly wisdom of personal finance. Clason created a fictional protagonist, Arkad, a journo who went on to become the “richest man in Babylon”.

The financial wisdom which forms the crux of the parables offered through Arkad’s viewpoint is the crux of the bestseller. Clason relied on pamphlets reeled out by the US banks and insurance companies to collate this personal finance masterpiece, which has sold 2 million copies and is still a must-read book, which was published almost a century ago – 96 years to be precise.

We delve into the highly inspirational lessons of wealth creation from the rich content of the book, initially envisaged as general themes of financial advice. It is mainly classified into The Seven Cures and The Five Laws of Gold.

The Seven Cures are ways and means for generating money and wealth while the Five Laws are insights on protecting wealth and its investment. The general nature of the book offers scope for overlap. We take a look at these phenomenal takes on personal finance from the book.

Also Read: 10 Lessons You Need to Embrace from ‘Think and Grow Rich’ to Become Successful

Richest Man in Babylon Lesson 1: Investments in self

The main realisation we all need is to trust our worth and our efforts. One of the most significant investments that individuals tend to sweep under the carpet is the focus on self-investment. Rather modern society tends to look at the primacy of children and retirement.

While the importance of both of these cannot be disputed we rarely realise that unless we do not channel our investments in ourselves, we cannot have equipped to reach the above-mentioned goals. So pull yourself up from the bottom of our priority list vis-a-vis investments in our valuable time, money, and resources.

Sacrificing ourselves first en route to achieving our goals does not work. But yourself at the centre of your own goals. The idea is that when our own time and wellness are prioritised, we are graced with abundant energy. This positive energy would boost your productive juices and in turn your revenues.

We should also not be afraid of our investments which go astray as these also yield good lessons. This essentially means you imbibe excellent lessons from failures. Such investments also have the potential to drag you out of the cocoon of your comfort zone and to take more risks.

Relentless learning is the differentiator between the rich and the poor. Also, these minds refuse to rest on their past glory and constantly strive to achieve more success. Our focus should be to customise our power and skills to achieve our aims.

So we can invariably earn more by channelling our investments into education and developing more skill sets thereby making ourselves equipped to be employable. The idea should be to be in a state of constant improvement in our learning. That is the best foot forward.

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Richest Man in Babylon Lesson 2: Focus on our social environment

The saying goes that man is a product of his surroundings. In other words, your social environment determines who you are. It reflects on your general mood, worldview and aspirations. Arkad advocates putting yourself in an enlightened environment surrounded by people with positive vibes.

Such a conscious decision will enable you to imbibe a sense of empowerment. You would end up being proactive rather than opting for a reactive thinker. These people with positive vibes raise the bar for you so that you stretch yourselves and put in more effort, elevating yourselves to a higher plain.

Naturally, a sense of self-belief is instilled in you. This requires a fine-tuning of thought processes, mindsets and habits as well. So a wise approach of surrounding yourself with positive vibes will do the trick.

Richest Man in Babylon Lesson 3: Approach to wealth

We should aim to grow wealth, or else we would also stagnate with it. Multiplying your resources is a wise move. Money becomes stagnant if each unit of it only provides a similar unit or even two. The approach here should be to expand or multiply our wealth of resources, which would open many vistas for you.

In essence, working for your wages alone would not suffice. We should tap our abilities to constantly churn out more wealth without investing much of our presence.

Spotting ideas or investments that would multiply on their own can create wonders as it would do so without draining our inherent abilities. Our wages can be utilised for investments in assets that would provide a steadier income for us. For example, if we have a consolidated sum as a bank deposit, it would not multiply on its own.

You should extract some revenue from that deposit, utilizing investing in say mutual funds or tap the recurring deposit route to grow it.

Also Read: 60+ Rich Dad Poor Dad Quotes on How to Achieve Financial Freedom

Richest Man in Babylon Lesson 4: Visualising future streams of income

Clason’s Arkad exhorts us to foresee our future and visualise a scenario in which man is all alone. In such an eventuality, we must be prepared to or must have planned enough to take care of ourselves.

Because we may not be in the pink of our health to work and earn then. Savings is vital in this case – in the event of such a distress scenario. If you have savings, it also gets rid of stress and will be sufficient to make purchases which you deem necessary.

With this comes financial freedom and that would result in peace of mind. Arkad invokes a basket theory to make us realise this beautifully.

The analogy is about a basket that has a certain number of eggs – 30 in this case. So every month, we get 30 eggs – perhaps a reference to your permanent income.

However, we are also consuming 30 eggs, every month leaving the basket empty. Once you save a single egg per month the scene changes. It multiplies to 35 after five months and adds more and more eggs as months pass by.

This illustrates the power of savings as after some time you may need another basket to keep the eggs or resources that you have saved. The point is to earn for your future through savings, insurance policies, and retirement plans.

If you fail to save, you end up with an empty basket at the fag end of our livelihood, making survival difficult.

Also Read: 10 Lively Lessons The Book Harry Potter Teaches Us

Richest Man in Babylon Lesson 5: Approach to savings: The 70-20-10 rule

Our target should be to save a modest 10 per cent of our income, rather than aiming too much. Even this, many would find it difficult, though in principle we all agree about the need for savings. The fact is it is not at all difficult to save in the short term or for the long term.

If you have set definite, achievable targets, it is not a difficult proposition. Having such a target is up to you – no one else can set a target for you.

By following the 70-20-10 rule we can achieve this. Our income should be divided in such a way that the major chunk, or 70 per cent of it, is earmarked for food, clothing, shelter and necessities we call living expenses. The next 20 per cent should be your savings.

Of this, 10 per cent should be earmarked for retirement plans.

Five should be allocated to emergencies like medical expenses and repairs of your vehicle. The remaining 5 per cent should take care of our specific goals like vacations, intended purchases etc.

This leaves 10 per cent of our income which we can use to service our debt like loans, credit card payments and stuff like that. The key here is to stick to the percentage of allocations, lest all your calculations and the rule itself would go for a toss.

But if it is inevitable, you can tweak the rule and offset extra spending by reducing savings. But if we so wish to spruce up our savings, our living expenditure should be slashed. Cutting down the allocation for debt by reducing the debt portfolio itself is another way.

So perhaps when you earn additional income, like say a bonus, you can earmark more for paying off debt. This will cut debt exposure in the long run. You need to somehow save more regardless of your income so that your future is secure. This is possible by leading a disciplined life – financially and personally.

Also Read: 50+ Best Expectation Quotes: What We Expect From Life & How to Keep Yours High

Richest Man in Babylon Lesson 6: Living in the moment

Focusing on savings and discipline is fine, but we also have a life. A life that is ahead of money, savings, career objectives and our relentless pursuit of success. Some thought should go into this aspect also, apart from the number of games involving wealth and money, which is so much linked to our future.

These overwhelming concerns about a probable happy future should not take away the present moment from us –it is the moment of truth. We should enjoy this moment. We are not the masters of our destiny so overriding concerns about our future safety can turn out to be a futile exercise.

We are not sure about how much life we have in store. This is not about worrying about our life span, but this is all about factoring in such eventualities. If we accept that fact, we can shape our life trajectories better.

Striking this balance between future requirements and present joys will be beneficial for us. So focus on savings should be done away with. So is the case with business, future and investing.

Richest Man in Babylon Lesson 7: Home, Sweet Home

Your lifestyle is more or less fashioned by your home. Arkad’s philosophy prompts us to buy a home rather than live in a rented space. The argument is that owning a home would ensure we would stick to a comfortable lifestyle as this investment would have otherwise been accounted for by rent.

Owning a home allows you to or rather would prompt you to save and invest. It offers a sense of responsibility and also works as an ego booster. The other benefits are appreciation of the value of property and income tax benefits and a host of financial advantages.

Purchasing a residence of your own is a sure-shot step to boost your investment. As per traditional wisdom, this is a significant investment as home values always show an increasing trajectory. The essence of home is that it is an investment that you do for the future.

Richest Man in Babylon Lesson 8: The spending approach

Those running households always complain about the constant drag called expenditure. This argument happens despite the decent or above-average pay cheques, as complaints pour in over the inability to control expenses.

Because the more you earn the tendency to spend much more. You need to control your expenditure. There is no shortcut to achieving that aim. It is easy to spend more, but difficult to put a lid on your expenses.

As soon as we start earning more, we should be cautious to save more. This should be a calibrated exercise; you need to make yourself aware of the importance of saving more as years pass by.

This is a mind game played between yourself and your mind and you need to rein in your impulse to spend more. So exercising control over your expenses should be given top priority. Inject the thought in your mind that your savings determine your future.

Also Read: 40 Best Affiliate Marketing Quotes: Words of Wisdom from Industry Experts

Richest Man in Babylon Lesson 9: Betting on familiarity

Your investment bets should always be biased towards familiarity. That is, take the route of proven investments rather than gunning for the perceived hot avenues. All investments have an element of risk, with only the degree varying.

The Richest Man in Babylon urges us to do smart investing. Arkad is exhorting us to make sure that our principal amount is safeguarded. In other words, being enamoured by perceived higher earnings while risking our principal is not considered a wide idea.

So, we need to do deep studies on the hidden risks our investments are subjected to. We should not be swayed by other huge probable benefits which are dangled to all investors. Playing the long game should be the core idea.

Allurements to get rich quickly may have their pitfalls. So while it is a difficult situation to find new avenues to invest your savings, you can always rely on your proven investment track.

By adopting this strategy, we can save money, time the energy spent on such calculations. That is a great stressbuster.

Richest Man in Babylon Lesson 10: Picking your mentors

If you stick to all of the above ideas, the only way you could end up hitting a wobbly track is to run into a poor mentor.

There are umpteen people who would come up with outlandish suggestions on investing. Your foremost concern should be to skip their advice. The focus of your trust should be on experts as finance is a tricky proposition.

Arkad tells us that amateur players hand out cheap suggestions and almost all of them are shallow. We should get acquainted with those who are good enough at making money sensibly without immersing themselves in the cesspool of risk.

Such people stick to their plans and play the long–term game. Discipline is the buzzword for them and they wear consistency on their sleeves. By interacting with them frequently you are poised to get wealthier in a healthy manner.


The Richest Man in Babylon is hardly a preacher. Instead, he is also a layman like us. He is an exponent of practical, wise decisions. These qualities are the bedrock of any investment with a proven track record.

We should always tread the safe path and resist the temptation to splurge on supposed hot investments, lest we end up ruining even our principal amount.

There is no shortcut to making money, but investing wisely would definitely make you wealthier and climb the ladder of success.

As they, say nothing succeeds like success and there is nothing to substitute wealth earned with proper preparation.


The Richest Man in Babylon by George S. Clason

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