The Richest Man In Babylon by George Clason

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The Richest Man In Babylon by George Clason

Postby alvin » Sun Jul 04, 2010 9:04 am

Dennis was just talking about this book yesterday. I have done the book summary a while ago and shall share it here:

Babylon was a rich and modern city at its time and through its stories, the author did a great job to inculcate basic personal finance knowledge that everyone ought to have. Everyone wishes to be rich or financially free and many would think it takes great luck to be able to achieve that. But the author stressed that it is through very simple methods and a determined mind to succeed. It is interesting to see the problem of managing personal finance traces back to ancient times. The author shares with us the wisdom of the Babylonians with regards to money.

Book Summary:

The tale of the man who desired gold
A chariot builder wondered why he labored and still remained poor. After a coversation with his friend, they decided to approach the richest man in Babylon, Arkad, and seek for an answer.

The richest man in Babylon tells his system
Arkad told them about his hardship before he became rich and how he overcame poverty. He stressed that “a part of all you earn is yours to keep”, and that everyone should pay himself first and not less than a tenth of whatever he earns. In addition, each amount saved should in turn work for him to create more wealth. Arkad also warned the importance of where or whom you invest your money in. As mentioned in the book, it was a mistake to trust the brick maker to buy rare jewels.

Seven remedies for a lean purse
The king of Babylon, SARGON, returned after defeating the enemies and the situation of the Babylon city was bad. The King then ordered Arkad to teach the citizens how to acquire wealth. Arkad started inculcating the seven remedies for a lean purse:

1) Start fattening your purse – ‘For each ten coins I put in, to spend but nine’.

2) Control your expenditures – ‘Budget your expenses so that you may have coins to pay for your necessities, to pay for your enjoyments and to gratify your worthwhile desires without spending more than nine-tenths of your earnings.

3) Make your gold multiple – ‘…to put each coin to laboring so that it can reproduce itself and help bring you income, a stream of wealth that will flow constantly into your purse.’

4) Guard your treasures from loss – ‘Guard your treasure from loss by investing only where your principal is safe… Secure the advice of men experienced in the profitable handling of gold. Let their wisdom protect you from unsafe investment.

5) Make your home a profitable investment – ‘Own your own home’

6) Insure a future income – ‘Provide in advance for the needs of your growing age and for the protection of your family.’

7) Increase your ability to earn – ‘…cultivate your powers, to study and become wiser, to become more skillful…’, ‘the man who seeks to learn more of his craft will be richly rewarded’.

The debate of good luck
A discussion took place in the Temple of Learning where they debate whether wealth arised from good luck. Arkad explained that in betting, the game keeper always have the upper hand. A more concrete way to look at luck is that ‘good luck comes to the man who accepts opportunity’. E.g. when a money making opportuniy comes by, he should accept it and not procrastinate, letting it slip away. ‘Action will lead you forward to the successes you desire’.

The tale of the five laws of gold
Kalabab, a traveler spoke the story of Arkad and his treatment to his son, Nomasir. Arkad believed it was important for his son to learn how to manage money before he can inherit his wealth. He gave his son a bag of gold and a clay tablet with the five laws of gold carved on it. He then sent his son away and ask him to return 10 years later. If Nomasir could proved his worthiness, he will be made the heir to Arkad’s wealth. Nomasir lost his bag of gold very soon but it was the five laws that taught him to earn back the gold in multiples.

1) Gold comes gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.

2) Gold labors diligently and contendedly for the wise owner who finds profitable employment for it, multiplying as 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) Gold slips away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.

5) Gold flees the man who would force it to impossible earnings or who follows the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.

The tale of the gold lender of Babylon
Rodan, a spear maker received fifty pieces of gold as reward from the king for improving the spears of the royal guards. He felt lost with so much money and approached Mathon, a money lender, for advice. Mathon taught him the importance of protecting gold through his personal experiences. He advised Rodan that ‘better a little caution than a great regret’ when investing his gold.

The tale of the walls of Babylon
Using the analogy of the high impregnable walls of Babylon to ward off enemy attacks, the message in this chapter tells us that insurance, savings and dependable investments help guard us against unexpected tragedies and we cannot afford to be without adequate protection.

The tale of the camel trader of Babylon
Debasir shared his slavery story and what the Queen told him, “How can you call yourself when your weakness has brought you to this? If a man has in himself the soul of a slave will he not become one no matter what his birth, … If a man has within him the soul of a free man, will he not become respected and honored in his own city in spite of his misfortune?” The message from this chapter – ‘where there is determination, the way can be found’.
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Re: The Richest Man In Babylon by George Clason

Postby Dennis Ng » Sun Jul 04, 2010 9:27 am

alvin wrote:Dennis was just talking about this book yesterday. I have done the book summary a while ago and shall share it here:

Babylon was a rich and modern city at its time and through its stories, the author did a great job to inculcate basic personal finance knowledge that everyone ought to have. Everyone wishes to be rich or financially free and many would think it takes great luck to be able to achieve that. But the author stressed that it is through very simple methods and a determined mind to succeed. It is interesting to see the problem of managing personal finance traces back to ancient times. The author shares with us the wisdom of the Babylonians with regards to money.

Book Summary:

The tale of the man who desired gold
A chariot builder wondered why he labored and still remained poor. After a coversation with his friend, they decided to approach the richest man in Babylon, Arkad, and seek for an answer.

The richest man in Babylon tells his system
Arkad told them about his hardship before he became rich and how he overcame poverty. He stressed that “a part of all you earn is yours to keep”, and that everyone should pay himself first and not less than a tenth of whatever he earns. In addition, each amount saved should in turn work for him to create more wealth. Arkad also warned the importance of where or whom you invest your money in. As mentioned in the book, it was a mistake to trust the brick maker to buy rare jewels.

Seven remedies for a lean purse
The king of Babylon, SARGON, returned after defeating the enemies and the situation of the Babylon city was bad. The King then ordered Arkad to teach the citizens how to acquire wealth. Arkad started inculcating the seven remedies for a lean purse:

1) Start fattening your purse – ‘For each ten coins I put in, to spend but nine’.

2) Control your expenditures – ‘Budget your expenses so that you may have coins to pay for your necessities, to pay for your enjoyments and to gratify your worthwhile desires without spending more than nine-tenths of your earnings.

3) Make your gold multiple – ‘…to put each coin to laboring so that it can reproduce itself and help bring you income, a stream of wealth that will flow constantly into your purse.’

4) Guard your treasures from loss – ‘Guard your treasure from loss by investing only where your principal is safe… Secure the advice of men experienced in the profitable handling of gold. Let their wisdom protect you from unsafe investment.

5) Make your home a profitable investment – ‘Own your own home’

6) Insure a future income – ‘Provide in advance for the needs of your growing age and for the protection of your family.’

7) Increase your ability to earn – ‘…cultivate your powers, to study and become wiser, to become more skillful…’, ‘the man who seeks to learn more of his craft will be richly rewarded’.

The debate of good luck
A discussion took place in the Temple of Learning where they debate whether wealth arised from good luck. Arkad explained that in betting, the game keeper always have the upper hand. A more concrete way to look at luck is that ‘good luck comes to the man who accepts opportunity’. E.g. when a money making opportuniy comes by, he should accept it and not procrastinate, letting it slip away. ‘Action will lead you forward to the successes you desire’.

The tale of the five laws of gold
Kalabab, a traveler spoke the story of Arkad and his treatment to his son, Nomasir. Arkad believed it was important for his son to learn how to manage money before he can inherit his wealth. He gave his son a bag of gold and a clay tablet with the five laws of gold carved on it. He then sent his son away and ask him to return 10 years later. If Nomasir could proved his worthiness, he will be made the heir to Arkad’s wealth. Nomasir lost his bag of gold very soon but it was the five laws that taught him to earn back the gold in multiples.

1) Gold comes gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.

2) Gold labors diligently and contendedly for the wise owner who finds profitable employment for it, multiplying as 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) Gold slips away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.

5) Gold flees the man who would force it to impossible earnings or who follows the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.

The tale of the gold lender of Babylon
Rodan, a spear maker received fifty pieces of gold as reward from the king for improving the spears of the royal guards. He felt lost with so much money and approached Mathon, a money lender, for advice. Mathon taught him the importance of protecting gold through his personal experiences. He advised Rodan that ‘better a little caution than a great regret’ when investing his gold.

The tale of the walls of Babylon
Using the analogy of the high impregnable walls of Babylon to ward off enemy attacks, the message in this chapter tells us that insurance, savings and dependable investments help guard us against unexpected tragedies and we cannot afford to be without adequate protection.

The tale of the camel trader of Babylon
Debasir shared his slavery story and what the Queen told him, “How can you call yourself when your weakness has brought you to this? If a man has in himself the soul of a slave will he not become one no matter what his birth, … If a man has within him the soul of a free man, will he not become respected and honored in his own city in spite of his misfortune?” The message from this chapter – ‘where there is determination, the way can be found’.


this is a very good Summary.

Thank you Alvin. Keep it up!

From my own experience, I realise that the More I share, the more I Learn, so by sharing, you Benefit others, but at the end of the day, you benefit the Most, becos your sharing has helped to Crystallise your thinking and by writing your own words, you're forced to digest the information/knowledge and to Present it....ie. in the Process of writing (sharing), you also move your Learning to a higher level.

That is why I really encourage more Forumers to "step up" and to start posting in the forum. The person who will benefit the Most, whether you post to Share or just to Ask a Question, is YOU, not anyone else.

So why hesitate to post in the forum (can be just asking questions) when you stand to benefit? Stop being just a Passive Reader, start posting!
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Postby alvin » Sun Jul 04, 2010 10:43 am

I realised Dennis already offered 7 remedies to YOUR lean purse :D

1) Start fattening your purse – Dennis says "pay yourself first" and emphasized the importance of saving

2) Control your expenditures – Dennis says "live within your means"

3) Make your gold multiple – Dennis teaches you how to multiply your wealth through stocks, properties, land banking, wine investment and traded endowment funds.

4) Guard your treasures from loss – Dennis teaches you how to avoid scams!

5) Make your home a profitable investment – Dennis teaches property investment. Take more good debts to own more homes!

6) Insure a future income – Dennis teaches you how to be insured efficiently. Insure what is necessary. And also using gold to hedge inflation.

7) Increase your ability to earn - Dennis teaches you the formula to wealth is No of people x value add
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Postby Starfire » Mon Jul 05, 2010 8:35 am

For those who might find reading this book a bit difficult to understand. Our national library also have this title in Audiobooks.
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Postby Dennis Ng » Mon Jul 05, 2010 12:57 pm

alvin wrote:I realised Dennis already offered 7 remedies to YOUR lean purse :D

1) Start fattening your purse – Dennis says "pay yourself first" and emphasized the importance of saving

2) Control your expenditures – Dennis says "live within your means"

3) Make your gold multiple – Dennis teaches you how to multiply your wealth through stocks, properties, land banking, wine investment and traded endowment funds.

4) Guard your treasures from loss – Dennis teaches you how to avoid scams!

5) Make your home a profitable investment – Dennis teaches property investment. Take more good debts to own more homes!

6) Insure a future income – Dennis teaches you how to be insured efficiently. Insure what is necessary. And also using gold to hedge inflation.

7) Increase your ability to earn - Dennis teaches you the formula to wealth is No of people x value add


thanks Alvin, now that you write them down, indeed I am actually offering the 7 Cures for a Lean Purse.

And when I look back, I reached Financial Freedom 2 years ago in year 2008 becos I've been learning from books, seminars, and various mentors and practising the 7 Cures since year 2000 when I resigned from the bank.
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Postby Ms Tan » Fri Oct 21, 2011 3:16 pm

I’m learning something every day. Today I’ve learnt from a humble Beautician who has a BIG dream and has touched my heart.

Before I start my facial treatment, I told her I don’t want to buy any products, I don’t want her to “squeeze” my blackheads or pimples, I just want to enjoy quiet treatment and massage. Most beauticians will do as I’ve requested. However, I’ve met a very different lady today. She cannot stop persuading me on why it is necessary for her to do some of the steps and use some products (she stressed that I don't have to buy from her). She went on & on & on and then she told me she has a Dream, she wants to make women look pretty, from heads to toes.

Her sister has supported her Dream by volunteering to look after her baby in Malaysia (Johor) and sponsor her RM$6000 to take up the beautician course in Singapore. She wants to do her job well and she has completely bought me in as she does her job with passion and with a heart. I can feel that she wants to see good results on her Customers and she means it from her heart.

She is demonstrating that if you serve your Customers well or do your job well, money will come along as a by-product (Formula to Wealth = number of people you serve, multiply by the value add you provide).

I always admire people with dreams and passion. If you don’t have dreams, how can they come true?

Best,
Eileen
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Postby candy_chia » Fri Oct 21, 2011 3:31 pm

Just like what Eker stated in his book, Secrets of Millionaire Mind,

The number 1 reason most people don't get what they want is that they DON'T KNOW WHAT THEY WANT.


Ms Tan wrote: If you don’t have dreams, how can they come true?
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Re: The Richest Man In Babylon by George Clason

Postby candy_chia » Sun Aug 19, 2012 5:59 pm

Ebook, The Richest Man In Babylon by George Clason:
http://www.ccsales.com/the_richest_man_in_babylon.pdf

Pay Yourself First... Wisdom from "The Richest Man in Babylon"
http://www.youtube.com/watch?v=P_vslSwUvCU

Book review by Alvin:
http://www.bigfatpurse.com/2007/10/the- ... ge-clason/
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Re: The Richest Man In Babylon by George Clason

Postby candy_chia » Sun Aug 19, 2012 6:25 pm

7 Strategies to FATTEN Your Purse
posted by Dennis Ng on 30 Apr 2012 11:57 AM

In my journey in learning about managing and growing my money, I have read many books on Personal Finance.

Among all these books, the book that has the most influence on me is this book published in 1926 entitled, “The Richest Man in Babylon”, written by George Samuel Clason. Unlike other books on Personal Finance, this book uses a story telling format to tell the story of the richest man in Babylon named Arkad, sharing practical and useful tips on how to grow one’s wealth with his childhood friends.

Arkad was born poor, but through learning how to plan, manage and grow his money, he became the richest man in Babylon. Similarly, I was born in a poor family as well, with eight of us living in a 1-bedroom HDB rental flat then. However, in the last 18 years, after learning how to manage and grow my money, I achieved financial freedom by the year 2008.

What is Financial Freedom or Financial Independence? It means that if I decide to stop working, I would have enough money to continue maintaining the current standard of living for myself and my family for the rest of our lives.

Do you sometimes feel that money is not enough? Let me share with you “7 cures for a lean purse”, useful Tips shared in this book on how to fatten your purse.

First Cure: SAVE at least 10% of your income

Arkad says that typically when a person increases his income, he also increases his expenses, thus failing to accumulate any savings or wealth for himself. Arkad says that the first step to riches is to start the good habit of savings, and the simplest way is to save at least 10% of your income.

I started working in 1993, from the very first month I started working, I have been following Arkad’s recommendation to save money, in fact, I save 20% of my income monthly. To make the saving habit “automatic”, you can ask your bank to “GIRO” (automatically transfer) your money from the account you receive your income into another separate savings account. By doing so, you separate your savings from the bank account for your daily transactions, and thereby will not mix all your money together.

Imagine if you save 10% of your income, by working for 10 years, you would have saved more than 1 year’s of income!

2nd Cure: Control your expenses


Our desires and wants are unlimited but our financial resources are limited. Thus, we need to differentiate between “needs” and “wants”. For instance, you need a mobile phone, and you may want an expensive smart phone.

Thus, in learning how to manage your money wisely, you need to first prioritise to buy what you need first, and only use the remaining money to buy what you want. However, no matter what happens, your total expenditure should not exceed 90% of your income. By doing so, you can satisfy your desires and wants without spending more than you earn.

3rd Cure: Learn how to GROW your money

Most people only know how to save, but they don't know how to grow their money. If the interest you earn from bank deposits is only 1% and if inflation rate is 3%, you end up losing 2% every year! Over time, you become poorer and poorer, not richer.

Thus, to help us lay more golden eggs (money make money), we need to learn how to convert our “golden eggs” into “golden goose”. Over time, when the income from your golden goose (different investments) exceeds your expenses, you would have reached financial freedom and can choose to stop working and yet continue to maintain you and your family’s lifestyle.

4th Cure: Protect your Capital from Losses

Warren Buffett, the richest investor in the world said that the first rule of investing is “do not lose money”, i.e. protect your capital from losses. How can you protect your capital?

Before you invest, you need to find out in the worst case scenario, HOW MUCH you stand to LOSE from the investment. Do not put all your eggs into one basket, diversify your savings into different investments. By doing so, even if some of the investments incur losses, overall, you might still be able to keep your capital intact.

5th Cure: Buy a House instead of Rent


Everyone needs a roof above our heads. If you rent, over the years, the rental can add up to a significant amount. However, if you buy a house, instead of paying rent monthly, you are paying monthly housing loan instalment. However, when you finally pay off your loan, you would have a valuable asset, your house!

When you buy a house and imagine that one day you will own the house, this may help to motivate you to strive to improve yourself, work hard and motivate you to achieve success.

I bought a HDB Resale flat in 1995 when property prices were high, despite going through the 1998’s Asian Financial Crisis and the 2003’s Sars Crisis, the market value of this HDB flat currently 50% higher, and the house remains a valuable asset.

6th Cure: Transfer risk through INSURANCE


There might be unexpected contingencies, accidents and events that may wipe out our assets and income and ruined our financial plans.

By choosing and getting suitable insurance plans, we can transfer the risk to insurance companies. For instance, you can choose insurance plans such as Term Insurance, Comprehensive Medical Insurance plans, Critical Illness plans, accident plans etc, to ensure that no matter what happens, you and your family’s financial wellbeing is being taken care of.

7th Cure: Increase your Earning capacity

If your income is limited, how much you can save is also limited. Thus, in order to increase your savings, you can either cut down our expenses or increase your income. There is a limit on how much you can cut down your expenses, thus, if you want to get richer, you should aim to increase your income instead.

How? You can try to increase your earning capacity, by upgrading yourself through attending courses and training. Once your knowledge and skill level increased, you’re likely to increase your income.

We should aim for lifelong learning and continuous growth. Because the world is moving ahead, if you’re not improving, you’ll be lagging behind others. If you continue to upgrade yourself increase your value add, you can definitely increase your income and fatten your purse.


7 Strategies to Fatten Your Purse
http://www.cpf.gov.sg/imsavvy/blog_post ... 4654613732

7 Steps to Financial Freedom
viewtopic.php?f=10&t=346&p=788&hilit=7+cures+for+a+lean+purse#p788
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