The Richest Man in Babylon
George S. Clason
The Richest Man in Babylon is George S. Clason's collection of parables set in ancient Babylon, written in the 1920s. It teaches the oldest rules of personal finance: keep at least a tenth of everything you earn, control your expenditures because they grow to meet income, make your savings work for you, guard them from loss, and invest in your own ability to earn. It remains one of the shortest complete introductions to saving.
You have been meaning to save once things settle down, and they never settle down. Clason's Babylonians had the same problem in 1926, and the cure they offer is not patience but order: a tenth of every payment is yours, taken first, before the landlord, the shop or the tax collector gets a vote.
The book in essence
Clason wrote the stories as pamphlets for banks and insurance companies to hand to customers, and collected them into a book in 1926. The frame is a set of tales about Arkad, the richest man in Babylon, and the lessons he gives to those who ask how he did it. The seven cures for a lean purse are the core. Start thy purse to fattening: keep a tenth. Control thy expenditures, because what we call necessary expenses will always grow to equal our income unless we protest. Make thy gold multiply by putting the savings to work. Guard thy treasures from loss by taking advice only from those experienced in what you invest in. Make of thy dwelling a profitable investment. Insure a future income. Increase thy ability to earn. The five laws of gold restate the same in the form of a warning about greed and impatience.
The book's language is deliberately archaic and its examples are camels and gold coins, which is part of why the rules have never dated: there is nothing in them tied to a product or a decade. It has stayed in print for nearly a century, and many later personal finance writers cite it as the book that started them.
Who it's for
- Anyone who has never managed to save and wants the simplest possible rule to begin with
- Readers who prefer a story to a spreadsheet
- Parents and teachers looking for a first money book to hand to a teenager
Who it's not for
- — Readers wanting anything about investing beyond the principle of seeking experienced advice; the book predates every modern instrument
- — Anyone put off by archaic, sermon-like prose; the ideas are simple and the style is a taste
Key lessons
01
A part of all you earn is yours to keep
For every ten coins that enter your purse, spend only nine. The tenth is not a sacrifice but a priority: you are the first creditor and you are paid before the others. Clason's emphasis is on the order. A small share kept first will, over years, outweigh a large intention to save what is left.
A young courier in Sivas has never saved, because there is never anything left. He sets his bank to move a tenth of each wage to a separate account the hour it arrives. For two months he complains about the smaller pay; by the sixth he has the first savings of his life and has stopped noticing the difference.
02
Control your expenditures
What each of us calls necessary expenses will grow to equal our income unless we protest. A raise is absorbed within months by a slightly better flat, a slightly better phone and a habit of taxis, without anyone deciding it. The tenth taken first is the protest; the rest is learning to tell a real need from a desire that has dressed itself as one.
A family doctor in Edirne gets a raise and, before the next payslip, writes down where it will go: half to the savings order, half to the children's swimming lessons and a better car insurance. A year later the raise is still visible in her savings account, which is not where her previous three raises ended up.
03
Make your gold multiply, and guard it from loss
Savings left idle are only a delay; they must be put to work so that they earn and their earnings earn. But Clason pairs this with a warning that has outlived every bubble: invest only where the principal is safe and take advice only from those experienced in the thing itself, not from a brick-maker about jewels. Guarding the savings from loss comes before growing them.
A retired train driver in Aydın is offered a share in a cousin's olive-oil venture with a promised return of 40 percent a year. He asks the one person he knows who has run an oil press for twenty years, and gets a list of the ways such ventures lose money. He keeps his savings where they were. Clason would recognise the question: ask the jeweller about jewels, not the brick-maker.
Try this today
Set up a standing order for at least five percent of your income, dated on the day your salary arrives, to an account you do not spend from.
Quick check
What is Clason's first cure for a lean purse?
Why do expenses always seem to equal income?
Selected quotes
“A part of all you earn is yours to keep.”
“What each of us calls our necessary expenses will always grow to equal our incomes unless we protest to the contrary.”