These are the extracts and my notes from the 1926 book by George S. Clason, The Richest Man in Babylon. One quote in particular had me think the most:
A part of all you earn is yours to keep.
At first this seems not to be coherent (all I earn is for me to keep), but read on to learn why that actually makes sense.
First off, in case you tend to think that a book written almost a century ago is not that relevant anymore, this paragraph has been written exactly to bust this belief:
And when youth comes to age for advice he receives the wisdom of years. But too often does youth think that age knows only the wisdom of days that are gone, and therefore profits not. But remember this, the sun that shines today is the sun that shone when thy father was born, and will still be shining when thy last grandchild shall pass into the darkness. " 'The thoughts of youth,' he continued, 'are bright lights that shine forth like the meteors that oft make brilliant the sky, but the wisdom of age is like the fixed stars that shine so unchanged that the sailor may depend upon them to steer his course.'
Now coming back to the first quote:
Do you not pay the garment-maker? Do you not pay the sandal-maker? Do you not pay for the things you eat? Can you live in Babylon without spending? What have you to show for your earnings of the past mouth? What for the past year? Fool! You pay to everyone but yourself. Dullard, you labor for others. As well be a slave and work for what your master gives you to eat and wear.
Seen this way, it does actually make sense: we pay all the others before ourselves, and most of the time actually don't keep part for ourselves! Now some practical advice on how to pay yourself first:
If you did keep for yourself one-tenth of all you earn, how much would you have in ten years?' "My knowledge of the numbers did not forsake me, and I answered, 'As much as I earn in one year.' " 'You speak but half the truth,' he retorted. 'Every gold piece you save is a slave to work for you. Every copper it earns is its child that also can earn for you. If you would become wealthy, then what you save must earn, and its children must earn, that all may help to give to you the abundance you crave. " 'You think I cheat you for your long night's work,' he continued, 'but I am paying you a thousand times over if you have the intelligence to grasp the truth I offer you. " 'A part of all you earn is yours to keep. It should be not less than a tenth no matter how little you earn. It can be as much more as you can afford. Pay yourself first. Do not buy from the clothes-maker and the sandal-maker more than you can pay out of the rest and still have enough for food and charity and penance to the gods. " 'Wealth, like a tree, grows from a tiny seed. The first copper you save is the seed from which your tree of wealth shall grow. The sooner you plant that seed the sooner shall the tree grow. And the more faithfully you nourish and water that tree with consistent savings, the sooner may you bask in contentment beneath its shade.'
In other words: save at least 10% of what you earn by paying yourself first (e.g. automatic bank transfer to a savings account on the day that you are paid) and invest that money wisely so that it is allowed to grow. And most of the time, you would not even realize you're living on 90% of your income:
Each time I was paid I took one from each ten pieces of copper and hid it away. And strange as it may seem, I was no shorter of funds, than before. I noticed little difference as I managed to get along without it. But often I was tempted, as my hoard began to grow, to spend it for some of the good things the merchants displayed, brought by camels and ships from the land of the Phoenicians. But I wisely refrained.
Key is to never get money out of there. That might be the most difficult/tempting though! Also, regarding what to do with these savings:
Advice is one thing that is freely given away, but watch that you take only what is worth having. He who takes advice about his savings from one who is inexperienced in such matters, shall pay with his savings for proving the falsity of their opinions.'
I particularly like that last sentence!
About having your money invested, and reinvesting the interests (compound interest) instead of spending those:
'You do eat the children of your savings. Then how do you expect them to work for you? And how can they have children that will also work for you? First get thee an army of golden slaves and then many a rich banquet may you enjoy without regret.'
Summarized to this point:
" 'Arkad,' he continued, 'you have learned your lessons well. You first learned to live upon less than you could earn. Next you learned to seek advice from those who were competent through their own experiences to give it. And, lastly, you have learned to make gold work for you. " You have taught yourself how to acquire money, how to keep it, and how to use it.
Some limiting beliefs might pop up, mostly due to the scarcity mindset:
And then another friend spoke up and said, "If what you tell is true, and it does seem as you have said, reasonable, then being so simple, if all men did it, there would not be enough wealth to go around." "Wealth grows wherever men exert energy," Arkad replied. "If a rich man builds him a new palace, is the gold he pays out gone? No, the brickmaker has part of it and the laborer has part of it, and the artist has part of it. And everyone who labors upon the house has part of it. Yet when the palace is completed, is it not worth all it cost? And is the ground upon which it stands not worth more because it is there? And is the ground that adjoins it not worth more because it is there? Wealth grows in magic ways. No man can prophesy the limit of it. Have not the Phoenicians built great cities on barren coasts with the wealth that comes from their ships of commerce on the seas?"
It's also important to provide for your family after your death (for example, life insurance)
"Provide also that thy family may not want should the Gods call thee to their realms. For such protection it is always possible to make provision with small payments at regular intervals. Therefore the provident man delays not in expectation of a large sum becoming available for such a wise purpose.
The last sentence of the following paragraph is something that I'm struggling with when faced with the amount asked by my financial advisor, but I know that I need to see this cost as something positive:
"Counsel with wise men. Seek the advice of men whose daily work is handling money. Let them save you from such an error as I myself made in entrusting my money to the judgment of Azmur, the brickmaker. A small return and a safe one is far more desirable than risk.
Another paragraph that speaks directly to me:
"Enjoy life while you are here. Do not overstrain or try to save too much. If one-tenth of all you earn is as much as you can comfortably keep, be content to keep this portion. Live otherwise according to your income and let not yourself get niggardly and afraid to spend. Life is good and life is rich with things worthwhile and things to enjoy."
No Robin Hood mentality here:
The King was thoughtful for some time. Then he asked, "Why should so few men be able to acquire all the gold?" "Because they know how," replied the Chancellor. "One may not condemn a man for succeeding because he knows how. Neither may one with justice take away from a man what he has fairly earned, to give to men of less ability." "But why," demanded the King, "should not all the people learn how to accumulate gold and therefore become themselves rich and prosperous?"
We are all humans, after all!
"Behold the richest man in Babylon," whispered a student, nudging his neighbor as Arkad arose. "He is but a man even as the rest of us."
Seven Cures for a Lean Purse
THE FIRST CURE Start thy purse to fattening:
That what each of us calls our 'necessary expenses' will always grow to equal our incomes unless we protest to the contrary.
THE SECOND CURE Control thy expenditures
THE THIRD CURE Make thy gold multiply
"This, then, is the third cure for a lean purse: to put each coin to laboring that it may reproduce its kind even as the flocks of the field and help bring to thee income, a stream of wealth that shall flow constantly into thy purse."
THE FOURTH CURE Guard thy treasures from loss
"Therefore, do I advise thee from the wisdom of my experiences: be not too confident of thine own wisdom in entrusting thy treasures to the possible pitfalls of investments. Better by far to consult the wisdom of those experienced in handling money for profit. Such advice is freely given for the asking and may readily possess a value equal in gold to the sum thou considerest investing. In truth, such is its actual value if it save thee from loss.
Guard thy treasure from loss by investing only where thy principal is safe, where it may be reclaimed if desirable, and where thou will not fail to collect a fair rental. Consult with wise men. Secure the advice of those experienced in the profitable handling of gold. Let their wisdom protect thy treasure from unsafe investments."
THE FIFTH CURE Make of thy dwelling a profitable investment
"Thus come many blessings to the man who owneth his own house. And greatly will it reduce his cost of living, making available more of his earnings for pleasures and the gratification of his desires. This, then, is the fifth cure for a lean purse: Own thy own home"
THE SIXTH CURE Insure a future income
"This, then, is the sixth cure for a lean purse. Provide in advance for the needs of thy growing age and the protection of thy family."
THE SEVENTH CURE Increase thy ability to earn
"Thus the seventh and last remedy for a lean purse is to cultivate thy own powers, to study and become wiser, to become more skillful, to so act as to respect thyself. Thereby shalt thou acquire confidence in thy self to achieve thy carefully considered desires.
The truth is this: Good luck can be enticed by accepting opportunity. "Those eager to grasp opportunities for their betterment, do attract the interest of the good goddess. She is ever anxious to aid those who please her. Men of action please her best. "Action will lead thee forward to the successes thou dost desire." MEN OF ACTION ARE FAVORED BY THE GODDESS OF GOOD LUCK
The Five Laws of Gold
- Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earngs to create an estate for his future and that of his family.
- Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
- Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
- Gold slippeth 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.
- Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.
The Gold Lender of Babylon
"The ox began first. 'You are my good friend. Because of your wise advice I have enjoyed a day of rest.' " And I,' retorted the ass, 'am like many another simplehearted one who starts to help a friend and ends up by doing his task for him. Hereafter you draw your own plow, for I did hear the master tell the slave to send for the butcher were you sick again. I wish he would, for you are a lazy fellow.' Thereafter they spoke to each other no more— this ended their friendship.
If you desire to help thy friend, do so in a way that will not bring thy friend's burdens upon thyself."
It applies equally to the borrower and the lender: BETTER A LITTLE CAUTION THAN A GREAT REGRET
The Walls of Babylon
In this day, behind the impregnable walls of insurance, savings accounts and dependable investments, we can guard ourselves against the unexpected tragedies that may enter any door and seat themselves before any fireside. WE CANNOT AFFORD TO BE WITHOUT ADEQUATE PROTECTION
The Camel Trader of Babylon
"Being young and without experience I did not know that he who spends more than he earns is sowing the winds of needless self-indulgence from which he is sure to reap the whirlwinds of trouble and humiliation.
WHERE THE DETERMINATION IS, THE WAY CAN BE FOUND
Plan to get out of debt:
This plan includeth three purposes which are my hope and desire.
First, the plan doth provide for my future prosperity. Therefore one-tenth of all I earn shall be set aside as my own to keep. For Mathon speaketh wisely when he saith: "That man who keepeth in his purse both gold and silver that he need not spend is good to his family and loyal to his king. "The man who hath but a few coppers in his purse is indifferent to his family and indifferent to his king. "But the man who hath naught in his purse is unkind to his family and is disloyal to his king, for his own heart is bitter. "Therefore, the man who wisheth to achieve must have coin that he may keep to jingle in his purse, that he have in his heart love for his family and loyalty to his king."
Second, the plan doth provide that I shall support and clothe my good wife who hath returned to me with loyalty from the house of her father. For Mathon doth say that to take good care of a faithful wife putteth self-respect into the heart of a man and addeth strength and determination to his purposes. Therefore seven-tenths of all I earn shall be used to provide a home, clothes to wear, and food to eat, with a bit extra to spend, that our lives be not lacking in pleasure and enjoyment. But he doth further enjoin the greatest care that we spend not greater than seven-tenths of what I earn for these worthy purposes. Herein lieth the success of the plan. I must live upon this portion and never use more nor buy what I may not pay for out of this portion.
Third, the plan doth provide that out of my earnings my debts shall be paid. Therefore each time the moon is full, two-tenths of all I have earned shall be divided honorably and fairly among those who have trusted me and to whom I am indebted. Thus in due time will all my indebtedness be surely paid. Therefore, do I here engrave the name of every man to whom I am indebted and the honest amount of my debt.