Richest Man In Babylon (George S Clason) - Summary, Notes & Highlights

If you’re looking for ways to increase your wealth and live an overall richer life, one ancient society might hold the key. No, really! In this book The Richest Man in Babylon summary, we’ll go over how the teachings from ancient Babylon could be your path to success.

Once upon a time in ancient Babylon, there was a very rich man called Arkad - the richest man in the land. Two of his childhood friends worked extremely hard but could barely afford to buy bread for their families. So they sought him out for advice and here is what he taught them:

⚠️ Takeaway 1 - Priorities

You need to pay yourself first. Before the landlord, car loans, credit cards, and even Uncle Sam. If your net income is $2,000 per month and you pay, $1,000 in rent, you're effectively working 80 a month for your landlord, or 1/2 of your entire monthly workload profitability is going to the landlord. Thinking of it this way will be much easier to handle your cravings for spending as well. In the book, it is suggested that once you get your salary, before any expenses - pay yourself 10%. This way you make sure that you always earn money for yourself before slaving for others.

Personally, I think this works really well - a few years ago I read Profit First and it goes into details about setting up multiple bank account for multiple different purposes. Like:
✅ Savings
✅ Investing
✅ Taxes
✅ Spending

🍀 Takeaway 2 - Action > Luck

Men of action are favored by the "goddess of luck". Most people when seeing other successful persons such as Mohammed Ali, Lionel Messi, or Elon Musk, attribute it to luck. They come up with all kinds of excuses for why they are not in the same position and did not have the same opportunities. These stars have talents… they met the right people at the right time... Or they were born into it! While this might be the case for some successful people, it's certainly not for the large majority of them.

What just brings them all together though is that they have been taking action. Picture this, a procrastinator and a doer are faced with opportunities, let's say, for simplicity, that they are faced with the same amount of opportunities. The chance of succeeding when taking in an opportunity can only be manipulated by a small degree, so in this way, the procrastinator and the doer have the same chance to thrive. What separates them though is the number of opportunities that they try out.

The procrastinator will always come up with an excuse. I don't feel good today... I actually have a rough day at work … Nope, the starts are not aligned today! Meanwhile, the doer tries it out and takes many of the opportunities given to him. Therefore, the chances that the doer will be lucky and succeed at some point are way higher than that of the procrastinator. But it has nothing to do with luck and everything to do with action.

🙅 Takeaway 3 - Defense wins games

Wealth is not a matter of income. Some earn much more than others, some have much larger families to support. Yet, all purses were equally lean. Now I will tell thee an unusual truth about men, and sons of men. It is this: That what each of us calls our “necessary expenses” will always grow to equal or income unless we protest to the contrary.

I know a lot of smart people that earn good money. Yet they have nothing to show for in their bank accounts. Every time they get an increase in salary, they increase their spending by the same amount. Always keeping up with Jones.

This is foolish. Primarily because it’s a huge risk-taking, which in turn causes you to be completely handcuffed and tied to your current job. If you don’t get that salary every month What is then going to happen to your boat, your house, and your car? Now when your boss tells you to go and clean the toilets for the third time during that afternoon you want to tell him to go (BEEP) himself. But then you think about the boat, the house, and the car and instead, you say: yes sir, that would be lovely! right away! No matter who you are or what degree is, everyone must obey the law of income minus expenditures equals savings. No matter if you are an engineer, an Mc Donald’s crew member, or Floyd Mayweather.

🦁 Takeaway 4 - Wait and attack

Act when the time is right. If you have done a thorough analysis and asked your friends and family about possible shortcomings in your research, don’t be afraid to act on it. Great opportunities are rare and should never be missed out on. For personal finance and investing, such opportunities sometimes mean that you must cut your expenditures a little more than usual. For instance, during the financial crisis and the following collapse of the stock market in 2008 and 2009 such opportunities emerged. For those who were willing to increase their savings and invest during that time - great profits were to come.

If you want to get started with investing and need some guidance - here is my ultimate guide to getting started.

💸 Takeaway 5 - Passive income

The power of passive income. Once you start to obey rule number one- pay yourself first- you will accumulate a lot of cash over time. While this will feel good all on its own, there’s something even better to come. As soon as possible you should start to put your hard-earned money to work. The good thing is about money is that unlike yourself, it never has to rest. Your money will work for you while you go to class, while you hang out at the gym,, and even while you’re sleeping. It’s modern-day slavery and best of all, it’s hundred percent legal.

This is what people like to refer to as passive income. If you decide to keep your slaves, they will breed. Even the kids will breed eventually. This will cause your money to grow exponentially. The good thing about exponentials is that they multiply over time and earning money becomes easier.. and easier .. and easier and easier.

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