The Richest Man in Babylon – George S. Clason [Book Summary]

by Nick

To Create Wealth, Save Money and Invest It Wisely

Why are only a few getting rich?

Because some save every penny they save, while others spend everything they earn on trinkets.

According to George, you need not only to save money but also to know how to use it wisely.

The first step from “The Richest Man in Babylon” is to start saving money.

Lead an economical lifestyle.

Cut down on pleasure. Spend the weekend not in Paris, but in the countryside or replace expensive toilet paper with ordinary. But this is not enough to become rich. You need to look for investment opportunities. Just deferred money does not increase in price.

Even at the bank, they bring insignificant interest. Invest in what makes a profit: stocks, government bonds or startups. If done correctly, savings will grow without any extra effort on your part.

Invest wisely: trust your savings only to people who know how to use them. Do not lend a lumberjack if he is planning to open a diamond trading business.

This book is available as:

AudiobookeBook | Print

Financially Successful People Always Admit That They Know Little

Do you consider yourself a competent person?

Or smart?

If so, you will be surprised.

Socrates said: “I know that I know nothing.” That is, a truly wise person understands and admits that he knows very little.

With each grain of knowledge new areas of ignorance open up – this is a fact.

Example. Having studied the basics of the theory of relativity, we inevitably encounter its more complex areas and realize that we still do not understand much. We even feel more ignorant than before.

Most people do not realize how little they know, especially in the field of finance. Many people can hardly calculate compound interest. But they are striving forward with a modest knowledge base, not having studied an area in which they understand nothing.

Example. Some, having studied the basics of investing in high-risk mortgages, though this was enough to make a fortune. But they were expected to fail in 2008 because they neglected to study the stability and riskiness of such a financial instrument.

By delving into the study of finance, you can take advantage of the ignorance of the majority: to identify investment opportunities earlier than others or enter into more profitable transactions.

Briefly exists thanks to advertising:

Wealth Builds Up Slowly, Trial and Error

Many people dream to get rich overnight.

But this is only possible in lotteries. Gaining wealth is a long process consisting of many tiny steps forward and several steps back. Why does it take so long? Because the world is constantly changing, especially financially.

You can’t just choose one strategy (for example, invest in certain stocks) and sit back, receiving money. The financial system is unstable, sooner or later something like a stock market crash happens. You have to adapt to a new situation, learn about new strategies, experiment with them and, possibly, fail several times. And as soon as you find a winning option, something will happen again.

Through gaining experience, you will learn to invest wisely.

This trial and error method is similar to scientific progress: failed experiments can be very useful. If you have failed to invest, for example, in a high-risk mortgage, you will learn how to make more effective investments in the future. This method involves making mistakes. The main thing is that the mistakes are small, so do not invest money that you cannot afford to lose in risky enterprises.

Do Not Work for Money – Money Should Work for You

Is there a difference between making money and gaining wealth? Most people think not. But there is a difference: “making money” – you work for money; “Achieving wealth” – money works for you.

Imagine that you work as a manager in a factory and get a good salary every month.

You earn money but do not gain wealth. To do this, you need to save and invest. Putting aside part of the income and investing it in real estate, you would achieve wealth. In this case, the money will work for you, and not vice versa.

To earn money means to achieve short-term financial success: you usually only think about what you can buy for the next salary. The future is of little concern to you. But the next salary may not be!

Achieving wealth is a long-term goal.

Example. The property you have purchased will not bring you immediate wealth; First, you need to pay back the investment or wait for the increase in its value. It will take some time. But when real estate begins to generate income, it will do so as long as you are its owner.

Long-term planning will protect you in case of unforeseen events, for example, loss of work.

Investments That Pay Off With Interest Can Be Very Profitable.

When you borrow money (for example, take a loan for training), most likely, you need to pay interest on it. Conversely, when you lend, you get interest. This is one of the main ways to achieve wealth. Money is the same resource as employees or raw materials.

Imagine you want to open a factory. What is needed for this? Raw materials for products and labor for its manufacture. You will have to pay for these resources. But capital is still needed: money for the construction of the plant. Capital is also a resource and must be paid. To attract employees, you need to offer a decent salary, and to attract capital, you need to offer investors interest.

Interest for an investor is an attractive way to create wealth: over time, you can increase your income by earning extra interest on a percentage.

Example. You are investing $ 100,000 in new business. The owner pays you the original amount plus ten percent, that is, $ 110,000. Then you reinvest the entire amount in another business under the same conditions. As a result, you get $ 121,000 – your interest income has increased.

Your money not only works tirelessly for you but also constantly improves in this matter.

Opportunity is a Source of Good Luck

Many people think that luck is a random occurrence. But is it always?

Example. You have been training hard for several months and are participating in a tennis tournament. You win by hitting the top edge of the net with the ball so that it bounces and the opponent cannot hit it. Luck? “No, you deserve luck.”

Speaking of random luck, people mean chance. Chance – something random and uncontrollable (winning a lottery or a lightning strike). Luck is not accidental. She must be earned by her labor.

How to make yourself more successful?

You need to constantly look for opportunities to improve your well-being.

Example. An entrepreneur looking for new technologies for consumers spends time every day studying trends, the global financial situation and communicating with inventors. One day he finds out that 3D TVs are projected to be the latest trend. On the same day, he hears about an inventor who discovered a way to make 3D TVs at half the usual price. The entrepreneur takes the opportunity and begins to make TVs, becoming very successful. Hard work, mindfulness and the search for opportunities are prerequisites for “good luck”.

Work Tirelessly to Discover New Opportunities and Use Them Immediately

The Boy Scout motto is “Get Ready.” Stick to it to find opportunities to increase wealth.

The omission of opportunity is the cause of failure. Why do people give up opportunities? Often they put them in a long drawer.

Example. If the same entrepreneur decided not to invest in new technologies of 3D-television, but to wait until they prove themselves properly, the inventor would surely find another investor.

Do not wait for the opportunity to be served on a silver platter – take the initiative and don’t miss it. To increase the flow of opportunities, you need to work. Explore and explore areas of interest to you, create a network to quickly identify and evaluate any opportunity.

Brilliant opportunities are very rare, even if you work hard. We’ll have to wait, and this may disappoint you: it will seem as if your hard work does not bring results. But your patience will pay off when the opportunity arises.

Example. The entrepreneur invented the radio that does not require electricity. He works hard, improving his product, and then seeks investors. During the year, investors refuse him, saying: “Now no one is listening to the radio!” Sorry, he continues to search until one investor discovers that the product is ideal for developing countries with an undeveloped energy system. The product, ultimately, is a great success: the entrepreneur’s patience paid off.

Think Rationally and Do Not Take Loans

Why do some people go bankrupt? They make irrational financial decisions. How to avoid this?

Make all decisions about expenses with a realistic assessment of personal needs and financial circumstances.

Example. You desperately want a luxury car. In fact, you do not need it, and the purchase will require a large loan on unfavorable conditions. You should not buy it, but let’s say you did it. Now you spend most of your income on paying interest, and then on paying off interest debt. You cannot afford it, so you take another loan to pay off the previous one. So you find yourself in a debt funnel.

Taking a loan is a very bad idea. So you can’t save up money to invest and create wealth. Instead, you have to spend income to pay off debt. Surprisingly, it can harm creditors themselves, depriving debtors of the opportunity to increase their wealth. A loan makes them financially unstable, which leads to complete non-payment of debt – a nightmare for every lender.

Example. The recent eurozone crisis. Greece was heavily indebted to the European Central Bank, had to make debt payments and could not invest in education, infrastructure, transportation, and so on, which is beneficial for the economy in the long run. Without these investments, a country will never achieve wealth in order to fully repay debts. This can lead to defaults that put both parties in a difficult position.

Sometimes creditors should suspend debt payments so that debtors get back on their feet.


Save. Never take a loan to buy a luxury item. It will be very difficult for you to get rid of such a load. If you desperately want something you cannot afford, save money. Invest part of your earnings wisely.

Do not waste all earned immediately. Set aside part of the funds and invest them, for example, in stocks or bonds.

The money will start working for you, earning interest. However, do it wisely: do not trust your beginners or amateurs with your savings. No matter how attractive the opportunity may seem, if the person whom you trust money is inexperienced, the investment will be unsuccessful. Only work with people who know what they are doing.

Why You Should Read “The Richest Man in Babylon”

  • To learn how to operate with personal finances
  • To start making the right financial decisions
  • To gradually grow rich

This book is available as:

AudiobookeBook | Print