The 7 Money Lessons You Should Already Know

Daily Reckoning
Nilus Mattive

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If wealthy people have the same 24 hours in a day, and work just as hard as others, how do they acquire such incredible wealth?

This was the question George Samuel Clason set out to answer in his timeless classic The Richest Man in Babylon. Since 1926, Clason’s book has sold more than 2 million copies and has been translated into 26 different languages.

Set in ancient Babylon, supposedly the wealthiest city in the history of the world, the book dispenses financial advice through a collection of short stories. The Babylonian financial gurus offer simple and common sense advice to managing your money — advice that’s still relevant today. 

What I like most about this book is the simplicity of the storytelling. Although the book is not religious, the format and diction comes across as “Biblical,” making Clason’s advice seem infallible and sticky in your mind. While none of the lessons are likely to be earth-shattering, they cover the fundamentals of basic wealth building everyone should know.

Going back to the original question: Can wealth creation be taught?

Clason says it can and I have to agree. In the book, Clason tells the story of Arkad, a merchant and the richest man in Babylon. The king of Babylon asks Arkad to share his wisdom with 100 students in an effort to increase the collective wealth of the population.

Most of the people in Babylon are broke, or as Clason calls it, having a “lean purse.” To cure a lean purse, Clason teaches these seven timeless lessons through the story of Arkad:

1st Cure: Start Thy Purse to Fattening.

The streams of income flowing into your life at any given moment can be large. But the balance in your bank account will only grow if you’re disciplined enough to divert portions of those income streams.

Throughout the book, the “enlightened” characters stress saving at least ten percent of your income every month, without fail. Do this by setting aside ten percent before all other expenses are considered.

“But when I began to take out from my purse but nine parts of the ten I put in,” Arkad said, “it began to fatten. So will thine.”

2nd Cure: Control Thy Expenditures.

The amount of money you make is important, but it’s secondary to the degree to which you learn to control your expenses. Clason calls lifestyle inflation one of life’s “unusual truths.”

He writes, “That what each of us calls our ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary.” You must budget and plan your expenses earnestly. Demand value for the dollars you spend and, “…confuse not the necessary expenses with thy desires.”

3rd Cure: Make Thy Gold Multiply.

Your wealth should extend beyond your income. Make sure all saved monies are kept in the highest-yield interest-bearing accounts available. If you have experience …read more

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