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The Richest Man in Babylon – Book Review

by Md Azharuddin
I have completed reading the book “The Richest Man in Babylon” for 2nd time. I was able to revise the book in 4-5 hours and got refreshed important points of the book.  About the Book: This book was written in George S. Clason and published in year 1926. The amazing thing about the knowledge in this book is, its applicable for any age and generation.

Detailed Review & Explanation

Main Topic of the Book:

The main topic of the book is How any person can able to achieve wealth by following certain steps and avoiding certain mistakes. This book also focus on how to get rid of debt. Anyone who wants to be reach must read this book at least once, so he can understand the principles of being rich. 

Chapters of the Book

  1. The man who desired Gold
  2. The Richest man in Babylon *
  3. Seven cures for lean purse*
  4. Meet the goddess of good luck
  5. The five laws of gold * 
  6. The gold lender of Babylon 
  7. The walls of Babylon 
  8. The camel trader of Babylon
  9. The Clay tablets from Babylon *
  10. The luckiest man in Babylon 

I have highlighted the most important chapters with *. These chapters has the most critical and useful information. 

Seven Cures for Lean Purse

  1. Always keep 10% of your income in savings before paying anyone. 
  2. Control the expenditures and spend in your budget. 
  3. Invest your surplus amount to multiply you money.
  4. Guard your money from loss. 
  5. Own a Home for family (* More about this in further discussion) 
  6. Insure a Future income.
  7. Increase your ability to earn. 

How to Apply this in your Life? 

#1 Save 10% of what you Earn  

Its always noticed that we pay to others before we pay ourself. In fact majority of people will not be able to save anything because they may have paid to everyone and then remaining money for other expenses. 

Make this rule in your life, No matter how much you earn. Keep 10% for yourself and save it without any excuses. Some people may use excuse that we make so less salary that we cannot really save anything, the cost of living is so high that my salary is not enough. Now the reason for you to start saving 10% of your salary before paying anyone is you become disciplined and when you make this commitment with small amounts, you can surely make it for large amounts. Also you will be able to save some money which gives you confidence and makes you more energetic to work.  

Warren Buffet Said:

Do not save what is left after spending; instead spend what is left after saving.” 

#2 Control your Expenses 

One popular condition for many people is, your expenses increases as your salary increases.

So in rule 1 it was advised to save 10% of your income. And then plan your expenses in the remaining amount. Many people find themselves in situation where they got huge hike in salary over period of few years, but unfortunately they were unable to save anything despite of earning more. 

When you want to buy something, think twice, do you really need it? If its not necessary just don’t buy. Now a days people are buying expensive,  unnecessary things with Credit Cards on EMI. This is a big mistake to buy things we cannot afford. Why do you want a flagship phone models like iPhone, Samsung, OnePlus etc. The sad part is people buy these things on EMI. When you are using Credit Cards, you are buying things with the money which you don’t have. So you have to repay that money and if you are late you have to pay extremely heavy interest on it. 

I will write another detailed article soon explaining where you can save money and control your expenses. 

Warren Buffet Said:

“If you buy things you do not need, soon you will have to sell things you need.”

#3 Invest your money to grow it. 

According to some reports only 2% of Indians invest in Stock Market. The primary reason is Ignorance and Fear. Many consider stock markets as gambling and never invest it. Instead people invest in Real Estate, Gold, Business etc for growing their money. The problem with this instruments is it requires a large sum of money and most of these instruments are illiquid (Difficult to convert to cash when we need it). 

The solution for this is start investing in Mutual Funds via SIP. In this way you can start investing with a small amount of Rs 500 per month. Start Today, don’t try to time the markets. Define your long term objectives and then start investing in mutual funds or shares directly (if you have knowledge of fundamental analysis). 

Warren Buffet Said:

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

#4 Guard your money from Loss

Many times we get suggestions from people to invest in some new business opportunity where you will get 2x to 10x returns in few years. Its human nature that we expect huge returns in short period of time. But in reality most of the time you will loss your money by investing in these schemes, opportunities or hot stock tips. 

Before you invest in any business opportunity, stocks, real estate etc. Make sure to protect you principal amount invested at any cost. Before investing in any company, mutual funds always guard your principle. 

Warren Buffets Two Rules of Investing are:

“Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1”

#5 Own a Home for family

Every person has a desire to own a home. This is one piece of advice you must be very careful. 100 years back it was a great Idea to own a house. In today’s inflated property prices, its better for young professionals to ren a home.

The problem is, many people take huge home loans to buy a home which is bigger than their requirement. Once they have taken huge loan 50% of their salary will be used just to pay EMI. They will not pursue new opportunities because they want a stable pay check. They cannot shift to new city because they are already have a home. I will advice you to don’t take any kind of loans in the beginning of your career, instead focus on investing your money in beginning. 

Warren Buffer Said:

“Avoid Debt at all costs” 

#6 Insure a Future Income

Plan for your long term future, if you start young you will have a lot of time to compound your investment. Its advisable to take certain insurance policies like term insurance, health insurance so that you will be covered in case of any worse incident happen to you or your family.  

Warren Buffet Said: 

Someone’s sitting in the shade today because someone planted a tree a long time ago.

#7 Increase your ability to earn 

Always work on yourself to learn new skills every month. When you learn new skills you can able to increase your income sources. Never depend on on one income source. 

In today’s digital era we have far more opportunities in various forms to increase our income. So you can find many ways to generate additional income along with you day job. 

Overall this book is one of the best you can read about the importance of money and investing.

Buy on Amazon

Md Azharuddin

I am a Digital Marketing Strategist with 14+ Years of Experience. I can help you build your marketing campaigns and grow your business online.

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