7 Fundamental Financial Lessons from The Richest Man in Babylon

The Richest Man in Babylon by George S. Clason is a timeless book on personal finance. Even though it was written almost a century ago, the lessons still hold true today. Written as stories set in ancient Babylon, the book teaches simple but powerful money principles through the life of Arkad, the richest man in the city.

Here are 7 key financial lessons we can all learn from it:

1. Start by Paying yourself First

Arkad's first lesson is simple—“A part of all you earn is yours to keep.” No matter how much you earn, always save at least 10% before you spend. It may seem small, but over time, this habit builds wealth. Pay yourself first before paying bills or buying things.

2. Control Your Expenses

It’s not how much you earn, but how much you keep. The book warns against lifestyle inflation—spending more as you earn more. Learn to differentiate between wants and needs. Make a budget and stick to it so your spending doesn’t eat up your savings.

3. Make Your Money Work for You

Saving is good, but investing is better. Money kept idle doesn't grow. Invest your savings wisely so that it earns more money. It could be through business, mutual funds, real estate, or other safe avenues. Let your money create more income—this is called compounding.

4. Avoid Investments You Don’t Understand

Arkad lost money when he gave it to a bricklayer to buy jewels. The lesson? Don’t invest in something you don’t understand or in someone who isn’t an expert. Always research and seek advice from knowledgeable people before putting your money anywhere.

5. Own Your Home

While this may not apply to everyone, owning your house (if done wisely) gives you financial security and reduces long-term expenses like rent. The book suggests that owning your own residence brings peace of mind and stability.

6. Ensure a Future Income

Prepare for retirement and emergencies. The book advises putting money aside to protect your family and old age. Today, that means buying health insurance, life insurance, and investing in long-term instruments like a Public Provident Fund (PPF), SIP, or pension schemes.

7. Keep Learning and Improving

To increase your ability to earn, keep upgrading your skills and knowledge. Arkad says, “The more wisdom we know, the more we may earn.” Learning never stops—whether it’s reading books, taking online courses, or learning from mentors.

Conclusion

The Richest Man in Babylon doesn’t use fancy financial jargon. It gives basic money rules wrapped in stories that anyone can understand and follow. If you apply even a few of these 7 lessons in your life, you’ll be in a stronger financial position than most people. It’s not about how much you earn, but how wisely you manage it.