The Richest Man in Babylon by George S. Clason is a classic on person finance. He tells the story of Arkad, the richest man in Babylon, and he shares the power of how to save money and make it work for you.
Among the various stories the book tells is that of the Five Laws of Gold, my personal favorite. Arkad sends his son out into the world with a bag of gold and a tablet containing the five laws of gold. Back in that time it was customary for the sons to inherit their father’s estate with no formality. Arkad saw the flaws of this.
Arkad: To start thee well, I will give thee two things of which I, myself, was denied when I started as a poor youth to build up a fortune.
First, I give thee this bag of gold. If thou use it wisely, it will be the basis of thy future success.
Second, I give thee this clay tablet upon which is carved the five laws of gold. If thou dost but interpret them in thy own acts, they shall bring thee competence and security.
Ten years from this day come thou back to the house of thy father and give account of thyself. If thou prove worthy, I will then make thee the heir to my estate. Otherwise, I will give it to the priests that they may barter for my soul the land consideration of the gods.
Nomasir traveled to Ninevah, hoping to find opportunity in the growing city. Not too long after joining a caravan he fell in company with fellows that claimed they had a horse faster than any in the Empire of Babylon. Making a bet on this horse against another man who claimed to have the fasted horse, he lost the majority of his gold, later finding it was all a con game.
Nomasir then entered into a partnership with another young man as merchants, their business failed horribly and he had been left with their debts. He had sold everything he had of value, soon he wouldn’t be able to keep hunger at bay.
At this time, I bethought me of the table thou had given to me upon which thou had carved the five laws of gold. Thereupon, I read most carefully thy words of wisdom, and realized that had I but sought wisdom first, my gold would not have been lost to me.
Nomasir got a job as a laborer and started saving his gold as he could. One day he had the opportunity to invest in a mining venture to bring copper and tin into Ninevah, which badly needed it. Following the third law he joined the enterprise, he proved canny enough that he soon became a member of this investment group.
At the end of the ten years he returned to the home of his father and pronounced that the laws were true.
Through my misfortunes, my trials and my success, I have tested time and again the wisdom of the five laws of gold, my father, and have proven them true in every test. To him who is without knowledge of the five laws, gold comes not often, and goeth away quickly. But to him who abides by the give laws, gold comes and works as his dutiful slave.
He presented his father with two bags of gold, one to repay the first bag given to him, the second to repay him for the tablet upon which his fortune was made.
Here are the Five Laws of Gold
I. Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.
The best way to build a fortune is to start saving. If you save no less than one-tenth of your income in ten years you’ll have saved a years worth of wages. It starts with the habit, every time you make $100.00 dollars but $10.00 of it in a different bank account, do this often and you’ll be amazed how fast it accumulates. In the book they make an excellent observation, how hard is it to live with 9/10’s of your income? It’s fairly easy once you acquire the habit.
II. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
As nice as it is to see your small fortune continue to grow, still putting 1/10 in it, sitting in the bank it cannot work for you. If you want to see the money increase find for it profitable employment, that may be investing in new equipment or livestock as a farmer, or expanding your restaurant, or even placing your money in a new bank with a higher interest rate.
III. Gold clineth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
Who when he wants to learn about quantum physics asks a contractor? Or seeking advice on mechanics consults a nurse? If you want to learn about how to handle money ask someone who knows about it. Arkad tells the story about loosing his small fortune by taking advice on jewels from a bricklayer, his mentor reminds him that to learn of jewels he should consult someone who’s business it is to know such things.
A favorite book of mine, Fooled By Randomness by Nassim Taleb, makes an observation about the trading business. It is not an occupation with a long work-expectancy, most traders only survive in the business for a few years. The traders with grey hair, who have been doing the business for years, they know it better than most. They’ve seen business fail and succeed, stocks go up and down, they know their business and can give advice with a good deal of accuracy.
IV. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.
Echoing words of caution from the previous law, know your business. Before entering in a particular business or venture, seek out those who are already in that business. Learn what you can from them and seek their advice on your plans.
V. Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.
Don’t expect money to do the impossible, true it can grow, but it takes time for your money tree to grow firm roots before it bares fruit.
Don’t be swayed by emotions when it comes to investing your money. No matter how great the guy makes the plan sound consult someone who knows money and the application of it. Fanciful dreams of making quick money is great, but rarely possible. Get-rich-quick schemes are just that, schemes.
That is the sum of it, with wisdom in one hand, and hard work in another, a fortune can be built from the humblest of beginnings.