As a business/commercial law attorney, I am often asked about my recommendations for inspirational books for business success and personal finance. Often times, people assume this genre of self-improvement books has a history within the last 20-30 years when the subject gained popularity. However, my first recommendation is often for a book that was first published over 85 years ago – The Richest Man in Babylon by George S. Clason. The principles it teaches are just as important today as they were before the Great Depression.
The author, George S. Clason (1874-1957), was owner of the Clason Map Company and Clason Publishing Company one of the first companies to publish a road atlas of North America. However, he was better known for publishing a series of pamphlets on thrift and financial success, which first appeared in 1926. These pamphlets became very popular and were bought by insurance companies and banks for distribution to their respective clients/account holders. The Richest Man in Babylon is a compilation of these pamphlets. You will also notice the principles outlined by George Clason are consistently utilized by current financial and self-help authors today.
This book is an examination of how the Kingdom of Babylon was transformed from a small village on the Euphrates River to become one of the wealthiest and most powerful kingdoms in the ancient world. To explain this transformation, Clason introduces several fictional characters (from both ancient and modern times) to explain the principals of money, responsibility, and personal finance. The Richest Man in Babylon highlights that personal wealth and success do not occur overnight– with fast solutions and through get-rich-quick schemes. Instead, wealth accumulates by applying a consistent set of principles over time. The book introduces both the Seven Cures for a Lean Purse and the Five Laws of Gold. For purposes of this post, I will concentrate on the Five Laws of Gold.
The Five Laws of Gold
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“Gold cometh gladly and in increasing quantity to any man who will put no less than one-tenth of his earnings to create an estate for this future and that of his family.”
The first law is to become a saver and make saving a priority in every financial decision. In a world that emphasizes immediate gratification and the “buy now, pay later” mentality, shifting a focus to the initial thought of saving helps eliminate the need for immediate gratification and results.
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“Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.”
A successful financial plan is developed by finding a process where one can consistently make a positive financial return over time. We need to avoid the extremes between hiding money in a mattress to wild speculation and day trading. Instead we are looking for the consistent return. The baseball example I use is that we want a high batting percentage of singles and the occasional double—not always swinging for the home run.
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Gold clingeth to the protection of the cautious owner who invests it under the advice of men in its handling.” No individual can have all the answers.
If we attempt to do it all, our focus and priorities are often watered down in the process. Instead, we must seek men and women around us whom we can trust to provide us sound advice and counsel.
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“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.”
This principle reminds me of the old saying “Dance with the one that brought you.” Often individuals want to follow the newest trend or fad even though their personal knowledge of this potential opportunity does not exist. Instead, the goal should be to find investments that we (through the course of our everyday work, hobbies, and interactions) have developed a practical experience and knowledge. That experience and knowledge can be utilized to our advantage.
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“Gold flees the man who would force it to impossible earnings or who followed the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.”
There are no quick answers and you cannot become “rich overnight.” A lot of the financial catastrophes we have observed in the past 20 years (from the tech bubble bursting in the 1990s to the financial meltdown of 2007-2008) are based on the notion of quick results. New schemes are found that, in the long run, do not work and cause more harm than good. We need to avoid the quick decisions based on feelings and personal dreams. Instead, we should focus on a practical empirical approach that takes emotion and popularity out of our financial or business decisions.
I first read The Richest Man in Babylon soon after graduating from law school. As an attorney starting my legal career and first post-degree job, accompanied by typical law school student loan debt, I wondered how I would be able to tackle my new career along and establish myself for future financial success. The down-to-earth examples provided in The Richest Man in Babylon highlighted the fact that obtaining financial success is a marathon and not a sprint. Consistent application of basic financial principles is what leads to success.
To read Part 2 of the review of The Richest Man in Babylon click here.
© 2014 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved
This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.
