En este artículo vas a encontrar un resumen del libro «El hombre más rico de Babilonia» de George S. Clason, uno de los primeros libros (es de 1926) en materia de educación financiera.
Recomendamos encarecidamente su lectura puesto que da unos consejos muy inteligentes en materia de educación financiera y, sin embargo, es muy ameno y nada extenso.
The seven ways to acquire wealth
1- Start filling your bag
2- Control your expenses
3- Make your gold bear fruit
4- Protect your treasures from any loss
5- Make your property a profitable investment
6- Secure income for the future
7- Increase your ability to acquire goods
Introduction
"The Richest Man in Babylon" is a fable that illustrates the reasons for the success of ancient Babylon, one of the richest cities in the world at that time. It was a simplified version of the current economy because at that time money was already used for exchanges and loans even existed.
The book tells the adventures of several characters, among them Arkad, a boy who works very hard while applying the principles of wealth, which allows him to become the richest man in Babylon and thus buy his freedom. .
As a young man, Arkad was a hard-working scribe. He quickly realized that although money does not buy happiness, it can greatly contribute to improving his quality of life. It was then that he began his search for knowledge to learn how to generate more money and thus be able to have a freer and fuller life.
Arkad then decides that the best way to learn is to ask those who have been successful and he does not miss any opportunity to do so. For example, one day a very rich man gives him a complex order and only gives him two days to complete it. Arkad agrees to work all night without rest in exchange for the man teaching him some rules of how money works. The advice that the latter gives him is the following: «I found the path to wealth when I decided that a part of everything I earned had to belong to me. The same will be true for you.
Arkad is then somewhat disappointed by this principle since he thought it was obvious that everything he earned belonged to him. It is then that the rich man explains to him that from the moment the expenses begin to accumulate, you begin to work to meet your expenses and you become his slave. The solution is to set aside 10% of your income and make sure this amount is not spent. This way you won't even realize that you are missing 10% of your income, but it will still be yours.
Arkad realizes that it is not going to be a bed of roses and that he is going to have to continue working hard to achieve it. After several failed attempts, Arkad finally manages to apply the principle that the rich man had taught him. The latter, seeing that Arkad was a good disciple, decides to put him in charge of part of his business.
Thanks to his successful management of the rich man's business, he also becomes rich. He in fact surpasses the wealth of the latter since Arkad became the richest man in Babylon. But he always kept in mind that money is nothing more than an instrument to enjoy life to the fullest.
The seven ways to acquire wealth.
The book goes on to tell stories from the life of Arkad and other inhabitants of Babylon. Each of these stories – which ultimately take the form of recommendations from Arkad – illustrate and explain the following seven ways to acquire wealth (or, according to the book, “ways to fill an empty purse”):
1- Start filling your bag
It's about following the first advice that Arkad received in his youth and saving 10% of everything you earn.
2- Control your expenses
It is important to make a list of all our expenses to know where we are spending our money. Once the list is made, we must choose the expenses that are mandatory and that are within the limits of 90% of our income. We can forget the rest without thinking, considering them as part of the multitude of desires that must remain unsatisfied.
3- Make your gold bear fruit
In the words of Arkad, “a man's wealth is not in the coins he carries in his purse but in the fortune he amasses, the stream that continually flows and feeds him. It's what every man wants. What any of you want: a source of income that continues to produce, whether you are working or traveling."
In other words, it is about investing our money intelligently so that it generates more passive income for us. And if we can benefit from compound interest, even better.
4- Protect your treasures from any loss
Before making any investment, we must carefully study the situation and make sure that we can claim it safely. We must not allow ourselves to be carried away by romantic desires to make a fortune quickly; We must be fully aware of the dangers that any investment can present. Otherwise we may lose the money that it has cost us so much effort and time to raise.
5- Make your property a profitable investment
The fifth way to fill an empty bag is to own your own house. In short, Arkad considers that it is preferable to own his own house than to live rented. The reason is that the cost of living will be greatly reduced and you will be able to allocate a large part of your earnings to pleasures and satisfying your desires.
6- Secure income for the future
It is important to ensure that we will have income in the future when we can no longer work or are no longer here to ensure that our children do not lack for anything. To do this we must accumulate wealth as soon as possible. Some of the ways recommended by the richest man in Babylon to do this is to invest in real estate or interest-bearing loans (the equivalent of today's crowdlending).
7- Increase your ability to acquire goods
In Arkad's words, “The more knowledge we acquire, the more money we will earn. A man's business changes and prospers because insightful men try to improve themselves to be more useful to their superiors. So I urge all men to progress and not sit idle, unless you want to be left out. So the seventh and final way to make a fortune is to cultivate intellectual faculties, study and educate oneself, and act with respect for oneself.
The five laws of gold
«If you could choose between a sack full of gold and a clay tablet engraved with words full of wisdom, what would you choose?«
The book "The Richest Man in Babylon" changes the scene and we find Arkad with his son Nomasir. Arkad is now older and wants to ensure that his son will be able to properly manage the inheritance he receives. To do this, he tests him by giving him three bags of gold and a tablet with the five laws of money.
Without thinking twice, Nomasir ignores the tablet and takes advantage of the money and bets it all on a horse race. As expected, he loses all the money and since he has nothing left, he then decides to read the tablet. This contains the five laws of money:
1- Gold comes easily, in ever greater quantities, to the man who reserves no less than a tenth of his earnings to create an asset in anticipation of his future and that of his family.
2- Gold works diligently and profitably for the wise possessor who finds a profitable use for it, multiplying even like flocks in the fields.
3- Gold remains under the protection of the prudent possessor who invests it according to the advice of wise men.
4- Gold escapes the man who invests without purpose in companies that are not familiar to him or that are not approved by those who know how to use gold.
5- Gold flees from the man who forces it into impossible profits, who follows the seductive advice of fraudsters and swindlers or who is a sign of his own inexperience and his romantic investment intentions.
These five laws of money are much more valuable than money itself. That is why these rules help those who want to be rich to be rich but also those who already are rich to remain so.
Conclusion
Although the style of the book is somewhat biblical at times, we highly recommend reading it since it gives some very intelligent and useful advice on financial education and, yet, it is very enjoyable and not at all extensive.
What Robert Kiyosaki says in "Rich Dad, Poor Dad" is largely inspired by this book: your money should work for you instead of you working for the money. Therefore it seems reasonable to read the book from which all these ideas emanate. Surely you will not regret it since it is really a book that will make you reflect and change (for the better) your relationship with money.