The Clason Babylonian Wealth-Building System
Ancient Babylonian wisdom for building wealth through disciplined saving, wise investing, and protecting your growing fortune
The Clason Babylonian Wealth-Building System is the central teaching framework from The Richest Man in Babylon, delivered as wisdom from Arkad, the wealthiest man in ancient Babylon, to citizens who wondered why they remained poor despite years of hard labor. The system has seven cures that form a progressive wealth-building method: first pay yourself by saving at least one-tenth of all you earn before paying any other expense; then control your expenditures so your necessary expenses do not grow to consume your increased income; next make your gold multiply by putting savings to work earning returns; protect your growing treasure from loss by investing only where principal is safe; make your dwelling a profitable investment by owning your home; ensure a future income through insurance and retirement planning; and finally increase your ability to earn by investing in your own skills and knowledge. These principles endured for nearly a century because they address the fundamental psychology of money: wealth comes not from how much you earn but from how much you keep and multiply. The parables make the principles memorable and emotionally resonant, which is why this book has been distributed by banks and insurance companies to millions of people worldwide.
- Pay yourself first by saving at least ten percent of everything you earn
- Control expenditures so desires do not exceed income
- Make your gold multiply through compound returns
- Guard your treasure from loss by investing only where principal is safe
- Make your dwelling a profitable investment
- Ensure a future income through insurance and planning
- Increase your ability to earn through skill development
- Start the gold by paying yourself firstFrom every unit of income you receive set aside at least one-tenth before paying any bills or expenses. This is not optional or dependent on having extra money. It is the first expenditure from every paycheck. As Arkad teaches a part of all you earn is yours to keep and if you cannot live on nine-tenths then you cannot live on ten-tenths either.
- Control your expenditures to live below your meansBudget carefully and distinguish between necessary expenses and desires. What each person calls necessary is actually the sum of their desires and desires will always grow to consume available income unless checked. Prioritize spending on genuine needs and a few carefully chosen desires rather than allowing lifestyle inflation to absorb all earnings.
- Put your savings to work earning compound returnsDo not let savings sit idle. Invest them where they will earn returns that themselves earn further returns. Seek investments where your gold works for you day and night. The power of compounding means that money invested wisely today becomes a stream of wealth flowing to you indefinitely.
- Guard against loss by investing only where principal is safeBefore making any investment consult those wise in handling money. Avoid schemes promising unrealistic returns. The first sound principle of investment is security of principal. Do not invest in ventures you do not understand or with people who lack proven expertise.
- Increase your earning ability through continuous learningInvest in developing your skills knowledge and professional capabilities. The more wisdom you possess the more you may earn. Seek mentors study your craft deeply and constantly look for ways to provide greater value. Your ability to earn is your most important asset.
Arkad was a humble scribe in Babylon who worked long hours but had nothing to show for it. He sought wisdom from Algamish the money lender who taught him the first cure: a part of all you earn is yours to keep. Arkad began saving one-tenth of his earnings and investing wisely.
A young man received an inheritance and invested with a brickmaker who claimed expertise in buying jewels abroad. The brickmaker knew nothing about jewels and the investment was lost entirely.
George S. Clason was a businessman who founded the Clason Map Company of Denver Colorado. In 1926 he began issuing pamphlets on thrift and financial success using parables set in ancient Babylon. Banks and insurance companies distributed millions of these pamphlets which became the most widely read financial guides of their era. The pamphlets were collected into The Richest Man in Babylon. Clason chose ancient Babylon because it was one of the wealthiest cities in history and the financial principles he wanted to teach were truly ancient and timeless rather than tied to any modern economic system.