In
George S. Clason's book, The Richest Man in Babylon the
book's first story, two friends - a chariot builder and a
musician - reflect on where their working lives have taken
them. Though pleased to have wives and young families, they
struggle to make ends meet and wonder if there could be
another way.
The
conversation turns to a man they grew up with, now
considered to be the richest man in Babylon. His name is
Arkad, and they resolve to go and see their old friend and
seek his advice. Arkad is asked by his old friends how fate
has come to make him rich. He immediately rebukes them for
assuming that 'fate' has contributed anything to his
success, telling them that they have only remained poor,
"because you have either failed to learn the laws that
govern the building of wealth, or else you do not observe
them."
While still a
boy, Arkad had noticed that wealth, if it did not actually
create happiness, certainly enhanced the quality of life.
One could furnish a house well, wear good clothing, build
temples for the Gods, sail the seas or eat exotic food from
distant lands. He resolved that his lot would not be that of
the poor man, that he would make himself "a guest at the
banquet of good things".
Yet with no
inheritance due to him he realized he would have to put
effort and study into the ways of wealth. He started a job
as a scribe, laboring long and hard writing laws and other
things onto clay tablets. One day, in return for a
particularly difficult task on which he had to work through
the night, Arkad asked the client, a money lender, if he
would teach him some of the secrets of money.
Paying
yourself first - The man agreed, and in the morning
revealed this principle: "A part of all you earn must be
yours to keep". Arkad felt a bit short-changed at this, for
he felt it to be obvious - was not all you earned 'yours to
keep'? Living expenses quickly eat up whatever you earn, the
money lender observed, which means you become a slave to
your work and earn merely to survive. However, by putting
aside at least ten per cent of your earnings and marking it
off as "not for expenditure", over time this amount builds
and starts earning money for you, without you having to do
any work. It matters little how much you start with, as long
as you observe the rule to pay yourself first out of
whatever your earn. You will soon not even notice the
absence of this small amount.
After some
setbacks, Arkad's savings grew into a satisfying amount.
This pleased the old money lender to the extent that he
asked the young man to run part of his large estate. Later
he shared in its profits. The lesson: those who know the
laws of money seek each other out. While many pay lip
service to financial principles, the principles never work
for them because they do not take action.
Yet the money
lender's advice is not that of a penny-pincher. He counsels
Arkad to enjoy life and not strain to save too much, along
as he is continually increasing his pot of saved money.
One of the
important points of the book, particularly for our age of
high debt, is that we should 'pay ourselves first' at the
same time as paying off our debts. Thus, ten per cent to
ourselves, twenty per cent to our debtors on a pro rata
basis, and the rest to live on. Many people are put off
saving because they think first of the weight of their
debts. But as soon as you see the growth of your unspent
cache of money, it will motivate you to add to it.
