SEVEN CURES FOR A LEAN PURSE: LESSONS FROM ‘THE RICHEST MAN IN BABYLON’
“The Richest Man in Babylon” has been the go-to book for many readers and writers in their quest for financial wisdom since it was first published in 1927. Set in ancient Babylonian times, it is your typical cliché rags-to-riches kind of story; however, the invaluable principles shared therein have been the bedrock upon which much of today’s financial literature is founded.
One other note-worthy thing about this book is the simplicity of its presentation. Each of the eleven chapters of the book is written in short story form (sort of like the parables Jesus told) and is based on at least one lesson or principle of wealth creation or financial prudence. The focus of this piece though will be the third chapter – ‘Seven Cures for a Lean Purse’. A more modern rendition of that would look somewhat like “Seven Steps to Seven Figures” or “Seven Keys of Wealth Creation’. Let us look at these “keys”, shall we?
Rule 1: Start thy purse to fattening
The main figure in the story, Arkad, has been petitioned by a group of young men to teach them how to grow wealthy like he did. The first lesson he shared with them happens to be one of the very first lessons he himself was taught when he began his own journey:
A part of all you earn is yours to keep.
Algamish to Arkad, The Richest Man In Babylon, pg 14
For every ten coins thou placest within thy purse take out for use but nine. Thy purse will start to fatten at once and its increasing weight will feel good in thy hand and bring satisfaction to thy soul.
The Richest Man In Babylon, pg. 27
The first rule of wealth acquisition is probably the simplest of them all. Spend less than you earn. Savings are the seeds we sow towards a harvest of financial independence.
The other side to this rule, which is not talked about in the book, is the issue of tithing— giving to God a tenth of all He has blessed you with. If you are a regular member of any church in this country, you most likely don’t need me to quote that well-known, well-preached (in fact, sometimes over-preached) scripture in the book of Malachi. I would however quickly add that, tithing (and any giving we do as believers) is to God and not man, and should be viewed as such. We also need to remember that no one can ever out-give God. Father Abraham’s life is proof (See Hebrews 6:10 and Proverbs 10:22).
A very simple format you can follow as a beginner for managing your expenses is the 10-10-80 Ratio – Pay God, Pay Yourself, Pay Your Bills (7 Keys to Abundant Living with No Regrets, Stephen and Georgina Adei, pg. 14-16)
- PAY GOD 10%. This represents your tithe. With time you can choose to increase the amount “as led” (Malachi 3:10-12, 2 Corinthians 9:6-15)
- PAY YOURSELF 10%. You owe it to yourself every month to set aside at least a tenth of all you have for savings. This is the “gold” which will “bear children” for you in the years to come. (Algamish to Arkad, The Richest Man in Babylon, George S. Clason, pg 14)
- PAY YOUR BILLS 80%. All other expenses fall here. For example, food, utilities, dues, entertainment, phone etc. With proper planning and prioritisation of needs, you will find that you can actually live on this fraction.
Rule 2: Control thy expenditure
This rule, closely linked to the first, seeks to emphasize the importance of budgeting. Here, Arkad teaches his listeners how to create a budget and what to include in it. But first, he teaches the purpose of a budget: “…to help thy purse to fatten.” (pg 30, lines 27 and 28)
Your budget helps you appropriately apportion the remaining 80% of your income to cater for your needs and a few wants without compromising your ability to save that tenth that belongs to you (your savings) or that which belongs to God (your tithe).
“Budget thy expenses that thou mayest have coins to pay for thy necessities, to pay for thy enjoyments and to gratify thy worthwhile desires without spending more than nine-tenths of thy earnings. (pg 31, lines 2 to 4)”
Rule 3: Make thy gold multiply
The gold we may retain from our earnings is but the start. The earnings it will make shall build our fortunes.
Arkad, The Richest Man in Babylon, pg 31
No one gets rich simply by hoarding money. Let your money work for you. Put it in a profitable business or Investment. Repeat this cycle with your earnings. Take advantage of compound interest and start now. It is the continuous inflow of the “children of your gold” that adds up to create your wealth. There are different types of investments (which is a topic for another day), so do some research and select a few. For beginners, treasury bills and mutual funds like
Databank’s ‘Mpack’ are good places to start. Once you get a stable footing, you can explore riskier options.
Rule 4: Guard thy treasures from losses
So, we are all about putting our money to work for us and getting some investments stored up for the future. Be careful, though, that you don’t give your hard-earned gold to a brickmaker to buy jewels from Phoenicians! (You’ll get it once you read the book). Only invest in ventures in which your principal is secure and from which you’re sure to get a good return. Of course, the greater the return, the higher the risk of loss but you still need to be careful. This is where consultation matters. Read books, walk into any trustworthy bank or investment company, and talk to their customer service personnel, browse the internet cautiously. Seek knowledge about a venture before you throw your hard-earned cash away. In short, invest in something you are knowledgeable about or have consulted an expert about.
Rule 5: Make of thy dwelling a profitable investment
The focus of this rule is the benefit of owning one’s own home, thus, cutting out rent payments. While this may not necessarily apply to someone just starting out in life, it’s still not far-fetched at all. Remember those gold coins you saved up and put in investment? How about directing a percentage of that toward the purchase or building of your future home? Imagine the amount of rent that will save you in the not-so-distant future.
Rule 6: Insure a future income
Apart from your future dwelling, another area to consider for long-term investment at this stage is the period you will not be working anymore – your retirement.
In view of this rule and its immediate predecessor, I think a worthy investment to save toward will be the purchase of land. Land as an investment appreciates in value over the long-term.
Rule 7: Increase thy ability to earn
“The man who seeks to learn richly of his task may be rewarded”
Arkad, The Richest Man in Babylon, pg 41
“As a man perfecteth himself in his calling, even so doth his ability to earn increase.”
Arkad, The Richest Man in Babylon, pg 40
“Observe people who are good at their work— skilled workers are always in demand and admired; they don’t take a backseat to anyone.”
Proverbs 22:29, MSG
It stands to reason that as one’s skills and knowledge increase, one’s market value and earning capacity increase. Study to be the best at what you do. Plan and invest toward furthering your education. Invest in yourself. Develop your other interests and talents; you never know what doors they will open for you. Above all, develop the right attitude toward work (Colossians 3:23). Again, increase your financial knowledge, so that as your gold increases, you will know how better to put it to work for you.
Finally, let me leave you with the words of Arkad, our able teacher, the richest man in Babylon, “Go thou forth and practice these truths that thou mayest prosper and grow wealthy, as is thy right.” (pg 42)
And oh, the next time you pass by a bookshop or book-sales, do well to grab a copy of this amazing book.
This article was first published in the August 2017 edition of GNOMIC Magazine