This post is all about the concepts of saving gold and creating good luck from The Richest Man in Babylon.
It’s one of my favourite books on personal finance. That’s why I want to share my favourite lessons from it.
These lessons take the form of stories and make it fun and easy to understand what might otherwise be boring for many people – including myself.
Meeting the Goddess of Good Luck
Many people gathered in a large hall to discuss how one may become rich. They were concerned with the role luck plays in one’s fortunes.
Men who bet on horses and play the gaming tables always lose over time. They are not deserving of good fortune. The table owners will always profit on the desires of these men.
The Goddess of Good Luck looks for those deserving of good fortune in the form of a profitable venture. Once you’ve saved at least one-tenth of your income, this money is best used to create new wealth.
If you save 10% of your income for 10 years, you will not only have saved the equivalent of one year of income, you will also have reaped the interest on your investments. Your gold will have worked for you in this sense.
Many men in the hall spoke of missed investment opportunities. One man had the opportunity to invest in land above a canal where the new owner planned to irrigate water. Instead, he rejected this opportunity in favour of the latest garments brought in from the East. The value of this property shot up after the irrigation project complete.
Another man in attendance was a shepherd. He once had the chance to buy 900 sheep from an old man locked outside Babylon’s walls for the night. The old man was in a hurry and offered to sell his herd for a hefty discount. Unfortunately the man delayed action until the morning. And by then, the walls had opened and 4 other shepherds came and offered the man a better price.
The moral of this story is…
To attract good luck to oneself, it is necessary to take advantage of opportunities.
Those eager to grasp opportunities for their betterment do attract the interest of the goddess. She is ever anxious to aid those who please her. Men of action please her best.
Action will lead thee forward to the successes thou dost desire.
The Goddess of Good Luck favours men of action.
The Gold Lender of Babylon
One day, a spear-maker in Babylon sought out the local gold lender. The gold lender was excited that the spear-maker had come to ask for advice. Most people just asked for money.
Gold bringeth unto its possessor responsibility and a changed position with his fellow men. It bringeth a feeling of power and ability to do good. It bringeth opportunities whereby his very good intentions may bring hime into difficulties.
He needed advice about the money he recently received from the king for his design of the new palace gates. After receiving this once-in-a-lifetime award, his sister asked him to share his earnings to help her husband become a merchant.
The gold lender offered his advice.
If you desire to help thy friend, do so in a way that will not bring thy friend’s burdens upon thyself.
The gold lender told him about his method to identify a smart investment.
From each person to whom I lend, I do exact a token for my token chest, to remain there until the loan is repaid. When they repay, I give it back, but if they never repay, it will always remind me of one who was not faithful to my confidence.
Gold Lending Lessons
With his method, the gold lender has a record of all the lessons he learned.
First, you can tell by receiving high-value collateral, that it’s a smart investment. In the worst case scenario, you could always just sell the collateral to repay the payment.
The safest loans are to those whose possessions are of more value than the one they desire: land, jewels, camels or other things that can be sold to repay the loan.
Next, the gold lender recommends investing in people skilled at their profession. Such people can make a profit from the initial investment and pay interest on their loan.
In another class are those who have the capacity to earn. They labor or serve and know how to be paid.
He then describes a third class of loans that seems to bear less fruit.
Others are those who have neither property nor assured earning capacity. Life is hard and there will always be those who cannot adjust themselves to it.
Another lesson, he learned from the midst of a tumultuous relationship.
Humans in the throes of great emotions are not safe risks for the gold lender.
The gold lender also believed that young people think they already know everything about how the world works.
Youth is ambitious. Youth would take shortcuts to wealth and the desirable things for which it stands. To secure wealth quickly youth often borrows unwisely. Youth, never having had experience, cannot realise that hopeless debt is like a deep pit into which one may descend quickly and where one may struggle vainly for many days. It is a pit of sorrow and regrets where the brightness of the sun is overcast and night is made unhappy by restless sleeping.
The Gold Lender’s Advice
The gold lender wrapped up these lessons with a review of the spear-maker’s exact situation.
Should your sister’s husband come to me and ask to borrow fifty pieces of gold I should ask him for what purpose he would use it. If he answered that he desired to become a merchant, I would ask “What knowledge have you of the ways of trade? Do you know where you can buy at lowest cost? Do you know where you can sell at a fair price?” Could he say “Yes” to these questions, then I would say to him that his purpose is wise and his ambition honourable.
The main takeaway from the gold lender’s learning is the following.
What thy labour earns for thee and what is given thee for reward is thine own and no man can put an obligation upon thee to part with it unless it do be thy wish.
Better a little caution than a great regret.
The Five Laws of Gold
Gold is reserved for those who know its laws and abide by them.
In summary, the following are the five laws of gold from ancient Babylon.
- Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.
- Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
- Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
- 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.
- Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of trickster and schemers or who trusts it to his own inexperience and romantic desires in investment.
With a little patience and determination, anyone can learn to make their gold multiply. These lessons, when put into practice, may change the life of whoever decides to follow them.
Wrapping up Lessons on Gold & Good Luck
The Richest Man in Babylon is a brilliant book that teaches basic finances with simple stories. In the form of gold and “good luck”, men may build their wealth if they follow a few simple principles.
Firstly, they should be patient and save at least one-tenth of their income. Next, they should multiply their savings with profitable investment opportunities. Finally, they should ensure they only make smart investments by following the lessons of the Babylonian gold lender.
By following these three simple concepts, any man regardless of industry or stature, may begin to grow their value. Just as the richest man in Babylon started from humble beginnings, you too can become wealthy in your own right.
By learning these lessons and taking action, you may learn to find better investment opportunities. But you don’t have to stop there. Learn modern approaches to finding valuable investment opportunities.
Internalise and become the Richest Man in Babylon with Mind & Practice today.