The Richest Man in Babylon first appeared on the scene in 1926 as a series of informational pamphlets on basic financial management. By 1927, several of these pamphlets had been compiled into a book and this collection has been in print ever since.

In short, The Richest Man in Babylon is a series of financial parables. These stories are set in ancient Babylon and relate the story of a Babylonian regular guy who used some basic financial sense and built up a great deal of wealth.  Basically, a young man asks a rich person to mentor him. This wealthy man slowly teaches him the rules to wealth, which are timeless and that anyone can apply. He scolds the young man when he makes mistakes, but eventually the boy gets rich.

  1. Spend Less Than You Make. Save and Invest The Difference

Sounds so obvious but common sense isn’t so common. Most young people I meet have openly admitted that they spend every bit of what they make every paycheck.This is one of my pet peeves that annoys me most. I know secretly that they will not get rich if they make more money (like they often complain and wish for) because they will just spend more and return down to zero in the bank account.

  1. Use Saved Money To Make More Money

This is probably one of the golden truths of wealth creation that is voiced in many classics like Rich Dad Poor Dad. Kevin O’Leary of Shark Tank explains this well. He imagines every dollar like little soldiers. Everyday, his mission is to capture more soldiers and get those soldiers to work to capture even more soldiers.

Most people are using that money on things that rust, rot, or deteriorate to a net worth of zero. These include houses, cars, boats, clothing, watches, jewelry, or any merchandise. You’re making someone else rich by doing that.

What are the smart people doing? They’re taking every dollar they save and spending that on something that will make them MORE money. Usually, it’s on something that they’re skilled at or can understand: a basketball player might spend it on basketball lessons, a programmer might spend it on an exclusive programming in-person training, a businessman might spend it on a small business that will make him more money.

  1. Only Take Advice From People Skilled In That Field

Only take advice from the best people in a field. Be careful of any other advice that comes your way. Everyone loves giving advice. The book illustrates this with a story of the main character investing his money with foreign jewel traders that promised to bring back rare jewels for cheap. He was scammed and brought back fake jewels. He also tried investing his money in the shield business with a man who worked as a cloth maker (and clearly didn’t know a thing about the shield industry).

An example would be listening to advice from the tailor on jewelry or business. What does this guy know about either of these things? NOTHING! That’s why he’s a tailor. Find an expert at business or jewelry who has made a lot of money (and can prove it).

Sounds simple but you’d be surprised how many people listen to anyone’s advice. A lot of successful people do listen to advice, but it’s not as stringent as it should. They will listen to anyone who sounds successful or looks rich or is on a fairly famous podcast or has made at least 6 figures.

  1. Only Invest Your Money In Industries and Skills You Are Very Familiar With Or You’ll Lose Your Money

Along a similar theme as the last point, you only want to invest in industries that you are familiar with. For example, let’s say you don’t know much about real estate. Investing money in it is like throwing it out the window because it’s easy for people to mislead you or for factors you didn’t consider to deplete your investment.Just like you shouldn’t try to do heart surgery with no knowledge or experience with surgery, you should not waste your hard earned money on areas you aren’t familiar with.

  1. Don’t Wish For A Lump Sum of Cash. Work To Achieve A Consistent Cash Flow Instead.

People wish that they get lucky and win a lottery. But any lump sum of cash you win will eventually go to zero and you’ll be broke again. In fact, many lottery winners go through their whole winnings within a year. And their happiness levels go back down to zero.

The craziest part is that usually, they’re no better of than when they started: their fashion, standard of living, and everything else is surprisingly the same. They weren’t smart with their money or have a money-mindset and therefore they bought things that will depreciate to zero value.Treat your money like solders that will bring you more money.

  1. You Will Lose Money If You Put It To Foolish Use

What this basically means is that if you invest or use money in businesses you aren’t familiar or people who aren’t good at a task, you will lose it. If you push it too hard to earn money in a near-impossible way, you will lose it. If you buy into scammers, you will lose the money. If you spend or use money based on your own inexperience or emotional urges, you will lose it.

  1. Put Away 10% of your Earnings and You Won’t Even Notice A Difference in Quality of Living

Pay yourself first. This means that before you spend any of your earnings, put aside 10% for saving and investing.Your money is not truly yours to keep because you immediately give it away by spending it on rent, food, or items you don’t need.

The book makes a profound point: If you start with 10% tucked away, you will not even notice the difference. Your quality of life will have no noticeable difference. You surprisingly will learn to live without it.

  1. Invest in Your Ability To Earn More

What the heck does that mean?It means you should spend your time (or money) to improve your skills, knowledge, and ability to earn more money. I truly think is a golden truth to wealth that is most important, yet overlooked constantly, so pay attention:

Most people quit learning at the age of 21 when they finish school. Others are lifelong learned. Until they die at 90 years old, they keep learning and improving. This gives them a huge advantage over time. While the average worker, goes home after work to watch TV, does nothing to improve himself, and rots his or her brain, you can get ahead by improving yourself a little each day.

  1. You Will Lose Money If You Let Greed Cloud Your Judgement

There is a difference between having big dreams versus letting your greed influence your decisions. You can build a multi-billion dollar business with a small $1000 investment. It’s been done before. Crazier things have been accomplished.

But that does not mean you buy into a promise of someone offering you a “magic return of millions with a one time investment.” That’s a scam. Often, a lot of billionaires I have studied, like Sam Walton and Warren Buffett, were always very conservative with their investments. They would rather build slowly versus rushing into an opportunity with risky down-side.

  1. What You Earn Is Not Yours To Keep Until You Invest It Properly

The book mentions a concept called “what you earn is not yours to keep.” It basically means that just because you earned $100 bucks doesn’t mean it’s really yours because you immediately turn and spend it on items (rent, toys, clothes, etc.). So in reality, it’s their’s to keep.

Instead, immediately take 10% off the top and set it aside into a income-generating system (like a Lemonade stand or McDonald’s) that you own forever and keeps generating you money for you to keep.

  1. People Who Take Action Get Luckier Because They Make Their Own Luck

Don’t interpret this to mean, “if you gamble more, you will make more money.” What he’s actually saying here is that people who actually take what they learn and use it (rather than keep it in their head), tend to be more “lucky.” If you are doing everything you can to bend all your odds in your favor, you will have more chances and appear to others to be more lucky.

The stories themselves are of varying levels of quality. There are two great stories, a fair number of middling ones, and a few that left me confused as to the reason for their inclusion. Many of the stories had overlapping concepts, but they were explained and applied in different ways. In short, buy this book if you learn well from stories. If a well-told tale of the experiences of others is the way that you learn, this book will be very enlightening. I often learn this way, as I learned about totalitarianism from 1984 and objectivism from Atlas Shrugged.