The Richest Man of Babylon Summary Review – 8 Cures to a Lean Purse
This is a fantastic book that will help you change your mindset from working for a living to earning passive income.
I read this book a long time ago and have since reread it at least two or three times.
The cures this book suggests should be taken to heart and I have found that my wealth increases day after day because I apply these cures to my own life.
What is funny is that I find myself a little like the main character, Bansir, who is very excited about becoming wealthy. He runs into problems and falls into little traps along the way that keep him from following the cures completely.
There was a time when I was spending the money my properties were bringing in and I was not able to continue buying properties because I spent all the rent money.
This set me back six months and I eventually relearned one of the key lessons of the book.
The Richest Man of Babylon is probably one of the best books you can read if you want to be rich.
Written by George S. Classon in 1926, it is a fictional story about a young poor man (Bansir) seeking wisdom from a rich man (Arkad) asking how he favored so well in life.
The story begins with Bansir, who is working hard while staying poor, but having the desire to educate himself, he asks Arkad his secret to success and riches. 
Arkad begins telling the younger man how he is to work, save, spend, and live in order to be rich just like he is.
The principles in this book are simple to understand but can be take diligence and perseverance to attain financial freedom as Arkad did. If you apply the seven rules from the Richest Man in Babylon, you too can become rich too.
You can learn a lot from my summary post but I recommend you to actually read the book.
The stories and examples that Classon uses to explain the cures really stick in your brain and help you to apply them to your life. So let’s look at the cures to a lean purse.
Richest Man of Babylon Summary Review – Cures to a Lean Purse
1. Start Thy Purse to Fattening
The first cure is probably the simplest to do, but not many people do it. To start your purse to fatten is to pay yourself first.
This sounds a little counter intuitive because when you get your paycheck from your job, you actually receive your money from your employer and it's yours. In reality, your paycheck has already been spent.
Reoccurring monthly expenses take your money every month so it is not actually your money. We all have monthly expenses that take our money.
Things like a home mortgage or rent, car payments, health insurance, electricity, food, and every other luxury and necessity in your life owns your money, not you.
To pay yourself first it means for every $100 that you take home, you keep in your purse/bank account $10.
This money is to be saved, and not spent, for future investing. After time your bank account balance begins to grow bigger and bigger.
Over time you will have much more money in your bank account then when you did when you started.
Be careful not to spend this money on anything that will not make you money. New cars, big tv’s, vacations, etc. are all types of items that take money out of your account but does not put any back.
You can start this first cure today with your next paycheck you receive by taking out 10% and save it for a future investment of a rental property. If your paycheck is $1,000 then pay yourself $100 and save it.
The rest of the nine hundred dollars will then go to pay your bills and other expenses you have, but that one hundred dollars is yours to keep.
If you get paid every other week, you would get paid 26 times a year and saving $100 times 26 pay periods equals $2,600 saved up over the year!
Not to mention the interest you would gain if you put it in a bank account that earns interest.
That $2,600 can be a down payment on a house that would all you to stop renting and move into a house that you bought with your savings.
You now own a piece of property that you can rent out in the future when you move into another house you buy with your savings!
2. Control Thy Expenditures
“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.“
The second cure for a lean purse is to “Control Thy Expenses” which means to live below your means and don’t spend more than 90% of your earnings.
The only real way to do this is to list out exactly what your expenses are each month, then cut out expenses to get you below 90% of your income.
In order to have more money in your pocket that you can save for investing, you need to either increase income or decrease expenses.
Cutting expenses is hard to do but must be done in order for you to be rich.
As in the previous example of $1,000 per paycheck, if your expenses are $1,000 per pay period, you are not making any money but are just living paycheck to paycheck which most Americans do.
Your goal should be to cut out expenses so you have more money to save for future investments.
| Current Monthly Expenses | Possible Monthly Expenses |
| Rent Large House – $1,600 | Rent Medium House – $1,100 |
| Rent Large House – $1,600 | Rent Medium House – $1,100 |
| Verizon Cell Phone – $75 | Go Phone $40 |
| Cable Television – $100 | Free Over the Air TV + Hulu and Netflix – $16 |
| Car Payment – $300 – $15,000 Value | Sell the car for $15,000 and buy a $3,000 beater – $0 |
| Eating Out – $600 | Make meals at home – $200 |
| Entertainment – $250 | Red box move rentals – $15 |
| Gym Membership – $50 | Work out at home – $0 |
| Total Monthly Expense – $2,975 | Total Monthly Expense – $1,371 |
| Savings of $1,604 Monthly! |
Take time today to list out monthly expenses and get very detailed. Once you have a list of all the items you spend your money on, go through the list and figure what you can actually cut from your life to save more money for investment.
I suggest cutting out as many expenses you can, almost to where it may actually start to hurt.
Do you really need the NFL package with your television? Do you have time to watch all 500 channels you pay for each month? Maybe drop the plan to only have 60 channels and save $50 a month.
Or what about your cell phone bill, do you really need 15 to 20 gigabytes of data or can you stop the data plan and just find Wi-Fi locations to use the internet?
Doing this exercise will lower your expenses and save you money.
3. Make Thy Gold Multiply
“Put each coin to laboring that it may reproduce its kind even as the flocks of the field and help bring to the income, a stream of wealth that shall flow constantly into thy purse.“
The third cure for a lean purse is to make thy gold multiply. After you have started saving 10% of your income and cut out your expenses until it hurts, then you are ready to look at what to do with your money.
This is the point where you can spend your money on investments that earn you more money.
There are many ways real estate rental properties earns you money.
Check out my earlier post “5 ways Real Estate Rental Properties Earns You Money”
It is said that the majority of the wealthy rich people in the world hold their money in real estate and the reason why is you do not lose your money in fact you actually gain money through depreciation, cash flow, and tax benefits.
An example of what you should buy with your savings is a rental property that brings in $300 a month into your pocket.
An example of what you don’t want to buy is a flashy new car that does not bring money into your pocket but takes money out of it.
4. Guard Thy Treasures From Loss
“Guard thy treasure from loss by investing only where thy principal is safe, where it may be reclaimed if desirable, and where thou will not fail to collect a fair rental. Consult with wise men. Secure the advice of those experienced in the profitable handling of gold. Let their wisdom protect thy treasure from unsafe investments.“
After you have worked hard to save 10%, cut your expenses until it hurts, and then look for an opportunity for your gold to multiply, you need to find a safe investment for your money so you do not lose your hard earned/saved money.
When you are looking for an investment for your money, there are two things to keep in mind: Risk and Return. The goal is to find the investment that has the lowest risk with the highest return.
Everyone knows that stocks, mutual funds, IRA’s, and 401k’s are types of investments because you are investing in businesses.
Check out my post on 401k’s and IRA’s here. I prefer to invest in a business I can control and the real estate rental properties that my company owns are completely under my control.
The main reasons why I invest in rental properties have the lowest risk and highest return of all other investments.
Here is an example of the types of returns you can see with a single family rental property.
| Single Family Property | |
| Purchase Price: $100,000 | |
| Down Payment: $20,000 Closing Costs: $2,500 Carrying Costs until rented: $800 Rehab costs: $12,000 Mortgage Payments: $4,800 First year maintenance: $600 |
Monthly Rent Amount: $900 |
| First Year Expenses: $ 49,700 | Total First Year Rent: $10,800 |
| Cash on Cash Return: $10,800 / $49,700 = 22% | Yearly Return for year one: 22% |
It would be very unlikely to get a rate of return of 22% in a mutual fund but 22% is actually a low number for rental properties.
Imagine if you put no money down, which is possible, to buy a rental property and have the same monthly rent.
Your rate of return would not be calculated and be infinite since you had no money out of your pocket.
Another thing to watch out for is buying useless things with the money you make from your investment.
If you buy a piece of real estate that brings in $300 a month and you go and spend $300 a month on something like a new car, you are “eating the young your gold produces”.
Think of each of your dollars as little employees for you working hard day and night for you to make more money.
The beautiful thing is that you are now able to take your profits from the rental property to buy more investments that make you more money to buy more investments.
If you save the $300 a month from your rental, you will have $3,600 each year to save on top of your 10% from your income!
5. Make of thy Dwelling a Profitable Investment
This cure for a lean purse is about buying your home and not renting it. When you are a renter, you are giving your money away to someone else.
The home you are renting right now may cost you $1,200 a month in rent.
The landlord of the property is not in business to lose money so he is probably making money each month from the rent you paid.
If his expenses are $900 a month, and your rent is $1,200, you are giving him $300 dollars of your income for the “privilege” of living in his home.
That is another $300 that could be in your pocket every month, or $3,600 per year!
Find a home you can afford, while keeping the 10% to pay yourself first, purchase it and cut your expenses that you would normally have in renting a property.
6. Insure A Future Income
“No man can afford not to insure a treasure for his old age and the protection of his family, no matter how prosperous his business and his investments may be.“
This cure for a lean purse it to use insurance to protect yourself and your investments. Insuring your properties that you own against loss and liability is a must.
You do not live in the rental property but you allow others to do so.
Insurance protects yourself from damages to the property the tenant causes and even liability issues from the tenant.
If someone slips and falls on your property, you are potentially liable to be sued for damages. Make sure that you have liability coverage over the property to protect yourself from being sued in the future.
Insurance is relatively low in cost and will save you if you ever need it.
If you have any family at all, person life insurance is also a very good way to take care of them in the event of your passing.
I know that my wife and kids are taken care of in the event of my past because of the life insurance that I have myself.
My wife will be able to pay off the house and live just fine for the rest of her life because of the insurance and rental properties that we own.
7. Increase thy Ability To Earn
“Cultivate thy own powers, to study and become wiser, to become more skillful, to so act as to respect thyself. Thereby shalt thou acquire confidence in thyself to achieve thy carefully considered desires.“
When we are young we go to school to learn different subjects the one where older we choose which subjects want to learn.
The poor do not continue to educate themselves but rather work a job and stay the same place their whole lives. Self-education is the keys to success in life.
As you educate yourself more and become wiser and more skillful, you will be able to reach higher heights and go beyond your natural limit.
When you do start to increase your abilities you should put them to good work and apply them in a way that helps you to earn more money so that you can invest in your future by buying real estate rental properties.
I am constantly learning from anyone I meet and strives to be better than I currently am.
I can learn from anyone, be it the CEO of a major corporation, to a grocery store clerk. It’s own in the mentality of being teachable and not let your pride stop you from learning.
The more you learn the more you will be able to harness your abilities to find new ways to make more money and to make your life more fulfilling.
What are you passionate about?
Figure out a way to use that passion to make money. Are you passionate about baking? Maybe create a blog that teaches others how to bake in your style. Are you interested in personal fitness?
Maybe look for a way to start a new type of gym in your area. The possibilities are endless for you to increase your earning potential.
There is something to watch out for when you start to increase your earning potential. The tempting thing to do is to increase your standard of living when your income rises.
With a poor person mentality, the raise they get in their paycheck is already spent on things that they have desired.
Buying a new car, buying a bigger house, buying the luxuries that you desired are all things that will take your money and not provide any lasting wealth.
They do not think like the rich who use the increase in income to purchase more investments that bring them in more money.
The rich don’t deprive themselves of what they desire, instead they purchase investments that buy them what they desire.
Robert Kiyosaki, of Rich Dad, Poor Dad, tells of the time that he wanted to buy a Porsche for himself. He had done very well with investments and saved up $300,000 to buy a Porsche all in cash.
Instead of buying the Porsche for $300,000 and be out the cash in on a Porsche that doesn’t make you money. He decided to use that $300,000 in cash to buy a multi-family apartment complex that brought in enough monthly cash from passive income to make the payments on the $300,000 Porsche.
The beauty of that is after the Porsche is paid off Robert still has the investment of the apartment complex which is still bringing in enough money to buy another Porsche and his original $300,000 is protected in the apartment complex.
That is the way the rich think. Buy investments that help you to buy other the items that you desire.
8. It Is Better To Give Than Receive
“One gives freely, yet grows all the richer; another withholds what he should give, and only suffers want.” Proverbs 11:24
This last cure for a lean purse is my own addition for myself. I have always been taught that is better to give than receive and I have found that be true.
It is counter intuitive but the more money I give, the more money I receive. I don’t necessarily receive the money from the person that I gave it to, but it comes back to me in other ways.
I find that the more honest I am with my money and the more that I use my money to help other people the more I get in return.
The money that we are given from God is all His and we are just stewards of his money. He allows us to keep 90% of his money that we receive and give back to him only 10%.
I find this to be very generous as well as if we follow his desire for us to give he will give us more in return.
God doesn’t need the 10% that we give back to him, because he owns it all, but in reality giving the 10% is for us. To not let money control you or who you are is the reason God wants us to give back.
The great thing though is that the more I give, the less money has a hold of me, and the more I rely on God for my every need.
Richest Man of Babylon Conclusion
I hope you got a lot of wisdom from this Richest Man of Babylon Summary Review.
The richest Man of Babylon has these cures for a lean purse that have stood the test of time. I have implemented them in my life which has helped me to get to where I am today.
These cures are not rocket science, they are however hard to follow because of the many years of living life without the knowledge and experience in applying these cures to assist us in our life.
If you start today and apply these to your life, you will see many changes in you that will help you in your future.
If you would like to purchase this book, you can find it here on Amazon.com.
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