5 Cures to Financial Mediocrity From the Classic Book The Richest Man in Babylon

by | BiggerPockets.com

The Richest Man in Babylon, written by George S. Clason, has been one of the most influential and inspiring books for me. The protagonist Arkad, who is the richest man in Babylon, was commissioned by the king to teach his citizens how to acquire riches. The citizens of Babylon seem to be experiencing the exact same problem that our society is currently plagued with — a lack of financial intelligence. This article will dive into the five most important lessons — or cures — that taught me to conquer my financial ignorance and become financially free.

Arkad is famous for his “Seven Cures for an Empty Pocket.” The seven cures are filled with common sense advice, yet few individuals follow his sage teachings.

Here are the “cures” that I found most influential.

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5 Cures to Financial Mediocrity From The Richest Man in Babylon

Start thy purse to fattening (Cure #1).

I refer to this cure as the cornerstone of my financial planning. Arkad tells us to save 10% of our earned income, or in his words, one out of every ten coins. I have labeled this savings account my “financial freedom” account.

This account is only to be used for investing and growing your personal wealth. Once you begin to save for investing, the law of attraction kicks in. The account will continue to grow and attract more coins. This also forced me to concentrate on saving money for investment purposes only. The law taught how to budget my earnings and set up a plan for investing. Failing to plan is planning to fail!


Control thy expenditures (Cure #2).

I always tell my students to get their financial house in order before pursuing a huge endeavor as real estate investing. Begin by controlling your expenses, and learn the difference between personal and business debt. Most personal debt is to be avoided, while business debt is to be used to leverage the business and pay for your personal expenditures.

My father once told me it wasn’t how much I earned that was important, but how much I kept. Most of us stuck in the middle class run off and spend our increases in pay instead of investing the excess in ourselves or putting it into a financial freedom account. Learn to control your expenses and reinvest the excess!

Related: The Middle Class is Dying: Here’s How to Rise Ahead in the Aftermath

Increase your ability to earn money (Cure #7).

This is one of the most important cures. If an educated person loses their wealth, they have the ability to create new wealth. The education makes a person wealthy, not the money. In real estate, there are countless strategies that an investor can utilize. An investor should become proficient in one strategy before attempting to learn another. The key is to always be a student and never assume that you have become an “expert.”

My career in real estate exploded when I decided to “get educated.” What are the steps I took? I sought out a real estate coach, I devoured real estate books on multifamily investing, I became a licensed real estate salesperson, and I bought countless training programs. I made a commitment to myself that I would learn as much as possible about multifamily investing before I invested in another deal. I spent approximately two years educating myself before I purchased my first investment property with my partner Jake. The education allowed me to connect with partners, find deals, and create a terrific team.


Guard thy treasures from loss (Cure #4).

Warren Buffet said it best: ”There are two rules in investing. Rule #1: Never lose money. Rule #2: Never forget rule #1.”  This rule has become one of my mantras. My focus is on the buying aspect of real estate. Any successful investor will tell you that your money is made when you “buy right.”  Allow me to expand this law a bit further.

Many in real estate do not have time to personally manage a property, so they choose to hire a management company or partner with others. Yet others seek a more passive approach and look to a syndication to invest their capital. This law demands that you consult with wise men and “secure the advice of those experienced in the profitable handling of gold.” It seems fairly obvious to follow this advice, yet many investors fail to perform proper due diligence when entering into these investments.

The story about Arkad entrusting his hard-earned money to a brick maker who was supposed to purchase rare jewels in Phoenicia illustrates the pitfalls in investing with those who have no experience. Arkad lost his entire investment and learned an invaluable lesson. I often hear investors asking their friends and family for real estate advice. We all have an Uncle Charlie who is always spouting that real estate is risky and should be avoided. If you dig a bit deeper, Uncle Charlie doesn’t own any real estate — and should keep his unfounded opinions to himself. Don’t listen to Uncle Charlie; seek out Mary, who owns 300 units and is growing her portfolio.

Related: 6 Steps to Improve Your Financial Situation (in a Way That Actually Lasts!)

Insure a future income (Cure #6).

This is one of the main benefits of real estate. The average American has been brainwashed into funding a pension plan for their retirement. Although this strategy has several benefits, it does not compare to a portfolio of multifamily properties. The options are exciting. Should I sell part of my portfolio, should I hold and cash flow, do I sell some assets and take back a note as part of my payment? Arkad defines the cure as “provide in advance for the needs of thy growing age and the protection of thy family.” With real estate, an investor can create generational wealth while providing for his family and his retirement.

Your Task

Set up your own personal financial freedom account (FFA). The time is today, not tomorrow. Create a monthly budget to track all of your expenditures and to find ways to save money to invest into your FFA. Next, choose a niche in real estate (ex. fix and flip, buy and hold), and begin your education. Seek out a mentor/coach to help shorten your learning curve and propel you to success more quickly. All that’s left is to take action. Then the fun begins!

Have you read The Richest Man in Babylon? What’s your favorite tip from this classic read?

Let’s talk in the comments section below!

About Author

Gino Barbaro

Gino Barbaro is a father of six and the co-founder of Jake & Gino LLC, a real estate education company focused on multifamily investing. He has grown his portfolio to 674 units in three years and is the best-selling author of "Wheelbarrow Profits".


    • HI Tom,
      I own “The Richest Man in Babylon”. It is probably available on Amazon for a few bucks. Or for free at your local library. It is not an investment primer. It is a book to get you in the mindset to live beneath your means and invest wisely. I believe Gino is trying to summarize the book in a few short paragraphs. I would also recommend “The Millionaire Next Door” and at least glancing at the “Rich Dad, Poor Dad” books. They are not going to tell you which apartment building to buy, but they can help change your frame of reference. They were helpful to me as I transitioned from Corporate America to being a full time real estate investor.

      There are also what I would call “investment” books such as the books on Landlording and Rental Property investing by Brandon Turner. They are about 20 bucks apiece and contain several hundred pages of checklists and details.

      In general, I liked the article, but my biggest beef with Gino and other posters on Bigger Pockets is the continued terrible advice about not funding your employer sponsored IRA/401K. Take the free money from the 401K. Take the deferred tax break. Build up a nest egg through automatic deductions that you won’t even notice.

      DO BOTH. It is not a choice between participating in your 401K and investing in real estate. That is malarkey that BP has been spouting all over the site. Fund your 401K to get the employer match, save ADDITIONAL money, invest in a rental house and watch both investments grow. Keep funding, the 401K, but the 2nd house or multiunit, and keep on trucking. I think that’s how our fiend Arkad got so rich.

      Happy investing everybody.

      • Gino Barbaro

        Many people on BP are entrepreneurs and are control freiks. I see many issues with 401s. The fees can be onerous, the returns small, the choices of investment minimal and the lack of control. I am just waiting for the govt to come in and change the rules. Arkad got rich because he educated himself and was ready when an opportunity arose. Everyone said he was lucky, he was ready.
        In my situation, I cashed in my 401k, paid 10%, saved on taxes because of my cost segregation, and now the property cash flows plus I will refi and pull out my investment. You can not velocitize money in a pension plan. Is that for everyone. Absolutely not. But if you want to become wealthy and take control, the 402k was not working for me.
        I do agree that it is a good savings vehicle for those who can’t save, but those investors should not consider real estate as an investment vehicle. Real estate is an investment where you need a hug level of financial intelligence, as opposed to investing in mutual funds.

  1. Jerry W.

    Thanks for the article. I do a bit of both. I have about 30 rental units, and I have a retirement plan that I put 10% of my pretax income into. It is doing very well and is passive, where my rentals consume nearly every spare minute and dollar. I however am getting close to retirement age so have set some goals to reach retirement hopefully before I am 65. My plan is to generate income or savings of $6000 per month. I will do this by either increasing income or decreasing expenses by $1,000 per month each year for 6 years. I have come close to this years goal. I paid off a note that was $200 per month without refinancing a property to do it. I also paid off the lowest balance mortgage I had which was only $6,000 and was $400 per month, and finally I put $50,000 into a retirement account that should generate $200 per month. The biggest block between me and quitting the day job is health insurance. I do not see how to get insurance for $3,000 a month without keeping my day job.

  2. Rory Fowler

    This is my #1 recommended book. I agree it is basic. And it is not a book. It is a collection of parables handed out as brochures in the early 1900s at banks to help people understand basic financial principles – principles long forgotten by many in the 2000s.

  3. David Greene

    Love this. I think this book should be required reading in school. As a matter of fact, I was just reading it last night at 2 am in the middle of a graveyard shift. Good timing!

    My favorite part about the whole thing is the principles listed in the book are truly timeless. Whether it is gold or dollars, camels or notes, robes or rentals, learning a new trade or getting an RE license, the principles hold true over time while the vehicles change.

    I’ve yet to read a book that impacted me so deeply, emboldened me so greatly, and encouraged me so strongly as this one. It was a baptism for my confidence. If anyone is considering getting started in real estate, please, please, please, read this book first and have a confidence you can follow it’s instructions before you jump into RE investing.

  4. My grandmother gave me a copy when I was 12 years old. It changed my young life.
    Today, I use it to educate young people whenever one asks “How you make money?” There are several copies in my office library. What’s so special about “The Richest Man” is I can sit down with a young person and we can read it together in a few hours which turns into months of their asking questions.
    One of my multi-family units is mostly Section-8 tenants. I made “The Richest Man” required reading 2 years ago. Twice a month we get together and talk about their personal finances and other important topics. You know since doing this I haven’t had a late payment. And I’ve seen a big improvement in their lives.

    • Gino Barbaro

      Great comment Mark. Life is all about our beliefs and what we believe we can achieve. If you couple that with common sense education and love from family members, the sky’s the limit! Keep making an impact on people’s lives. Success in life comes from our relationships and the value we can deliver to people. (at least, that’s what I think)

  5. Peter Mckernan


    Great article!! These are always great rules to follow and will give someone the advantage over another person that is living check to check. Saving money for that next deal if that’s in two months or two years is the best way to create the long term wealth you talk about. If there is a savings plan set in place that can reap huge benefits in the long run, it comes down to the patience.

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