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A Financial Parable: The Richest Man In Babylon
November 29, 2019

The rules for building wealth in ancient Babylonia were surprisingly similar to the strategies used today to get financially ahead. See what a hard-working but poor Babylonian chariot maker learned from his wealthy patron about the rules for “fattening one’s purse.” By applying seven timeless principles to your personal finances today, you may be able to improve your overall wealth picture. 
 
1. “START THY PURSE TO FATTENING” 
Arkad, the richest man in Babylon 6,000 years ago, decided early on that no matter how little or how much he earned, he was entitled to keep at least a portion of what he made. He settled on 10%, which sounds somewhat like an early form of biblical tithing. Arkad saved that amount before making purchases or paying any of his bills. “Do not buy from the clothes-maker and the sandal-maker more than you can pay out of the rest…” He believed that over time one will not ever miss the 10%. Plant the seed of wealth and let the shade from your wealth tree grow. 
 
2. “CONTROL THY EXPENDITURES”
Bansir, the industrious chariot maker, followed Arkad’s first principle with great discipline, but eventually complained that the remaining nine tenths of his income was not always enough to meet necessary expenses. Arkad responded by saying, “That which each of us calls “necessary expenses” will always grow to equal our incomes unless we protest to the contrary. Confuse not the necessary expenses with thy desires.” His point was that as human beings, we will always have more desires than earnings can gratify. Learn to separate the two. 
 
3. “MAKE THY GOLD MULTIPLY”
Arkad preached that a person’s wealth is not in the coins one carries in one’s purse; it is the income one builds, the “golden stream that continually floweth into his purse and keep it always bulging….an income that continueth to come whether thou work or travel.” Wise investments can make each coin in one’s surplus labor for you, and the additional coins that result from this relationship work for you as well. Great is the income from this combined effort – the ancient equivalent of compounding interest or stock gains of today – “so one can have riches available for such uses as I should decide.” 
 
4. “GUARD THY TREASURES FROM LOSS”
“Be not misled by thine own romantic desires to make wealth rapidly.” Arkad learned from his own mistakes in safeguarding some of his treasure. He had entrusted savings of a year to a bricklayer friend who promised to buy jewels in Phoenicia so they could later sell and divide the profits. We’d call this a side hustle today, and it was a disaster. The bricklayer knew little about the jewelry trade and was quickly swindled out of his money. Arkad learned the folly of allowing a bricklayer to make decisions outside his expertise, and in the future only made investments in activities he studied carefully. He also learned he was willing to pay for advice from professionals experienced in handling money for profit, as this counsel may prevent potential loss equal to the amount of the investment. 
5. “MAKE OF THY DWELLING A PROFITABLE INVESTMENT”
“I recommend that every man own the roof that sheltereth him and his.” The idea is that it’s wiser to make a house payment for your benefit than to make a payment to landlords getting wealthier off your rental dollars. “Then when the house be built, thou canst pay the money lender with the same regularity as thou didst pay the landlord. Because each payment will reduce the indebtedness to the money lender, a few years will satisfy the loan.” 
 
6. “INSURE A FUTURE INCOME”
Retirement plans were certainly not part of the ancient financial landscape, but setting aside enough funds to protect families as they age was still a formidable concern. Arkad believed that insuring a future income was an important consideration. “The life of every man proceedeth from his childhood to old age. This is the path of life unless the Gods call him prematurely to the world beyond. Therefore, I do say that it behooves a man to make preparation for a suitable income in the days to come, when he is no longer young, and to make preparations for his family should he be no longer with them to comfort and support them.” 
 
7. “INCREASE THY ABILITY TO EARN”
To Arkad, “keen-minded individuals seek greater skill that they may better serve those upon whose patronage they depend.” The more wisdom we acquire, the more we may earn. He urged all his students to “be in the front rank of progress and not stand still, lest they be left behind.” No matter what profession one is involved with, learn the methods and skills of those greatest at any craft. Educated workers have more interest in their labors, greater concentration to the task and more persistence.
Arkad believed that money was plentiful for those who understood the simple rules of its acquisition. The seven points above lead to one person’s monetary success in Babylon thousands of years before an industrial revolution and well before there were global stock exchanges. If the seven principles are followed even today, overall improvements become tangible for those who make their own treasure. 
 
Past performance is no guarantee of future results, and the opinions and other information in the commentary are as of November 22, 2019. This summary is intended to provide general information only and is reflective of the opinions of Commerce Trust Company’s Financial Advisory Services Group.
This material is not a recommendation of any particular security, is not based on any particular financial situation or need, and is not intended to replace the advice of a qualified attorney, tax advisor or investment professional. Diversification does not guarantee a profit or protect against all risk.
Commerce does not provide tax advice or legal advice to customers. Consult a tax specialist regarding tax implications related to any product and specific financial situations.
Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
 

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