The book The Richest Man In Babylon by George S. Clason shows up in Google searches for “oldest personal finance books" and “best personal finance books”.
I’m surprised that even though it was published nearly a century ago, it’s as actionable today as the day it was published.
To add to my surprise, I realized that I did exactly what the book recommends nearly ten years ago, and I had never heard of the book before.
As a result of doing what the book recommended (plus a huge stroke of luck and excellent timing) my net worth increased to over one million dollars at the age of 24.
Then, I broke one of the rules and almost all of it slipped through my fingers like grains of sand.
But to be honest, I’m happy it happened the way it did.
Why?
Keep reading to find out, plus get all 7 rules from The Richest Man In Babylon, coming up in what has shaped up to be one of my favorite and most valuable newsletters of The Bleeding Edge to date.
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In the last week of high school, I did something arrogant.
My final class project was due in 5 days. The project was to apply for scholarships and create a resume for job interviews.
I had barely started.
My teacher, who I liked and respected, was getting on me about finishing this project.
“If you don’t finish this project, you won’t pass this class and you’ll miss graduation.”
I was getting annoyed because I didn’t believe this final project had any meaningful impact on my life after high school. I simply didn’t believe in school.
I had no ambition to go to college because I didn’t respect jobs that required a college degree. That path wasn’t for me.
I knew deep down that I wouldn’t take the traditional path.
What path would I take? I didn’t have an answer.
I had blind faith that things would work out.
But there stood my teacher telling me I had to do this project because that’s just how the last week of senior year worked.
I was fed up with the whole “system” of schooling, and in rebellion, I sought to stick it to the man.
So I stood up from the back of the 30-person class and addressed the room.
In an act of frustrated rebellion to prove that school didn’t matter, I told the class “You guys better remember who I am because I’m going to be rich or famous.”
The details of what happened after are fuzzy, but according to a friend in the class, the teacher agreed with me but said I still had to finish the project.
And here I am almost ten years later having experienced a net worth of over a million dollars and lost nearly all of it. I’m not famous by any stretch, but have some exposure in certain online circles. I’m now living in New York City, an environment far different from my small farm-town roots.
By most measures, I’m making progress on backing up my claim made to my tiny town’s high school class.
Now that I have a smaller ego and some real-world experience, I’m sharing the full story of how I made and lost $1,000,000.
By the end of this newsletter, you’ll have actionable takeaways on how to build a fortune of your own
To be clear, you will not become a millionaire within a few years.
But if you understand my story and the timeless wisdom from The Richest Man In Babylon, you won’t have to lose your fortune like I did.
The Story Of Making And Losing One Million Dollars
“Perhaps there is some secret we might learn if we but sought from those who knew” - Bansir, The Richest Man In Babylon
Two years after graduating high school, I hadn’t made much progress on my quest for fortune and fame.
I wasn’t putting any time or energy into into it, either.
I spent most of my time:
Smoking weed.
Playing video games.
Working part-time.
In community college for computer programming (my mom convinced me to go).
But a single moment in my early twenties changed my life for good.
I was working at a utility construction company. My job was to take a shovel and dig holes. From there, the rest of the crew would use a machine called a directional bore to drill hundreds of feet and install the cable underground.
The shop was in my hometown of Webberville, Michigan. The shop was so close to my parent’s house, the joke was I could roll out of bed and land at the front door of the shop.
Once at the shop, we’d drive an hour or more into the Metro Detroit area. Every day before the long drive, we’d stop at a gas station to get gas, buy energy drinks, and fill our crew’s cooler with ice.
One day, while scooping ice in the back of the gas station, I heard footsteps approaching. I turned around to see a familiar face I used to work with, DJ.
DJ had recently left the company to start his own. My face probably lit up because I was excited to see him.
Without even a hello, he asked me one question.
“Have you heard of Bitcoin? There are computer nerd all over the world running a program on their computer and making money.”
The idea of doing nothing and running a computer program to make money was compelling, to say the least. I already knew how to build computers and had a basic understanding of computer programming.
I spent the ride to the job site reading articles on Bitcoin and Googling questions that popped into my head. I read more about Bitcoin on the ride back home.
Then I read more when I got home.
I started to feel that Bitcoin was more than just a digital coin. I began to see it as a new form of money. I saw it as a new way to create wealth.
I became completely obsessed.
This was August 2017. Bitcoin was $3,000. I was 20 years old and in my youthful excitement, I had a strange feeling.
I started to sense that if what I was reading was true, Bitcoin could be one of the most important technologies of the century.
I was young, but old enough to know that I didn’t have the life experience to prove this on my own.
Luckily, there were real-life meetups where Bitcoin enthusiasts met in person to discuss the technology.
So I went to the very next meetup to ask questions and test the validity of how I felt.
When I arrived, I was sat at a table with a handful of others. They were extremely kind to answer every single question I had. And I had a lot of questions.
By the night's end, I had pages full of notes.
Over the next few months, I kept Googling, watching videos, and learning about crypto mining.
At one point I used my gaming laptop to try mining a new cryptocurrency called Electroneum.
I let my laptop run overnight and it made $100 in 8 hours.
It’s as if I stuck gold in my bedroom. I was ecstatic.
I started to do the math. $100 in 8 hours, running 24 hours...
I’d be making almost $300 a day just from my laptop.
But I could make even more if I had a computer more powerful. So, I spent my savings on constructing a mining rig on a bamboo shoe rack.
Hey, it doesn’t need to look good to make money.
Once my rig got up and running, the profitability of mining went down a bit (making $300 a day on a laptop means others start doing it too).
Even with the dip in profits, my new computer was still making upwards of $120 per day.
I thought I was a genius. I felt like King of the World at 20 years old.
From there, I continued putting money into Bitcoin, and the price kept going up.
In December 2017, Bitcoin hit $20,000. I had turned $1,000 into about $3,000 of unrealized gains. Not bad for a 90-day investment.
But what goes up must come down.
In exactly one year, Bitcoin dropped from a high of $20,000 to a low of $3,000.
While I was disheartened by the drop, I still believed in Bitcoin because I knew the technology behind it.
Around that time, I realized that if I wanted to make the most of this seemingly once-in-a-generation opportunity, I needed to get serious about budgeting. That way, I could shovel as much spare money into Bitocin as I could.
Fortunately, I unknowingly had incredible timing,
Bitcoin was about to go on a massive rally over the next two years.
And I was serious about budgeting.
I tracked every single penny I spent from January 2019 to December 2021.
See below, my July 2019 Monthly Expense Sheet.
You’ll notice that on the right side, my income was $667 per month. That’s not a glitch. I was working full-time at a real estate company as their videographer.
Full-time making $667 a month? Yes.
I believed in Bitcoin so much that I decided to trade 1/3 of my salary for a vested payment in Bitcoin, unlocked after 12 months
At the time, my salary was $24,000.
The Bitcoin deal was as follows:
My new salary would be $8,000
$8,000 would be invested in Bitcoin and sent to me after 12 months.
The other $8,000 went to the business owners for fronting the Bitcoin.
That happened in July 2019.
Even though I just sacrificed a large portion of my cashflow, I still shoveled as much money as I could into buying Bitcoin.
Fast forward to May 2021 and I was sitting on about $80,000 in Bitcoin at 23 years old.
Around that time, I started learning about these things called NFTs - Digital collectibles powered by crypto. I immediately understood the technology behind it.
By the end of May 2021, I converted half of my Bitcoin, $40,000 worth, into GaryVee’s VeeFriends NFTs.
Then I caught the NFT bug and spent the other $40,000 on various others, namely Curio Cards & Cool Cats.
The timing of these investments couldn’t have been better, and within 12 months what originally started as humble investments in Bitcoin turned into over $1,000,000 in crypto & NFT holdings.
It was around this time I started to think I didn’t want to work for the real estate company anymore.
With my newfound wealth, it made sense to quit and live off my NFT earnings for while. So that’s what I did.
Within the same month, I sold some of my NFTs for a down payment to a house in Oak Park, Michigan.
I felt I had life all figured out. I only sold my NFTs when I needed the money to pay bills, buy food, or whatever else my heart desired.
I’m a millionaire, I deserve to spend a little bit.
However, NFT and crypto prices were slowly falling from their all time highs, and would soon drop 90% from where they once were.
I lost almost all of my net worth I didn’t sell my holdings when they were valuable.
Others in crypto culture touted the pride of never selling no matter how high the price went. It could always go higher.
Most people over 30 years old told me to sell. They knew it wasn’t likely that my original investment of $10,000 to $1,000,000 had much more room to grow.
But I felt like the smartest human of all time. I listened to the crypto bros online who were just as euphoric, delusional and inexperienced as I.
I didn’t sell.
But to this day, I’m happy I didn’t sell.
I know that if I sold and had $1,000,000 in the bank at 24 years old, I wouldn’t be who I am today.
My ego would be massive and I would have lost any ambition for bettering myself.
I would’ve rot at home in the spoils.
Now, here I sit in September of 2024, living in New York City helping run the Instagram of VeeFriends, the same company whose NFT I bought back in 2021.
I’m back to budgeting and investing my spare money into crypto and the stock market.
I have no doubt that I will become wealthy one day, and this time, it will be sustainable and healthy.
What’s the ket to becoming wealthy?
Read timeless wisdom on building wealth
Do what the timeless wisdom recommends
Give it 30 years.
And that’s what I intend to do.
What timeless wisdom can be shared from this experience?
This is where we’ll learn from The Richest Man In Babylon by George S. Clason.
Written in 1926, the book takes place around 2,000 BC in Babylon.
The book starts with two peasant-class friends realizing they live in squalor despite growing up in the same situation as Arkad, the richest man in Babylon.
If they all grew up in the same town with the same teachers, why is he rich and they’re poor?
So, they visit him to ask how he became the richest man in Babylon.
Fortunately for the two friends, Arkad is happy to share how he built his wealth.
Arkad explains how he became the richest man in Babylon by sharing the “7 cures for a lean purse”.
How To Build Wealth via 7 Cures For A Lean Purse
“Wealth, like a tree, grows from a tiny seed. The first copper you save is the seed from which your tree of wealth shall grow. The sooner you plant that seed, the sooner shall the tree grow and the more faithfully you nourish and water that tree with consistent savings, the sooner may you bask in contentment beneath its shade.” - Algamish the Gold Lender, from The Richest Man In Babylon
1. Start thy purse to fattening.
“A part of all you earn is yours to keep. It should not be less than a tenth no matter how little you earn. It can be as much more as you can afford. Pay yourself first. Do not buy from the clothes-maker and the sandal-maker more than you can pay out of the rest and still have enough for food and charity and penance to the Gods.” - Algamish the Gold Lender, from The Richest Man In Babylon
The richest man in Babylon recommends taking 10% of everything you earn and keeping it for yourself.
This is the foundation of building wealth. Before you pay your landlord, get groceries, buy clothes, pay bills… Pay yourself first.
In doing so, you’ll hardly notice it’s gone.
You can do this by setting up automatic 10% transfers from your checking to your savings. Or, in your company’s HR software, route 90% of your direct deposit into your checking, and 10% into your savings.
In my journey, I saved more than 10% without really thinking. I knew that any dollar that left my pocket wouldn’t be invested in Bitcoin. Therefore, I was careful to make sure I had money to invest.
2. Control thy expenditures.
If you don’t have money at the end of the month, how do you expect to build wealth?
While I used a free Google Sheet template to take penny-pinching to the extreme, you don’t have to. Most bank apps categorize spending for you.
Even still, I recommend using an app like NerdWallet to show your investments, property, credit score, debt, and income in one app to get a holistic view of your finances.
I’ve been using NerdWallet for over a year and can’t recommend it enough.
Your savings are your ego minus your income. Do you have the guts to face potential judgement or peer pressure to spend your time and money with your friends at a bar, when a house party is just as fun and costs less?
You don’t need to spend money to have fun. Spend less than you earn. Simple.
3. Make thy gold multiply.
“Every gold piece you save is a slave to work for you. Every copper it earns is its child that also can earn for you. If you would become wealthy, then what you save must earn, and its children must earn, and its children’s children must earn, that all may help to give to you the abundance you crave.” - Ariadne, from The Richest Man In Babylon
Expecting to become wealthy without investments is like expecting to win Monopoly by collecting $200 every time you pass go.
You need to make your money work for you by owning assets.
I knew that every dollar I put into Bitcoin would basically 10x in the next few years. because I had that confidence and clarity, I had the motivation to put in as much as I could as quickly as possible.
While a 10x in a few years is not replicable, you can simply invest in the S&P 500 and see your money double every 8 years. That’s not bad! It takes time to grow sustainable wealth.
Besides, the skills needed to become suddenly wealthy are different than the skills needed to keep it.
4. Guard thy treasures from loss.
I learned this lesson the hard way, just like Arkad did in the book.
‘You’ve saved not less than one-tenth of what you’ve earned for the past year. What have you done with it?’, Algamish the gold lender asks Arkad.
‘I have given it to Azmur, the brickmaker, who told me he was traveling over the seven seas and in Tyre he would buy for me the rare jewels of the Phoenicians. When he returns we shall sell these at high prices and divide the earnings’, Arkad replies.
‘Every fool must learn,’ he growled, ‘but why trust the knowledge of a brickmaker about jewels? Would you go to the breadmaker to inquire about the stars? No, by my tunic, you would go to the astrologer, if you had power to think. Your savings are gone, youth, you have jerked your wealth tree up by the roots. But plant another. Try again. And next time if you would have advice about jewels, go to the jewel merchant. If you would know the truth about sheep, go to the herdsman. Advice is one thing that is freely given away, but watch that you take only what is worth having. He who takes advice about his savings from one who is inexperienced in such matters, shall pay with his savings for proving the falsity of their opinions.’ Saying this he went away.
And it was as he said. For the Phoenicians are scoundrels and sold to Azmur worthless bits of glass that looked like gems. But as Algamish had bid me, I again saved each tenth copper, for I now had formed the habit and it was no longer difficult.
“Every fool must learn.”
I wasn’t satisfied with $1,000,000. I aimed to make $5,000,000. Then I would be happy to cash out.
I was listening to the advice of the newly wealthy on what I should do with my newfound wealth.
I may as well have asked a two-week-old baby for advice on how to run.
Instead, I should have sought the advice of experienced wealth management advisors, and paid for a good one, as I had the money to spend.
“If you would know the truth about sheep, go to the herdsman. Advice is one thing that is freely given away, but watch that you take only what is worth having. He who takes advice about his savings from one who is inexperienced in such matters, shall pay with his savings for proving the falsity of their opinions.” - Algamish the Gold Lender, from The Richest Man In Babylon
This ties into something that is loosely mentioned in the book: Invest in what you know.
Learn what you’re investing in. Don’t put your money into something a friend is ravoing about just because they’re raving about it.
You have to understand an investment to build conviction and stomach volatility.
5. Own thy own home.
I bought a home with my crypto earnings because I believed owning a home would pay off better in the long run vs paying someone else’s mortgage by paying them rent.
And this was true, for a while.
My mortgage payment was only a few hundred more than rent, and I was basically paying my future self. Additionally, as housing prices went up, so did my net worth.
Unfortunately, my insurance and escrow had been miscalculated and I was paying over 50% of my take home. My home was no longer affordable. I was able to rent two of the rooms, but I was still paying $600 per month, and I wasn’t even living in it. I was living in New York City.
6. Insure a future income.
This is pretty simple.
It’s hard to build wealth if you’re using the money you earn to live off.
Try maintaining a consistent income so you can get your new money working for you as quickly as possible.
7. Increase thy ability to earn.
While investing your money, don’t forget to invest in yourself.
Spend your time and energy on bettering yourself. Grow your skillset to solve harder problems, earning you more.
In a way, that’s what I’m doing with the newsletter. As I learn new things, I write about it here.
By doing so,
I solidify what I learn by teaching it.
Bring value to readers by sharing what I learned
The newsletter will work for me until the day I die.
The few hours I spend writing (or in this case, many days) result in a newsletter that anyone can read for centuries.
These all ladder up into increasing my ability to earn.
So, that’s it.
What do you think?
What did you learn?
Did any part of my story remind you of your own journey?
I’d love to hear about it!
If you think I brought you value, consider becoming a member of the monthly edition.
Once a month I share the very best resources, tools, and stories I find on the internet in the paid version for $15 per month.
See you next Monday :)
Definitely learnt the hard way also aha
- Take Profits
- Only Invest in things you believe in & understand
- Diversify
- ‘Time in the market is better than timing the market’
Loved the news letter & the story you said as a kid. Reminded me of mine… Seesh who, am I right? Loving all the introspection & how you will that forward.
For me, I’m going to re listen to the richest man in Babylon & review the principles to my behaviors again.