Rags to Riches story: The Richest Man in Babylon

Many people who read '' The Richest Man in Babylon'' take away as it's core message, the seven cures for a lean purse. The lesson is an important one for it dwells on the matter many face as their first obstacle to being wealthy. What many over look though, is the story leading up to the cure. The chapter that is the title of the book itself. 

Chapter 2: The Richest Man in Babylon

In many ways it tells the story of us. People who are seeking to be free from this constant cycle of working day after day with little to no hope for a financially free future. 

I most enjoyed the use of words from the old english in the book, which gave it a type of historical lore and feeling. 

The story has resonated with me and I hope it stays with me, so that I too may pass on the knowledge held by the richest people in Babylon.

Once there was a young man who worked the scribes in the old city of Babylon. He laboured the whole day, in the hopes, that he could earn well for he desired to be rich. 

One day, Algamish, the money lender came to the master because he needed a copy of the Ninth Law. He promised the young man a gold coin, if he finished the task in two days. The young man was eager to earn the gold coin and laboured hard for two days, but alas the law was long and when the money lender returned, the scribes were not yet finished. The money lender was very angry, but the young man said,

'' Master Algamish, you are a very rich man, if you share your wisdom about your wealth and how I too can be rich , I will labour all night upon the clay and have the scribes ready by the morrow.'' 

Algamish smiled but nodded. 

All night long the young man worked, though his back ached and the smoke from the lamp did make his head hurt, he did not stop, and by the time the sun rose, he had the scribes ready before the money lender. He said '' Algamish, I have fulfilled my share of the bargain, now pray tell me what you promised.'' Algamish, the money lender agreed and said 

'' Just like the sun that is shining today, is the same sun that shone when our ancestors were alive, the wisdom of wealth remains the same no matter the passage of time.''

He warned, '' Mark my words, for if you do not, you will fail to grasp the truth that I wish to tell you, and your night's work will be in vain. I found the road to wealth when I decided that a part of what I earned is mine to keep.''

The young man was clearly confused. He asked '' Is not all of what I earn, mine to keep?''

''Far from it.'' He replied. 'Do you not pay the garment-maker for your clothes? Do you not pay the butcher for your meat or the farmer for the milk you drink? You pay everyone but yourself. Hence, why your purse is lean. You labour not for yourself but for others.If you save one-tenth of your earning every month, how much would you have in a year?'

The young man replied '' Why, I would have one-tenth of what I earn in a year.''

''What about in ten years?''

''I would have a year's worth.''

''That is but half the truth'' replied the money lender. ''Every gold piece that you save, is a slave to work for you. Every copper it makes is it's child that can earn for you. If you wish to be wealthy, what you save must earn, and it's children must earn, that all may work to give you the abundance that you crave. 

Wealth like a tree, grows from a tiny seed. The first copper you save is the seed from which your tree of wealth must grow.'' So saying, the money lender picked his tablets and went away.

The young man pondered on what he had learnt and decided that he would save a tenth of his monthly earnings.

After a year had passed, Algamish reappeared at the master's workshop and inquired about the young man. When he was bought to him, Algamish asked '' Son, have you paid to yourself every tenth of what you earned?''

The young man answered proudly, '' Yes master, I have.''

''That is good and what have you done with it?''

'' I have given it to Azzur the brick-layer, who was travelling across the sea to Phoenix, from whence he will buy gems, which we will sell for a tidy profit.''

'' Every fool must learn'' growled Algamish 'But why trust the knowledge of a brick maker about jewels? Would you go to the baker to inquire about the stars? No, you would go to the astrologer. You have uprooted your wealth tree and given it away. Plant another, but this time if you wish to get advice about jewels, go the jewel merchant. If you wish to know about sheep, go to the herdsman.'

So saying, the money lender left and returned after another year. He again inquired about the young man and asked him, 'What progress have you made since last I saw you?'

'I paid myself faithfully' replied the young man, 'and I have entrusted my savings to Aggar the shield maker, who buys bronze and pays me a rent every fourth month.'

'That is good, and what do you do with the rental?'

'I have a grand feast with honey and cakes with special wine. I buy a grand tunic and one day I will buy a horse upon which to ride.'

Algamish laughed, ' You have but, eaten the children of your savings. Then, how do you expect them to work for you? And how can they have children that will also work for you? First get thee an army of golden slaves and then you can feast without regrets.' So saying, he went away again.

The money lender returned after two years, he had deep lines upon his face and his eyes drooped and he tired easily. But he went to the young man and asked '' Hast thou yet achieved the wealth thou dreamed of?''

''Yes, I take advice from brick layers only in the business of laying bricks, and my golden army doth serve me well.'' replied the young man.

The money lender smiled and said ''You have learned your lessons well. First, you learnt to live upon less than you earn. Then, you learned to seek advice from those who were competent through their own experience. And lastly, you have learned to make gold work for you.

You have taught yourself how to acquire money, how to keep it and how to use it.''

The young man's name was Arkad who would go on to become the richest man in Babylon, and who spread the wisdom of wealth to his friends and neighbours. Many who left his teaching were skeptical, many failed to act on his advice but a few had new light in their eyes and a determination to act and succeed as he did.

Similary, We have the opportunity to save one-tenth of our income and plant seeds of wealth in our own lives, and live finacially free lives just as the money lender of Babylon hath advised.

Atomic Habits by James Clear: How you can turn your resolutions to habits

Over the years, like many people, I have made multiple resolutions to create a healthy and productive habit only to end up failing. After reading the Atomic Habit, author James Clear makes it clear that the reason we fail to develop these habits is because we do not follow the four laws of Behaviour change. We fail to make our new behaviour ''Obvious, Easy, Attractive and Satisfying.''Failing to abide by any one of these laws, means you will fail to adopt a new behaviour. 

What this means is, the next time you make an effort to go the gym you have to be aware that if you do not post obvious cue's like setting a reminder on your phone,or writing it down on a to-do list, you may not be inclined to follow up on that routine till it becomes a habit. Furthermore, if you make going to the gym a hassle or constantly complain about it being strenuous, you will not find it easy or attractive. And finally, if on a day to day basis you got more satisfaction from going to the bar with your friends than going to the gym that would mean that the act of working out wasn't satisfying enough to pull you away from other activities.

After reading Atomic Habits, I found two powerful strategies that can make every new habit obvious, easy, attractive and satisfying, so that you can become a happier, healthier and a more productive person.

Stack and Start:

The first strategy for developing a habit is called the stack and start. This is a strategy where you attach a new habit to a habit you already have. For eg: When I wanted to start the habit of flossing my teeth, I would grab my floss stick and floss one tooth as soon as I finished brushing my teeth. In this strategy, you use an old habit to trigger a new habit. Over time, my brain learnt that as soon as I was done brushing, I needed to floss my teeth. Thus, I managed to stack a habit on another habit.

When you stack habits, you are using the momentum of the old habit to make the new habit easier to initiate. This strategy makes the cue of the new behaviour obvious and it makes the requirements of the new behaviour easy.

Sync and Score:

Secondly, To make a new behaviour attractive and satisfying you need to synchronize and score. What this means is, you need to synchronize something you enjoy doing with a new habit. For eg: If I enjoy listening to a certain type of music, and I listen to it only when I am doing a certain workout, I will eventually look forward to doing the workout.

James Clear says ''if you only allow yourself to enjoy all your favourite experiences while you execute a healthy and productive new habit, you'll find the new habit is something you actually look forward to doing.''

Syncing is a great hack for habit building but to make a habit stick you must make the habit satisfying and you want to do that you must keep score.

Scoring let's us know how far we have come and motivates us to keep going in the long run. After a month of workout, how satisfying is it to see a calendar full of  red ticks that indicated a successful work-out five times a week. The calendar is a visual proof that you are someone that cares about your health and you should take pride in that. It acts as a score card and let's you stick to your new habit.

Everytime you write, you are a Writer 

Everytime you play an instrument, you are a Musician

Everytime you exercise, you are an Athlete

So when you stack new habits to old habits, and sync new habits with things you enjoy and keep score, you will be able to finally make that resolution a habit.

I hope you enjoyed this breakdown of the book Atomic Habits. Please share your thoughts down in the comments below. If  you have a recommendation, please let me know. Bye for now.

A Breakdown of: ''Rich Dad Poor Dad'' by Robert Kiyosaki

Imagine If you were to stop working, how long will you be able to survive on your remaining savings? What I just asked you was the definition of wealth. Acquiring wealth makes a person truly rich, and that is what the book Rich Dad, Poor Dad strives to teach us.

Rich Dad Poor Dad teaches us that the reason the rich stay wealthy is because they acquire assets whilst the poor or middle class people acquire liabilites.

An asset is anything that puts money in your pocket while a liability is anything that takes money out of your pocket.

Let's compare a cashflow of how the poor, the middle class and the rich use their income:

A poor person earns his income from a job and his expenses are things like food, clothes, shelter and entertainment. He

has no assets. But his expense becomes his liability as it keeps taking money out of his pockets.

A middle class person earns more income from a job so he can save money. He purchases things, that he thinks are assets but are actually liabilities. He purchases a home and has a mortgage, transportation, credit card debt etc. Hence why it stops him becoming wealthy.

On the other hand a rich person, instead of looking to earn more money from their normal job as their only source of income, buys and owns assets that bring them a form of Passive Income.

Passive Income is an income that doesn't require you to trade your time for money, so in other words, you can be earning even when you are asleep. 

Some examples of passive incomes are businesses that do not require your presence, investments in stocks, bonds, mutual funds, income generating real estate, royalties, notes and anything else that has value that produces income.

Take a look at the above cash flow, which category do you fit into? 

Robert Kiyosaki explains that many people think a house is an asset whereas it is a liabilty because it comes with a mortgage along with maintenance costs and upkeep that take money out of your pockets.

Cashflow helps us keep track of our wealth and when we are losing money we need to look at the following simple formula to see where we are going wrong.

             BAD                                        Good

    Income   =  Expense                Income   >  Expense

    Assets   <   Liabilities                Assets   >  Liabilities

                       

If your income is the same as your expense and your assets are lesser than your liability, you will soon go into debt.

If your income is greater than your expense and your assets are greater than your liabilties, you will get wealthier.

And that is why the rich keep getting richer, and the poor keep staying poor. The rich use their assets to pay off their

liabilities and the remaining money is invested into assets again. Therefore, their asset coloumn continues to grow and 

their income continues to grow with it. For normal people, their profession is their income but for the rich, their assets are their income.

On a side note, this book was one of the first financial book I ever read and it introduced to me a new world of managing

my money. It's a great read for beginners starting out, who want to learn more about the finance world. 

Robert Kiyosaki said, 

        ''Don't work for Money, Make Money work for you.''

If you want to learn more about Rich Dad Poor Dad, I encourage you to read the book and let me know whether you have what it takes to be a Rich Dad.

This has been another Breakdown. I hope you enjoyed it. Please let me know in the comments what other books, you would like me to breakdown.

The Breakdown of: '' How to win Friends and Influence People'' by Dale Carnegie

Did you know that having fewer friends, as you grow older is more dangerous than being obese, or smoking fifteen 
cigarettes a day? 
Did you know that having a best friend at work, can make you 7 times more engaged and productive?

But regardless of the recent statistics on friendship, wouldn't it be nice to be surrounded by colleagues and customers that you can call your friends, rather than being surrounded by a group of people, you suspect are talking behind your
back?

Wouldn't it be nice to have a network of friends you could rely on, when your career doesn't go according to plan?
Wouldn't it be nice to have people that help you?

Luckily, all the tools you need to build solid friendships, strengthen your network and make people eager to help you, throughout your career, can be found in an 80 year old book.

The principles of this book are as applicable today as they were back when the book was published in 1936, and you
can be sure they will be used by your kids and your grandkids when they try to influence and win people.

Now there are many different principles that Carnegie talks about in this book but they all center around two fundamental behaviours. These are behaviours that we use everyday but we do not realise their importance. In fact, we take it for granted.

And those two fundamental behaivours are:-

1. Being Genuinely Interested in Others: 
The first fundamental behaivour to win friends is to know what the other person is interested in, and to talk about that subject matter. 
Author Dale Carnegie say's 
'' You can mek more friends in two months by becoming interested in other people, than you can in two years by trying to get other people interested in you.'' 

To spark a genuine interest in others, make it your mission to find out, how someone spends their time and what subjects interest them. Then make their subject of interest your temporary passion. Be fascinated, about what fascinates them.

If you want to make friends and influence people, start by taking a genuine interest in the other person.

2. Give frequent praise: 
Did you ever have a teacher or boss that praised you? What was your opinion of them after that? Did you like them better or not? 

Believe it or not, people crave for appreciation almost as much as they crave food. Everyone wants to hear that they have done a great job or are a great person and an asset to us. We are all starving for appreciation. 

You should always be hearthy in your appreciation and lavish in your praise because it costs nothing but you gain so much from it. Be eager to praise others for their effort. When you notice a co-worker or employee putting in extra effort, walk over to them and praise their commitment to the team.

The best way to practise praising others is to make it a daily habit. If you are honest with your appreciation, it will get you results, whereas criticism and ridicule will push people further away.

So if you want to win friends and influence people, be genuinely interested in others and give others frequent praise. Give people the joy of talking about their interests and satisfy their craving with praise and appreciation and soon you will find yourself surrounded by friends, who are eager to help you succeed. It could not be harder.

Dale Carnegie talks about other important behaviours and if you want to learn more about that, I would encourage you to read the book and then let me know how it helped you win friends, and influence people.

This has been another Breakdown. I hope I'll see you in the next one. 

The Breakdown of: The Personal MBA by Josh Kaufaman

When Josh Kaufman was a senior in collage, he accepted a job offer at P&G, to be an assitant brand manager. In this new position, he'd be working alongside people who had MBA degrees from top universities.

Josh didn't have an MBA and he couldn't justify going back to school to get an MBA and put himself in a massive student debt. So he wondered if there was a way he could master the fundamentals of business without getting
an MBA.

When he researched top business people that didnt have an MBA, he came across a brilliant business investor named 
Charlie Munger. 

Charlie Munger is the business partner of Warrent Buffet with whom he had developed the company 
Bershire Hathaway into a $400 billion dollar business. 
Munger doesn't have a formal business education. He is a meterologist and a lawyer from Omaha. Everything he knows
about business, he taught it to himself by analysing a latex work of mental moduls. 

Josh was inspired by this and started reading hundreds of books on business. Slowy, he started noticing a pattern. He discovered that at the heart of every business, is a five part frame-work.

1. Value Creation
2. Marketing
3. Sales
4. Value Delivery 
5. Finance

Josh says that without anyone of these parts, you don't have a business. 

A venture that adds no value to others is a hobby. 
A venture that doesn't have proper marketing is a flop. 
A venture that doesn't sell the value it creates is a non-profit. A venture that doesn't deliver what it promises is a scam and A venture that does not bring in enough money to keep operating, will inevitably close.

Let's explore each part so we can better analyse a business and make better business decisions as an employee of the 
business or as an enteprenuer thats trying to start a business.

1. Value Creation

When we create or sell something, we need to ask ourselves, are we creating something that people will actually pay for? 
The first thing to figure out when starting a successful business is to understand what drives people to buy a service or product in the first place.

Two primary characteristics that drive buyers decisions are convienience and high-fidelity. 

Convienience means a product being quick, reliable, easy and flexible. People always pay a premium for convienience. It's why departmental stores are so successful. You can get a whole range of products under one roof. A product maybe cheaper elsewhere else but because it's so convienient at a departmental store, people dont mind paying a little extra.

High fidelity means high aesthetic appeal, emotional impact or social status. An example of this is Apple computers.
People pay a premium for apple products because they love the way it makes them feel and it shows other people of 
their status and choice.

Sometimes, a product can be convenient and have a high fidelity but people may still not buy the product. Hence, why a new product should always go through ''The Lean Startup'', (something I have covered in the last blog).

2. Marketing

The question we need to ask ourselves here is, ''How well are we attracting and holding our customers attention?''

When apple lauched the original I-pod, they told the world that this device would hold a thousand songs in your pocket.
This statement and idea was remarkable at the time and violated people's expectations. It made people pause and take notice of this new product. Any business that can hold the attention of their customers has a great chance of getting their customers to the third stage.

3. Sales

In the area of sales, we want to ask ourselves, '' How well do our customers believe and trust us?'' 

People are not going to give away their hard earned money unless they believe and trust the product. The best way to build belief and trust is to get social proof. The way businesses make customers trust them is to get an influential celebrity to advertise their product or getting 5 star reviews on Amazon, etc.

If a business cannot get social proof, it needs to perform on a consistent basis and be around long enough for 
people to trust it. The more trust a business has, the more sales a business makes.

4. Value Delivery

The fourth part of every business is value Delivery. The question here is, ''Are we exceeding the expectation of our customers?'' 

Costumer expectations should be high enough to purchase your products but, let's say, after a customer purchased something, they got a coupon saying their next purchase would have a 10% discount, it would suprise the customer in a good way, since there was no mention of a discount and they were not expecting it. So your business performace has
exceeded the customers expectation. If your customer's expectation is exceeded, they will be satisfied and come back to buy again along with recommending your business to their friends.

Another way to exceed customer expectation is to have very good customer services. Make it convienient for your 
customers to return products as well as exchange them.

5. Finance

Finally, we have to ask ourselves, ''Are we making more money than we are spending?'' 

If not, you need to reduce spending on one of the four above mentioned parts, or produce something of more value. Make sure your Incoming is more than your outgoing.

Josh says that at the end of the day, you are simply using numbers to decide whether or not your business is operating the way you intended.

Being a great business mind is not about knowing all the answers, it's about asking the right questions and having
the right mental models. With this five part frame work, you can ask the right questions and understand any business
and skip MBA school.

I hope you enjoyed this breakdown, and as always I suggest reading the book to get your own take and earn your own ''Personal MBA''.

The Breakdown Series: An Introduction

Welcome to the Breakdown. The series where I read and analyze various business, finance, self help and self development books to give you a small bite size of what I perceive is the core message of the author. 

In this series I will cover various business books that will help and guide you to start your own business or startups with zero capital. Books on the various parts of a successful business and how you can access them to your advantage.

Books on investing at the right time and being a successful entrepreneur, as well as, a great leader.Books that cover the entire course of an MBA. Books on how you can make friends, stop worrying and live a rich inner and outer life. 


It all sounds overwhelming but that's what we are here to do, and just like any other enterprise, we are going to take it one step at a time.

Of course, you are more than welcome to buy the book (actually, I would encourage it) and let me know about your own interpretation of what the author intended to teach us in the books. So without further ado, let's get started...