These 5 rules are taken from The 5 Laws of Gold, which is a chapter in the book, The Richest Man In Babylon, by George S. Clason.
In the book, these rules (or laws) serve to illustrate how one of the characters moved from debt to wealth in 10 short years. It also examines the eternal question of whether it is better to earn money today, or learn the wisdom needed to earn more money for the rest of your life. This is the story of Nomasir, the son of Arkad (the richest man in Babylon) and his choice of wisdom or gold.
“Given the choice [most] ignore the wisdom and waste the gold”
This chapter also conjures up the familiar proverb, “Give a man a fish and he eats for the day. Teach a man to fish and he will eat for a lifetime.”
“Gold is reserved for those who know its laws and abide by them”
This is the real reason why the rich get richer, and the poor get poorer; the rich know how to manage wealth while the poor know only how to spend the wealth they haven’t made and accumulate debt. It’s that simple.
The story goes like this: Arkad, the richest man in Babylon, gives his son, Nomasir, a bag of gold and a tablet of the 5 laws of gold and sent him out on his own to build his wealth in 10 years. If he returned in 10 years time wealthier than he left, then he would inherit his father’s great wealth. Otherwise, he was out on his own.
After 10 years, Nomasir returns. He tells the story of how he lost all his money on a foolish gamble on a fixed horse race. It was then that he realized the importance of the laws of gold (wisdom over money) and rebuilds a bigger fortune that the one he began with.
He then relates each of the 5 laws to those gathered before him at his father’s house.
- Law I: Gold cometh gladly and in increasing quantity to any man who will put by not less than 1 tenth of his earnings to create an estate for his future and that of his family.
- Law II: Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
- Law III: Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
- Law IV: Gold slipeth away from a man who invests it in businesses or purposes with which he is not familiar or which are not approved by those who are skilled in its keep.
- Law V: Gold flees the man who would force it to impossible earnings or who fellow the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.
There is much overlap between these 5 laws and the 7 cures for a lean purse that are also laid out in the book. Specifically Law I and Cure I are both about paying yourself first That said, and even though the book is decades old and the events in the characters lives are set thousands of years ago, these are still sound principles and food for thought.
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