The Five Laws of Gold

When I first read “Richest Man in Babylon” by Goerge Clason, I had my doubts as to whether strategies and tactics based on thousand year old principles would be relevant to me in the 1990’s.

Now, 20 plus years later, after having executed the laws and rules outlined in the book, I know it to be as true today as in the past.

Clason’s work is timeless because the needs of man and the laws of gold are timeless and never changing.

Human desire for peace, joy, love, wealth, health and happiness never change. How we each achieve that may be different but the goals remain unchanged.

The fact that money comes to us from one place, other people, also never changes. To make money you must help and serve other people in a way that deserves them giving you there money.

Let’s take a moment and review each of the Five Laws of Gold together.

Pay thyself first

1. Gold (money) cometh gladly and in increasing quantities to any many who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.

It is safe to say (and has been said before) that few ever get rich living from paycheck to paycheck thinking that the goal is simply a bigger and bigger paycheck. A consistent savings plan is the beginning of all great wealth as it leads to law 2.

Until I read this, I always paid everyone else first. I paid my car note, house note and credit cards leaving very little to nothing for savings. Once I reversed the order, things changed quickly. I put my payment to my savings first and everything else second.

What this meant to me was as my income went up over the years, I made it a point not to raise my expenses (new car or bigger house) and kept the first 10% of all paychecks for me.

Pay yourself first means just that. Pay 10% to your savings first. Then you have 10% for charity, 10% to pay off debt or for saving/investing and live off of the 70% that is left and never let your personal expenses go above that. Never.

Invest to Build More Wealth

2. Gold (money) laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
Saving is the starting point of all great wealth but is not enough by itself. You must be looking for ways outside of your earned income to build additional streams of income.

This brings up the point that money just sitting actually loses value due to inflation. You must use your saving to invest and build income streams that constantly replenish your cash reserves and get them to grow.

Real estate is extremely effective for building wealth since it produces cash flow, equity build up, appreciation, equity capture and tax advantages. The stock market is speculation (gambling) not investing so be cautious as you make your investing decisions.

Read, Study and Seek Qualified Advise

3. Gold clingeth to the protection of the cautious owner who invests it under the advise of men wise in its handling.

By qualified, I mean you have spent a huge amount of time “qualifying” the advisor.

Ask: Does the person that I am about to take advise from…

1. Have all the time with his or her family I want?
2. Have the fitness that I want?
3. Have the community involvement that I want?
4. Have the happiness, peace and joy that I want?
5. Have the wealth that I want?

Simply put, unless the person you are about to take advise from has the results from their life that you want, they are not qualified to advise you. Note: You may need multiple mentors to achieve all of this. Maybe you need one from each category.

Do not fall into the trap of titles. Stockbroker and financial planner mean nothing more that they have passed a few more tests than you and do not indicate whether or not they have ever actually achieved anything of worth.

Other titles that may harm you are “parents” who offer their advice, but have never been in the financial position that you want to be in. Teachers, spouses, professors and bosses also need to be qualified by you.

“In the real estate context, this means get a qualified mentor that has achieved in real estate what you are wanting to achieve. In the lead investor context, the lead partner must be experienced.” Jeff Smith, Lifestyles Mentor

Don’t be Gullible

4. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.
Of the three wealth killers: ego, laziness and greed, this law encompasses the first two.

Either a person is so lazy that they won’t read, attend seminars or other wise educate themselves or they are just so egotistical that they think they are too smart to need any further education. How many day traders have just simply thought “everyone else must be stupid. I have this all figured out.” I believe most.

“In the real estate context, this means to be as educated as possible in the business you about to invest in. In the lead investor context, know what you are investing in and check out the lead investor thoroughly.” Jeff Smith, Lifestyles Mentor

Don’t be Greedy (The Third Wealth Killer)

5. Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.

While I don’t agree with the phrase “If it sounds to good to be true, it must be.” I do believe “If it sounds to good to be true, do more research.”

Laziness, arrogance and greed will keep you from doing the research and must be controlled at many levels to ever have any true peace and financial wealth.

“In the real estate context, this means to leary of any lead investor that might promise ridiculously high rates of return. Consult your mentor and check out all the details of the deal.” Jeff Smith, Lifestyles Mentor


  1. willie morales says

    Thanks Steve for this article on the 5 laws of gold, especially paying myself first!! to me that is the most important law going.

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