Treasure Management: 70, 20, 10 From the Richest Man in Babylon

Larry Chiang borrows his money discipline from an old book, The Richest Man in Babylon, and boils it down to three numbers: seventy, twenty, ten. That ratio is how he builds what he calls house money, a cushion set aside on purpose so part of every dollar in is protected before it can get spent. House money is not a balance you brag about. It is the reason you can walk away from a bad deal without flinching.

Larry’s point is that desperation is visible across a table, and the person who needs the check less almost always negotiates better. He treats the ratio as infrastructure, something you set up quietly before you ever need it, not a plan you improvise mid negotiation. The split protects the other frameworks in his playbook too, since PQRST prep and a pen-drop close both fall apart if you are mentally counting rent money.

Larry frames it as treasure management rather than budgeting, a word choice that matters to him because budgeting sounds defensive and treasure management sounds like offense. The cushion is also what lets him take a swing on an External API move, plugging into an existing format or distribution, without betting the whole house.

None of this requires a windfall to start. The ratio works on whatever is coming in this month, even if that number is small. Larry’s claim is that most people who feel stuck in negotiations are not bad negotiators, they are just broke in that specific moment.

Karma shows up here too, since Larry talks about tipping and reciprocating fast, habits that are only sustainable once a cushion exists to fund them. He walks through the actual math in the video below, straight from the book that gave him the framework.