“Money is plentiful for those who understand the simple laws which govern its acquisition. “
You see its effect just about every single place you go everyday because we indeed live in an economic world. I believe it’s everyone’s desire to amass as much money as possible, and there’re tonnes of books and programs out there that give advice on how to get going on the pursuit of financial fitness.
And what is it? Money! Money!! Money!!!
One of the classics on this topic of personal finance is Richest Man in Babylon which has remained in print after a century; (just to see how precious the tenets contained in the book are) . The book laid out 7 powerful and fundamental principles on creating lasting wealth aka 7 cures to a lean purse:
1. Start thy purse to fattening
“For every ten coins thou placest within thy purse take out for use but nine. “
This is where the well-known recommendation of saving at least 10% of your income comes from. This requires discipline but it definitely always pays off because it’s not how much one earns but keeps that determines financial success. The savings aren’t just all meant to the stashed permanently in some safe, but to enable one to build enough capital from which to invest in income-generating assets.
2. Control thy expenditures
“… our ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary. “
Keeping track of expenses and maintaining a budget are very profitable financial exercises anyone can adopt because whatever we track improves. Part of the reason these exercises are useful is that they assist with identifying and distinguishing necessary expenses (needs) from the unnecessary ones (wants/desires). If not properly managed, wants/desires will always rise to meet income (according to Parkinson’s law) and hence leave a person in financial duress .
3. Make thy gold multiply
“… put each coin to laboring that it may reproduce its kind even as the flocks of the field and help bring to thee income, a stream of wealth that shall flow constantly into thy purse. ”
You’ve probably heard the saying, “Make your money work hard for you.” Yeah! That’s what this principle is all about. Using some portion of the saved money in #1 to invest in assets (business, real estate, securities, etc) that will generate income for you . Warren Buffet once remarked that if you don’t find a way to make money while you sleep, you will work till you die. This just tells that passive income generation is essential to obtaining wealth.
4. Guard thy treasures from loss
“The first sound principle of investment is security for thy principal. “
Warren Buffet, who’s one of the world’s greatest investor, has a rule #1 for investing which is, “Never loss money”. The goal here is to strive as much as possible not to invest heavily in gimmicks or in ventures you’re not familiar with. As stated in the book, it’s strongly recommended that you seek sound advice from reputable individuals in the area you plan to invest in before making any move forward.
5. Make of thy dwelling a profitable investment
” Thus come many blessings to the man who owneth his own house. “
The book encourages home ownership as opposed to renting as the former has more potential in cutting down ones costs and boosting ones net worth/profitability in the future (home equity) compared to the latter. For some insight on how to turn your house into an income-generating machine check out this article.
6. Insure a future income
” Provide in advance for the needs of thy growing age and the protection of thy family. “
Here’s the point on future planning and thinking where the individuals are advised to not just make and multiply money for the present, but for the future. This entails using surplus monies for long term/future investments. The aim is to secure your future and that of your family .
7. Increase thy ability to earn
” The more of wisdom we know, the more we may earn. That man who seeks to learn more of his craft shall be richly rewarded. “
This last tenet is wrapped up in these few words, “The more you learn, the more you earn”. The more adept you are at what you do, the more you are paid. And the more individuals’ problems you can help solve, the more money you make as well. The onus is you to continually improve your skills, and utilize your talents to serve others. As Zig Ziglar once stated, “You can get everything in life you want, if you’ll help enough people get what they want.”
And that it! The 7 fundamental tenets on personal finance aka 7 cures for a lean purse – from the Richest Man In Babylon.
To your fat purse!!
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