The lack of clarity about money is the main reason, why most of us do not understand how to grow our finances or get out of debt and even after earning our whole life we still find it hard to have a comfortable nest egg for life after retirement.
“The Richest Man in Babylon” is one of those very few books who have successfully uncomplicated money matters for the readers. The author of this book George S. Clason has given very simple instructions about how to live a wealthy life. This book was first published in 1926 the advice is very much relevant for today’s generation.
I found this book extremely easy to follow. If you want to improve your financial condition and your habits related to money and you get dizzy when you try to read the complicated financial books with lots of charts and tables I suggest you start with this simple and engaging book like I did.
One of the Teachings from The Richest Man in Babylon: 7 cures for a lean purse:
1. Start keeping 10% of all you earn:
“Wealth consists not in having great possessions, but in having few wants.” — Epictetus
The book suggests “A part of all I earn is mine to keep”. Pay yourself first at least 10% of all you earn. You can increase this to 20% or more as you go along in this financial journey. Always pay yourself first no matter how little or lot you earn.
2. Control your expenses:
“Too many people spend money they earned; to buy things they don’t want; to impress people that they don’t like.” — Will Rogers.
Budget your expenses. Spend less than 90% of income. As you pay yourself 10% you have to control your expenses within remaining 90%. Today we are surrounded with so much temptation to spend more than we earn by using credit or instalments or what not but we must not blindly fall prey to the luring advertisements and buy things we don’t need.
If we do have to buy some lifestyle products that have become a necessity in today’s world then I highly suggest you keep a check on discounts and sales that slash down the price low enough for us to enjoy the luxury within a budget.
I recently stumbled upon an amazing website called CupoNation which has so many great deals and coupons that can help you get lifestyle products at a very affordable price. This website is definitely a great way to save a lot of money as it is filled with many options of sales and discounts.
3. Make the money work and it’s children work:
So what to do with the 10% you pay yourself. Well invest it wisely. Take advice from someone who is good with investments. Please never consult someone about investments who is bad with their own money.
When you get returns from these investments called as your money’s children in this book make them work too. Keep on investing the 10% and it’s children so you can create multiple streams of wealth flowing towards you.
4. Secure the investment:
Most people are scared to invest money as they fear they may lose it all. With proper study we can find safe options to invest. Start small and be safe. Study opportunities in details. Don’t take risk. Invest only where the principle is safe. I cannot say this enough take advice from someone who knows about investments.
5. Own my home:
This is the most difficult cure for a lean purse as the property rates have gone so high that it seems almost impossible to be a homeowner especially in the city of Mumbai where I am based but this goal should be a priority in our mind. Try to achieve this goal as soon as possible.
6. Prepare for the future:
“The lack of money is the root of all evil.” — Mark Twain
Provide in advance. Keep a small investment every week or month regularly for old age. Invest in properties that will grow in value for the future.
7. Desire to become rich:
Make a burning desire to become wealthy. Sharpen your skills. Increase your ability of your craft. No matter what your work is there should always be progress so that the streams of income will keep flowing and increasing. Study about your work, your skills, about money or investments and become wiser.
“Spend your money on the things money can buy. Spend your time on the things money can’t buy.” — Haruki Murakami (The Wind-Up Bird Chronicle)