You have been working very hard all your life. Yet, you found yourself in the same financial situation over and over again. Your income is barely enough to cover your basic needs. You are trapped in the rat race. You often wonder, what is it that you have been doing wrong? How come there are some people who are getting richer and richer by the day while you who had been working very hard is getting nowhere?
George Samuel Clason, author of the finance book The Richest Man in Babylon gave 7 financial advice to those who found themselves in the above-mentioned situation through one of the parables set in Ancient Babylon.
In the parable, the king summoned the richest man in Babylon, Arked and asked him why he became so wealthy. The King wanted to know the secret to acquiring wealth. At that time despite the years of prosperity in the kingdom, many people were struggling financially. It was the king’s desire to make Babylon a city of many wealthy men.
Here is Arkad’s 7 Cures to a Lean Purse:
1. Save 10% of your Income
Saving 10% of your income is the first step towards wealth. Do this each time you earn. It may not be much at first but it will grow over time if you do this on a regular basis.
For example, supposed you and your friend are both earning 10,000 a month. Your friend started saving 10% of his income while you continue to spend all of your income. Obviously, after a year, your friend will already have 12,000 worth of savings while you will have none.
Wealth grows from a tiny seed. The sooner you plant that seed the sooner shall the tree grow.
2. Control your Spending
The second cure is to control your spending. You might ask how is this possible when your income is not even enough to cover the necessary expenses?
Arkad insisted that it is possible. The key is to differentiate the necessary with the desires. Have a budget and stick to it. You can save money on the little things like cutting down on your expensive coffee habits and your cable subscriptions. You can save on electricity in your home. You can also stretch your food budget. The point is there are lots of ways if you are willing.
As soon as you have build up your savings, the next thing to do is to multiply that by investing. You will not be able to grow your wealth by merely saving your money. You need to invest your money too.
A man’s wealth is not in the coins he carries in his purse; it is the income he builds, the golden stream that continually flows into his purse and keeps it always bulging…an income that continue to come whether I work or travel.
An income that continues to flow whether you work or travel pertains to passive income. Passive income should be the goal of everyone. Only through investing will you able to let money work for you.
4. Guard your Investments
There are many investment opportunities out there. The key is to choose your investments properly and learn to protect them. Choose something that you are familiar with. Don’t invest in something that you know nothing of. Learn about your investment. Consult mentors or experts in that particular field. Just because you know somebody who got rich in that particular endeavour, it does not mean that you will too.
Also, don’t be fooled with the get rich quick schemes being offered to you. Remember that if it is too good to be true, it probably is. The basic rule of investment is that the higher the risk, the higher the return. The lower the risk, the lower the return.
5. Own your Home
Make your home a profitable investment. Instead of making somebody else rich through your monthly rentals, why not make your monthly payments become equity. It will reduce your cost of living in the long run. You would have also acquired a valuable home.
Moreover, Arkad believes that many blessings will come to a man who owns his house. After all, your home is the place where your family will live. It is the place where your children will grow. It is a place for you to rest. It is a place of happiness and memories for your family.
6. Prepare for Retirement
Every man should prepare for retirement. When you retire, your ability to earn income will diminish. You will not longer be able to work just like when you were young. It is also during retirement years where your health will most likely deteriorate. Thus, you should be ready before that time comes.
7. Increase your Ability to Learn
If you want to increase your income, don’t chase the money. Instead, increase your ability to learn. Study again. Read books. Attend seminars. Learn from mentors. Be more skilful. By improving yourself, you make yourself more valuable. Then success will ultimately follow.
The more wisdom we know, the more we may earn. That man who seeks to learn more of his craft shall be richly rewarded.