Few weeks ago I wrote a
pieces on FINANCIAL CHOICES IN YOUR TWENTIES. This post is just about similar
to that. As a matter of fact I wanted to tag this post 'Financial Choices in
Your Twenties Part 2. But again the lessons here are not only for young people
in their twenties, it is also applicable to people in their thirties or forties
that are yet to secure their financial future.
The Richest Man in
Babylon (authored by George S. Clason) is a must read for everyone who wants to
secure his financial future; who wants to enjoy financial freedom and build a
lasting wealth. I first read this book at a very young age (14 or there about).
Since then I have read several other financial books, and I came to a
realization that the principles contained in this book (The Richest man in
Babylon) is the foundation through which many other financial books are
written.
The Richest man in
Babylon is about the ancient wealthy city Babylon. Historically, Babylon is
known for its wealth and for the prosperity of its citizens. But it was not
always so. There came a time in history when the city known for its wealth and
riches was going through some economic hardship (what we will term recession
today). The King who was troubled sought advice from some of his councilors on
what to do to bring back the glory days. And so he was advised by one of his
councilors to invite the richest man in Babylon at the time (named Arkad), and
ask him to teach his fellow citizens the very same principles he used in
accumulating wealth. So, did Arkad. On the morrow after meeting with his king,
Arkad invited 100 of his fellow Babylonian citizens and taught them the
principles he used in becoming the richest man in Babylon at the time.
So therefore, this
article is a summary of the principles taught by Arkad to his fellow comrades
on becoming wealthy. I hope you find it helpful.
THE
LESSONS AS TAUGHT BY ARKAD
Lesson 1: Start
thy purse to fattening
Statement: “For each ten coins you earn,
spend but nine.” - Arkad
Interpretation: As Arkad says, “A part of all you earn is yours to keep”. Keeping a part
of your earnings is what lesson #1 is all about. The lesson teaches you to put
aside one-tenth of all you earn, and that is the starting point of accumulating
great wealth.
Brian Tracy (Bestselling author and coach), explained this thus, “Save 10%
of your income throughout your working life. Take 10% of your income off the
top of your paycheck each time you receive it and put it away into a special
account for financial accumulation. ”
Summary: This lesson can be summarized in one word SAVE! It was once said that,
"If you cannot save money, then the seeds of greatness are not in
you." – Anonymous.
Lesson 2: Control
thy expenditures
Statement: “Budget thy expenses that thou mayest have coins to pay for thy
necessities, to pay for thy enjoyments and to gratify thy worthwhile desires
without spending more than nine-tenths of thy earnings." - Arkad
Interpretation: As mentioned in lesion #1, saving is the first step in accumulating
wealth, and that can only be made possible if your expenses are controlled.
Controlling your expenses is the teaching of lesson #2. One way one can control
his/her expense is to live within a budget - . Budgeting will enable you to
make good use of the 90% set aside for spending.
Summary:
Lesson #2 can be summarized in one word BUDGET! Ensure that your expenses are
planned. Live within 90% of all you earn, and never spend the 10% set aside for
saving.
Lesson
3: Make thy gold multiply
Statement: “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”. - Arkad
Interpretation: Haven saved 10% of your earning, and you’ve disciplined yourself to
budget and control your expenses, the next money lesson as taught by Arkad is
to INVEST YOUR SAVINGS. Put your money to work. Let it work for you. By so
doing, your income will multiply and wealth will be accumulated over time. Benjamin Franklin further explains this thus “Remember that money is of
a prolific generating nature. Money can beget money, and its offspring can
beget more.”
Summary: Lesson #3 summarized in one word is INVEST! Make your money work for
you.
Lesson
4: Guard thy treasures from loss
Statement: “Guard thy treasure
from loss by investing only where thy principal is safe, where it may be
reclaimed if desirable, and where thou will not fail to collect a fair rental. Consult
with wise men. Secure the advice of those experienced in the profitable handling
of gold. Let their wisdom protect thy treasure from unsafe investments. ” - Arkad
Interpretation: Ensure that
you study carefully every investment opportunity that present itself before
parting with your hard earned money. Seek the council of financial experts
before investing your money into any business venture. This is the teaching of
money lesson #4. As Arkad says “The first sound principle of investment
is security for your principal. Study
carefully, before parting with your money, with assurance that it may be safely
reclaimed. Be not misled by your own romantic desires to make wealth rapidly”.
Summary: Study carefully, think things through, and
seek experts’ advice before investing in any business venture.
Lesson
5: Make of thy dwelling a profitable
investment
Statement: “Own thy own home.”- Arkad
Interpretation: The next money lesson as taught by Arkad is making your home an asset.
Your home (especially if you are renting one) is potentially the biggest
expense you have to tackle. Quit throwing money away on rent. There is
absolutely nothing wrong in renting a home, but it is a lot better if you have
one of your own. A house own by you not only serves as a shelter, but also an
asset. In real estate terms, landed properties are assets.
As Arkad says, “Thus
come many blessings to the man who owneth his own house. And greatly will it
reduce his cost of living, making available more of his earnings for pleasures
and the gratification of his desires.”
Summary: Own your home, as a house own by you is
a real ASSET in real estate terms.
Lesson 6: Insure
a future income
Statement: “Provide in
advance for the needs of thy growing age and the protection of thy
family."- Arkad
Interpretation: The sixth money lesson as taught by Arkad is to plan ahead for the day
that you will no longer be able to work. Part of your investments should be
long term, designed to carry you through your whole life. Also ensure you have
a good life insurance in place for your family, so that they don’t need to
struggle when you are no more.
Summary:
Have a retirement plan, and insure your family’s future.
Lesson
7: Increase thy ability to earn
Statement: “Cultivate thy own powers, to study and become wiser, to become
more skillful, to so act as to respect thyself.” – Arkad.
Interpretation: The last and final money lesson as taught by Arkad is to increase your
earning ability by constantly learning. Your earnings can be greatly increased
if you continually learn and strive to develop yourself. Thank God for the
times we are in, where learning is literally within our fingertips thanks to
the internet. This lesson is a vital one for entrepreneurs today. As an
entrepreneur or business owner you can move a step or two above your
competition by constantly learning new skills and staying up-to-date on
activities in your niche or line of business.
Summary:
If you want to increase your income, you must increase your ability to earn,
which in turn requires you to increase your value to society through constant
learning.
The seven money lessons
above may be nearly 90 years old, but the principles are just as important
today as they were back then.
I hope you enjoyed this
article. Please feel free to share this article with friends and leave us a
comment in the comment box below.
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