I am starting a new series on investement and am using the book "Richest man in Babylon" as one of the best books you should give to your kids (and yourself) to read. This book uses short stories set in time of Babylon and what strategies were used by characters at this time to make themselves rich. When I finish the series I will talk about the problems of getting there today this way but nevertheless a great guide.
Part 1 - "start thy purse to fattening"
In other words start saving. Without some basic capital saved up you cant get there. Even if you have a good vehicle to get there such as getting in a cryptocurrency ICO or just hoarding Bitcoin and planing on them being worth more and more, you still need starting money. I would add here (not part of the book because its set when they still had sound money) is as soon as you have that 10% save it in gold/silver/cryptos. All 3 are fairly liquid and protect you from inflation. Precious metal are pretty much at their bottom so you can expect only for your money to increase.
Best way to get there according to the book is to save 1/10 of your pay. As soon as you get your pay take 10% and put it away and make do with what you have left. If you know you have money on your card you will be much more liberal with it and start spending it over time. Just knowing you have less you will think more if you can afford for example to eat out tonight.
The money that you have put aside is not to be touched (obviously in a life and death type emergency). Now some people see emergencies a different way. I got a $900 fine(long story) recently and the government cancelled my licencse and agreed to reinstate if i agree to go on a plan to pay it off. Now if i say this is an emergency I should get some money from my "no touch" fund I'll never get there. So I agreed to pay it off in installments with me continuing to follow the 10 % "money diet" .
Now some people will say I will take out $100 this week for something and then next week instead of 10% saving I will save 10% and an extra $100 to put back. Avoid this scenario by remembering that the only money for spending at your disposal is the 90% of your salary/wage. Remember that 10 % is your actual pay that you pay yourself the other 90% is for others: rent, groceries and other bills.
Whats the reason you take 10% at the begining? Same reason government taxes you before you get your money not after you have paid all the bills. You take care of yourself first then decide in order of most importance what /who needs to pay next.
Should you do more than 10%? Probably not recommended to do this as it will start to significantly affect your lifestyle. Less than is not worth it especially today since we have inflation and this book was set in Babylon where there were no taxes and no inflation to eat up your money.
How do you exactly make do with 10 % less income as I'm sure many of us will say the budget is so tight by the end of my pay cycle I'm left with nothing - but thats part 2 (Control thy expenditures).
Source of images: www.quotesfromabook.com
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This is a classic. Haven't read it for a long time. Thanks for the reminder.
Yep its been a while for me too, my best friend gave it to me when we were at uni. Should be compulsory reading in high school.
I agree. It simply explains the key points, and lays such a solid and crucial foundation for financial wisdom.
Great book my friend, I read this book about 15 years ago.
Its always good to reread books like this, makes you think am I following this, or do I need to adapt something, makes you think. Cheers
This is a classic must read! Thx for the post. I gotta follow u
Cheers, will check your page as well now