BY: ANDREW STEWART
If you have ever asked yourself…Why is my financial situation not where I want it to be, Why am I struggling to dig myself out of this financial hole? Why does it seem like everyone else is getting rich and seizing opportunities? Don’t fret, you’re not alone. There are millions of people not just in Canada but around the world that ask those same questions. You see just thirteen years ago I was in that same boat and was asking those same types of questions of myself. My financial situation only started to change for me when I started doing three things. I made a concrete decision to alter my mindset and my habits.
There were two major books published in 1926 that rocked our world: Winnie-the-Pooh and The Richest Man in Babylon. Since 1926, Winnie-the-Pooh and his friends, Piglet, Owl, Tigger, and the ever doleful Eeyore have endured as the unforgettable creations of A.A. Milne, who wrote this book for his son, Christopher Robin, and Ernest H. Shepard, but it is the Richest Man in Babylon that has made a massive financial impact on untold millions of readers, myself included.
Written by George Samuel Clason as a collection of parables, The Richest Man in Babylon is a unique collection of stories about one thing: building wealth. I’ve read plenty of how to books and habit books but this one has stuck with me the most. I read it at least four times a year. I guess it is because the stories are written in a time when building wealth was much more straightforward, the principals being taught are easier to digest. In one of his parables, Clason tells the tale of Arkad, a merchant who is the richest man in the city of Babylon. You see, the same problem existed in ancient Babylon that existed in 1926 and still exists today: most people are broke. Clason refers to this “broke” condition as having a “lean purse.” To cure the problem of having a lean purse Arkad offers seven lessons:
Start thy purse to fattening
Create the desire and the habit to realize that a part of all you earn is yours to keep. You may think that all you earn is yours to keep but the reality is we all pay to live. Keep a minimum of 1/10 of all you earn for yourself. You will notice that you will live just fine off the rest. Arkad instructs to set aside 10% of their earned income, which I think is a great place for anyone to start.
Control thy expenditures
That what we call necessary expenses will always grow to equal our income unless we protest to the contrary. We are all burdened with more desires that we can gratify. Study thoughtfully your habits of living and you will find expenses that can be reduced or eliminated. Budget your expenses and do not touch your 10% savings and learning to spend less than you make.
Make thy gold multiply
Consider means to put your earned treasure to labor and to increase. Money in a purse is gratifying to own but earns nothing. An investment that grows over time and the interest reinvested onto the principal is a successful endeavor. A person’s wealth is not in the coins you carry, it’s the income it builds that continually flows whether you work or not.
Guard thy treasures against loss
Misfortune loves a shining mark. “Guard thy treasure against loss by investing only where thy principal is safe, where it may be reclaimed if desirable, and where thou wilt 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.” A sound principle of investment is security for the principal. Do not be mislead to try and make more rapidly. Before investing talk to experienced professionals because advice is free.