“Money is plentiful for those who understand the simple laws which govern its acquisition.”- George Clason
One of the best ways to discover the secrets of making money and managing it successfully is to study how wealthy people actually became rich, and how they retain their wealth. Unfortunately, many of us will never have close personal contact with the very rich, in order to learn at their footsteps.
The good news is that some of the world’s wealthiest people have chosen to reveal some of their secrets through books, CDs and training seminars. In future columns, we will examine some of the best wealth and money management advice available in the world, and try to apply it to your life.
No matter what your financial situation is now, it is possible to learn how to make and keep money by following the examples set by those who have been hugely successful.
This week we look at a book that has been hailed as the ‘greatest of all inspirational works in the subject of thrift, financial planning and personal wealth’- The Richest Man in Babylon, by George Clason.
Written in the 1920s in the form of parables such as those found in the Bible, Clason’s masterpiece has sold millions of copies and still is one of the ‘must-read’ titles for those who wish to learn how to become wealthy.
As Clason states, money is governed today by the same laws which controlled it when prosperous men thronged the streets of Babylon, six thousand years ago. In the chapter ‘Seven Cures for a Lean Purse’, he weaves a tale about the richest man in this ancient city who shares his rags to riches story. Without these steps, he says, no one can become truly wealthy. Here are the seven cures according to Clason:
Cure 1: Start thy purse to fattening
This initial cure is one that advisors still recommend highly today. For every dollar you earn, only spend 90 percent. The other ten percent must be left in your purse in order to ‘fatten’ it. There is no other way to build wealth than by putting aside some of what you earn. Even if what you are earning now seems inadequate to meet your needs, you will find that you can exist on 90 percent of your earnings.
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Cure 2: Control thy expenditures
This remedy deals with the problem of how to save ten per cent even when 100 per cent seems insufficient to meet everyday expenses. He points out that people’s expenses grow as their income increases. So you will have people who earn J$20,000 per month who complain that they can’t make ends meet, and others who earn J$200,000 monthly who have the same cry. He instructs us budget our expenses to be met by the 90 percent of our earnings.
Cure 3: Make thy gold multiply
Having ten percent of your earnings sitting in your ‘purse’ won’t make you wealthy; you must seek wise investments that will generate cash flow. As Clason says, each coin must be put to work so that it replicates itself, until there is a constant stream of money flowing into back into the purse.
Cure 4: Guard thy treasures from loss
Clason advises persons to be very cautious when getting into investments, especially if they have no knowledge in that particular area of business. He stresses that it’s important to consult with people who have had experience in handling wealth, and to always ensure that your principal will be reasonably safe.
Cure 5: Make of thy dwelling a profitable investment
Owning your own home can be more than a desire for decorating your own way or getting rid of an annoying landlord. According to Clason, it’s wise to use some of the 90 per cent that’s available for spending, to create an investment by borrowing to buy your own home. He says it is not beyond anyone’s ability to do this, if they are willing to buy what they can afford.
Cure 6: Insure a future income
Planning for your retirement and for the protection your family when you are no longer around, are keys to wealth-building. You must make investments that will continue to earn income when you can’t, or no longer wish to work. Also, you must insure your wealth to protect your heirs from loss.
Cure 7: Increase thy ability to earn
If you wish to increase your income, you must desire to do so in a strong, simple and specific way. When you are determined to achieve your goal, you will look for opportunities to improve your skills, learn more about your area of expertise, and exchange knowledge with others in your field. In other words- once you have the right ambition and actions, your rewards will follow.
If you wish to improve your finances, start to implement these seven cures to a lean purse immediately. As Clason states, “There is more gold in Babylon (Jamaica), than thou dreamest of. There is abundance for all.”
Copyright © 2007 Cherryl Hanson Simpson. No reproduction without written consent.
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Originally published in The Daily Observer, July 05, 2007
Cherryl is a financial columnist, consultant and coach. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl