Richest Man in Babylon: Chapter 03 -Seven Cures for A Lean Purse

This chapter will teach you how to acquire gold,

retain it, and make it grow.

According to Arkad, all wealth begins with the desire to succeed.

And since you're reading this post,

I'm pretty sure your desire for wealth is solid.

Arkad also says that it is practical that that which one man

knows can be taught to others. And so, he teaches us how

to acquire money through these 7 cures for a lean purse.

The best way to learn, according to Arkad,

is to listen attentively (or read carefully),

debate and discuss, and then teach others.

Teach your children so that future generations

do not suffer the horrible fate of a lean purse.

Before you start teaching, though, you must practice

what you learned. Prove that it works.

Practice it until your life demonstrates

that you know what you're talking about.

First get the results for yourself before

you promise to get results for others.

Any man who has capacity to labor and earn

has capacity to build great wealth.

If you wish to build a fortune, start by utilizing the money

you already earn from your current employment or business.

Your job is to put more money into your pocket each month

than you take out. Spend less than you earn.

Here's the first cure.

"For every ten coins you put in your pocket,

take out and use only nine."

You have to make a decision about what you want most in life.

Is it short term gratification or long term prosperity.

Do you want to spend money on vanity pleasures or do you want

to buy assets that will build your wealth for generations to come?

When you spend all you earn, you get short term gratification.

When save and invest one tenth of all you earn,

you will have the potential to build great wealth.

Your "necessary expenses" always grow to match your income,

unless you start acting differently. Don't confuse necessities

with short term desires. Each of us has more desires than we can afford. There are limits to your time, there are limits to your energy, there are limits to how much you can eat.

No matter how much money you make, you will always want more than you make, that's why it's important to control your spending...

because if you don't, then your future asset growth will suffer.

Which items from your expenditures can you reduce

or eliminate without much consequence?

Write down your monthly expenses.

Remember, we're working on a 90% spending plan.

Prioritize what you really must have.

Cross out the nice to have or unnecessary expenses,

unless they fit neatly into the 90% we've budgeted.

We don't touch the 10%. That's for savings and investments.

Keep working on your budget, and keep plugging the leaks.

Make sure your necessities are well taken care of

before you spend on anything else.

And don't spend more than 90% of your income.

Spend less than you earn.

The goal is not just to save money. The goal is to increase your net worth. We do this through investing and through secondary business ventures. This is where we first encounter the law of compounding.

Put the money you save in financial instruments like shares, bonds, etc.
Reinvest the earnings so you can grow your income even faster.

What you really want is to create an income that grows

exponentially with or without your participation.

You want residual income.

You want passive income.

The third law is to search for opportunities to invest your money

and earn compounding returns. Reinvest these returns until

you can afford to retire without lowering your standard of living.

"Misfortune loves a shining mark."
When you flash your wealth unnecessarily, you're bound to attract

the attention of criminals. Somebody somewhere is always looking

for quick and easy gains. Be wise. Protect your assets.

Don't become a victim.

A man who is careless with small amounts can never be trusted

with larger amounts. Therefore, develop the right spending habits while the amounts are small so that they're already ingrained

within you and have become second nature to you

when the amounts grow big.

Don't risk your principal.

The smartest thing to do is to secure your money.

"Be not misled by thy own romantic desires to make wealth rapidly."

That's what Ponzi scheme operators look for in a victim,

someone who's desperate, impatient and not thinking straight.

In the British television series, Hustle,

we learn that the first rule of the con is this:

"You cannot cheat an honest man.

Con men find somebody who wants something for nothing,

and they give him nothing for something."

Consider all possibilities before parting with your money.

If you're loaning it out to someone, do they have the capacity to pay? Do they have a reputation of being a good payer?

Can you get some form of security for the loan?

If you answered no to any of the above questions,

then you're probably just giving your money away.

There's a risk you might not get it back.

When investing money, are you investing with a reputable

and experienced company?

Will you get impressive returns in good time?

Remember to only invest money you can afford to lose.

If the loss would ruin you financially,

you're better off not making the investment.

Arkad advises that you buy yourself a home with a decent yard

where your children will be able to play outside,

and where you can plant vegetables to feed your family.

Instead of renting, you might as well just buy a house

and pay off your mortgage. Why help someone else pay off

their mortgage through your monthly rental payments

when you don't have your own house?

Owning your own home brings peace to your mind,

and courage to your heart, and joy to your family,

especially as an entrepreneur or business owner.

How would you feel if your family was forced out into the streets because you made foolish investments and lost your house?

Avoid get rich quick schemes.

You're better off with a steady and diligent wealth building plan.

Make sure your home is secure and fully paid off as soon as you can. This removes a huge burden from your shoulders

and allows you to go about your business stress free.

"Provide in advance for the needs of thy growing age

and the protection of thy family."

Put away some money to sustain yourself in your old age,

or when you're unable to work anymore.

Stash away some money for your family in case you pass away unexpectedly. There are several insurance plans and products

for this purpose. Consult your financial planner

and choose a plan that works for you.

Make a will, so that you avoid family infighting should you die prematurely. You want your assets to be divided fairly and honorably, and without bad blood between family members.

This is the reason we want rapidly growing and compounding income.

We also want passive and residual income where applicable.

Active income stops coming in when you stop working

(whether voluntarily or through circumstances beyond your control). Find opportunities for passive income that don't involve massive risk.

Talk to your financial advisor and choose a plan that works best

for you, whether it be real estate, stocks, bonds... etc.

This is one of the most important cures for a Lean Purse.

Jim Rohn says, "Work harder on yourself than you do on your job."

"Preceding accomplishment must be desire.

Your desire must be strong and definite."

Be specific. State exactly what you want to accomplish, by when.

"The process by which wealth is accumulated is first in small sums, then in larger sums. The more you learn and become more capable, the better you get at your craft, the more you will earn."

Find mentors, find coaches, join trade associations,

attend webinars and live coaching sessions.

Do all that you can to be a master of your craft.

Offer your customers the best possible service

and they will be glad to keep buying from you.

Always seek to get better at your craft, and improve

until none can do  what you do better than you.

The plan laid out in the Richest Man in Babylon

is not an aggressive plan. It's a safe and sustainable plan.

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