"The Richest Man in Babylon" is an outstanding book first published in 1926. It contains basic truths - things we all know but fail to practice all too often. I did a webinar to share its learnings amongst our users. I thought we'd share the video recording with all. We blended in the lessons from this book along with ideas from other thought leaders like Stephen Covey and others to make the 7 cures of this book more interesting and topical. Also, as a teaser, beer and money :-)
The webinar video is an hour long and the slides are here. (Warning: I do talk about my company briefly for about 3 minutes - so for those who don't want that, the summary is below and the book is directly available at Amazon.)
Core Habits, Discipline:
Honor thy commitments: Don't make promises you cannot (or, don't intend to keep). Don't assume that you can ignore the small/trivial commitments. Only by setting/meeting your small commitments will you become good at setting/meeting bigger commitments.
Learn from those successful in your cohort: Too much of the financial literature consists of tips from the super rich. These lessons are often not actionable by ordinary folks. Instead, look for people who are like you but who now are doing better than you. These could be people who are your neighbors, colleagues at work or school. This is exactly what the two people in the book did: they sought out Arkad, the richest guy in Babylon, to get his lessons. Arkad was in their cohort once - same school, same background, etc. Yet he quickly overtook them in financial standing. His lessons are particularly relevant and meaningful because they can perhaps follow those same footsteps too. Learning from the King of Babylon (who, no doubt, was richer than Arkad) makes no sense, however. The king inherited his money, and, even if he did not, enjoyed name recognition and access to resources that the ordinary person simply does not have. Hence, choosing the King as a role-model does not make sense. So choose your role-models and mentors wisely.
7 Cures:
Start thy purse to fattening. Start saving. Now. Clason recommends setting aside 10% of your income towards savings and coined the phrase "Pay yourself first." But Clason does not say how to do this. I recommend that to save 10% give yourself a "jolt" and behave as if your income has dropped 25% - 50%. It is this jolt that causes you to think creatively about where you can wring savings. The recording gives you an example from the beer company Stroh's and its 4 generation heir to bring home the idea of a "jolt" being a good way for you to think creatively about finances.
Control thy expenditures. Clason says that we should strive for "100% appreciated value for each coin spent." Don't spend on things that do not give you value. That sounds simple enough but think about the things we each buy because we want to impress someone else, or we make a plan and then do not follow-through (think about the new gym membership you purchased at the New Year but now don't use), etc.
To effectively control your expenditures, you need to distinguish between needs and desires. This is at the heart of successful budgeting. At Arnexa, we have been advocating an approach (drawn from time management and first proposed by Stephen Covey in First Things First) called the "zero baseline approach" (which is simply paraphrased as first needs, then desires).
Make thy gold multiply. Think of the number of income streams you have. For most of us, its just wages. But to become financially secure, you should add/diversify your income streams so that you are generating money from other sources: interest, dividend, rent, etc. The crucial point here is to reinvest your income so that it compounds.
Guard Thy Treasures Against Loss. Be adequately insured. Too many of us assume that bad things only occur to other people. Check your insurance coverages for home, auto, health and make sure that you are adequately protected. Another crucial point: Don't lend money to friends and family until you get so successful that you are able to write it off without expecting it back. This also means that you should not co-sign loans, etc. for others because you are then on the hook for others choices.
Own thy home. Owning a home and building equity in it is better than renting. This is largely still true today though one needs to be careful depending on the area you live. Any home you purchase should be affordable, and the home is not an ATM against which to borrow lightly.
Insure a future income. Set aside money for your retirement. If your company offers a 401K plan with a company match, contribute and make sure that you get as much of the company match as possible (it's free money to you). Be conservative in your retirement investments as well. Though you have a longer horizon, don't take risks unknowingly.
Purchase appropriate insurance for the future: Life insurance, and health insurance coverages to see you through during retirement. Don't assume Medicare or other government coverage will be adequate.
Increase thy ability to earn. Do better at work and secure greater wages. The book has a quote: "The man who seeks to learn more of his craft shall be richly rewarded." Seek out and get mentors who are people like you who have done better than you and who you respect. Ask them for their advice and plan your career accordingly.
Also, see if your hobbies can pay off. Today with the Internet many things are possible for people who are good at something - photography, graphic arts, website building, etc. You may be able to generate additional income doing something you love.
Good luck!
Submitted March 29, 2018 at 10:56AM by arnexa https://ift.tt/2GVXANZ
