Babylon existed 4,319 years ago, these advice were found written on tablets. And it’s interesting how despite of the millennia our world and their world is separated, the advice written on those tablets are still relevant till this day.
This only proves that no matter how many times the Earth revolves around the Sun, human nature, our biases and our tendencies remain the same.
I hope these advice would help you propel in your journey towards financial freedom.
- START THY PURSE TO FATTENING
“If thou select one of thy baskets and put in it each morning ten eggs and take out from it each evening nine eggs, what will eventually happen?”
This is not new financial advice but probably the most ignored, to keep 10% of thy income REGARDLESS. Most people would argue that they are struggling to make both ends meet with their current income, then what more if they would put 10% aside every paycheck?
This is a case of what I called financial Parkinson’s law; expense expands so as to consume the budget available for spending.
It is feasible and you will survive. Just imagine if your government decides to increase your tax by 10% more, will you not adjust? will you not survive? This is completely the same aside from the fact that this time you are taxing yourself and the money will be set aside for your future self.
- CONTROL THY EXPENDITURES
“What each of us call as our necessary expenses will alway grow equal to our income unless we protest to the contrary; Confuse not the necessary expenses with thy desires.”
Frugality is the most misused and abused word in the world of finance today. Billionaire Warren buffet is known for being notoriously frugal, however, frugality is not the sole reason why he’s a billionaire. And let me repeat it, “Frugality alone will not make you rich but it can prevent you from being broke.”
Frugality + multiple sources of income + some luck = Wealth.
Being frugal is not being cheap but wise. It is the act of paying less and getting the same result.
Dress to keep you warm, food for nourishment, house for shelter, car to bring you from point a to point b with peace of mind etc. Function first then aesthetic and pleasure second.
- MAKE THY GOLD MULTIPLY
“Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” – Albert Einstein
Due to the COVID-19 pandemic, more people are now engaging to stocks trading around the globe. Trading at the stock market is a good avenue to invest and enjoy the benefit of compound interest, if you know what you’re doing. On the other hand it can also lead to someone’s financial disaster.
S&P500 prior to the 2008 crisis increased on average 10% annually. If you invest $100 yearly for 20 years and received 10% increase annually for 20 years. After investing $2000, you will end up with $5,727.50 or 186.37% gain.
- GUARD THY TREASURES FROM LOST
“Gold in a man’s purse must be guarded with firmness else it’ll be lost; thus it is wise that we must first secure small amounts and learn to protect them before the gods entrust us with larger.
Study carefully before parting with thy treasure, each assurance that it may be safely reclaimed. Be not misled by thy known romantic desires to make wealth rapidly. Before thy loan it to any man, assure thy self of his ability to repay and his reputation for doing so.“
Lending money becomes tricky and hard when it’s someone close to us that’s asking for help. However, be clear whether you’re lending money and expecting it to return or you’re giving money away to help out (tolerate) your love one. If you will be resentful if the person fails to return what he/she owes you, it is far better to say no from the start.
If you’re working to earn money, remember that you traded your time for every dollar you earn. Giving away your hard earned money is like giving away your time, a commodity that you can never earn back.
- MAKE THY DWELLING A PROFITABLE INVESTMENT
Most people’s greatest investment would be their homes, which I think is not really accurate. If you’re not aware yet, your house is domesticating you and it doesn’t appreciate all the time. Look at 2008 for reference.
But again if you know what you’re doing, you can leverage your equity on your mortgage to acquire additional properties that will generate income and pay for itself.
Unless the you the homeowner is doing this, your home is more of a liability than an asset.
- ENSURE A FUTURE INCOME
Provide an advance for the needs of thy growing age and the protection of thy family
Investing on rental properties, stocks or annuities etc. will ensure future income but would require some knowledge and effort on your side but will definitely worth it. Liquidation of some estate and living modestly would make anyone’s retirement more pleasurable.
- INCREASE THY ABILITY TO EARN
“The more you learn the more you earn.” -Warren buffet
If you look closely, COVID-19 teaches a lot of lessons and one of those is that no job is safe during a pandemic and that a pandemic can happen and last this long despite of the technology that we have today.
It’s either we adapt or perish. Adaptation means learning new skill, new trade or new field. Things we conveniently delegate to professionals before in exchange for a good sum of money. Now since most people’s livelihood is in jeopardy, people don’t have the means to pay that it forced them to learn new things and do things on their own.
During times of prosperity however, if we would adapt this kind of mindset and become a sponge or a learning machine, not letting our profession limit our identity, the sky is indeed the limit in terms of our earning capacity.