7 Money Habits For a Better Financial Future
Lessons from a 1920s classic that permanently transformed my relationship with money
Up until last year, despite my great desire to build wealth, my actions were never consistent with the outcome I wanted.
I acted as if living below one’s means, saving up and investing were things for my future self to worry about.
And then I read The Richest Man in Babylon. It’s a rather short read and the lessons are almost too basic and obvious. But simple is actionable and almost always, underrated.
The book teaches personal finance 101 through parables set in ancient Babylon.
A year after reading this book, I have:
Doubled my annual income.
Set aside an emergency fund.
Invested in a side-hustle.
Invested in stocks that earned me a 35% return.
Great progress for a guy who desperately waited for payday each month, just a year ago.
Here are the 7 best lessons from the book.
1. “Start thy purse to fattening”
Start building your wealth by saving 10% of all your income.
Automate the 10% transfer to the saving’s account. Whatever you’re left with, consider that your spendable income.
Seems just as boring and unsexy of a finance move as investing in index funds, but when I looked into the saving’s account months later, all I wanted was to bump up the savings to 20% of my income.
Seeing the results built momentum for me to implement other such boring but functional financial advice.
2. “Control they expenditures”
Do not confuse luxuries for necessities and live below your means.
Or else, no matter how high your income, it will always equate to your living expenses.
Your income does not equal your living expenses. Your wants do not equal to your needs.
It took me 28 years to learn this simple lesson. Don’t be like me.
3. “Make thy gold multiply”
Invest and grow your wealth.
Invest in learning, your business or a side hustle, that will bring a return on your investment. Invest patiently over the long term. Most great investment results are just unwavering good decisions.
I used to play fantasy investor before I got my financial crap together. I used to pick a list of stocks but never really invest, as I never really had the money. Thanks to Lesson 1 above, I now could actually invest in stock. And I did.
4. “Guard thy treasures from loss”
Be diligent in your investments.
Only invest in what you understand. Go understand what you wish to invest in.
If you understand a great amount of things, diversify.
- “Make of thy dwelling a profitable investment.”
When in a position to, own your place of residence rather than rent it.
Or at least make that place beautiful and functional. You want to live in an environment that nurtures your potential.
6. “Ensure a future income”
Contribute towards your savings, pension and retirement income.
Future comes faster than we anticipate.
7. “Increase thy ability to earn”
Grow your skills, capabilities and knowledge to increase your earning potential and investment wisdom.
Get better every day. As puts it, ‘Getting Rich Is Just Self-Improvement in Disguise’.
CONTRIBUTED BY Krunal Dangar