Cures To A Lean Purse : Part 1

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January is a month of resolutions. More often than not, people come up with a number of goals they want to achieve by year end. Another characteristic of January is the so called “January Disease” which is brought about, in most cases, by forgetting resolutions related to financial discipline made in the previous year. As the year begins we will share some nuggets learnt from George S Clason’s book; The Richest Man in Babylon. The book was written in 1926 and most of the principles shared in this book are espoused by financial advisers worldwide. We will examine the principles outlined here and see how these can be implemented practically.

FIRST CURE: START THY PURSE TO FATTENING.

“But when I began to take out from my purse but nine parts of the ten I put in,” Arkad said, “it began to fatten. So will thine.”

The best place to begin in wealth creation and securing a good financial future is saving the current income that one has. The characters in the book emphasize the need to put aside ten percent before all other expenses are considered. For example if you earn a $1000 if you set aside $100 without fail at the end of the year you will have $1200. Other financial experts advise that one sets aside 10% for retirement, 10% for an emergency fund and 10% for future expenses or purchases like furniture etc. The money set aside will serve as the basis for investment but in order to apply this principle, the second cure is imperative.

SECOND CURE: CONTROL THY EXPENDITURES.

“That what each of us calls our ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary,” Arkad stated. “Confuse not the necessary expenses with thy desires.”

What you earn is critical but how you spend it is even more important. It is critical to be able to budget expenditure wisely with the view of the future clearly in sight. It is critical to clearly define between wants and needs. It is not surprising that most people and some countries dedicate most of their expenditure to consumptive spending rather than wealth creation to benefit future generations.

Next time you enter your shop ask yourself,
• Do I need it?
• Can I live without?
• Can I forgo this and wait until I have more disposable income?

The reason why most of us end up in debt is failure to put a tight rein on spending. For ladies, it’s the huge collection of designer shoes, clothes & bags while for men it may be the car or weekends out with the boys. A point to ponder is that the really wealthy people don’t spend as much as we who haven’t arrived spend. Warren Buffet still stays in his five bedroom house which he owned before he became a millionaire. The highest per capita expenditure on Mercedes Benz is in Africa but, we are the poorest continent. Germans make the car but most of them don’t even drive them.
Consumptive spending is our trademark and poverty has become our hall mark. Wise up and stop spending .

Next week we will examine two more cures to a lean purse. Ponder on the above and make a fresh start for 2017 and start a road to being more financially empowered.

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