After reading the richest man in Babylon by George Samuel Clason I came to the conclusion that you need to make changes to your habits if you really want to become rich. Being poor is really a frame of mind, if you think about it your only knowledge of money comes from your parents and close friends and if they’re poor the chances are you’re poor too.
By taking the time to become financially literate and increasing your financial IQ you can set yourself on the path of getting rich and wealthy quickly. If you can make rational decisions and keep your emotions in check you give yourself a better chance of quicker success. The Richest Man in Babylon really opened my mind and I can clearly see a way forward to become rich and wealthy.
The book pointed out seven points that you need to practice on a daily basis and adjust your habits so that these habits become the foundation of your character.
#1:Pay Yourself First
Define Saving Money to Yourself and Never Forget It
You work really hard, you take abuse from other employees and sometimes your boss. Most of the time you’re under appreciated and overworked, you hate most of your coworkers yet you have to mingle with them because you’re a team player!
After all the anguish and toil the least you can do is pay yourself first. Take at least 10% of your money as soon as it comes into your checking out and transfer to a notice savings account so you can start rewarding yourself for your work. Use whatever is left for living.
#2:Earn More Spend Less
Learn How to Save Money and Spend Less
Most people in the west and in particular America are spending more than they earn thanks to credit cards. Many people become irresponsible with credit and get themselves into insurmountable debt only to spend most of their lives paying it off at the minimum payment.
If you’re like this then take action and grind your credit card in a blender and stop using it until you can teach yourself to be responsible. Pay off your debt quickly and then spend significantly less than you earn. Ultimately you should try to aim saving 50% of your earned income.
#3:Protect Your Wealth from Stupid People
Wealth & Estate Planning is Essential
If you surround yourself with stupid people you’ll make stupid decisions, if you surround yourself with intelligent people then you’ll make intelligent decisions. I lost a lot of money after taking advice from a waiter on how to invest money, this was a waiter which lost most of his money in the stock market crash of 2000 yet I was still taking advice from him because the profits were likely to become big.
It’s only when I stopped listening to unqualified people and took charge of my money that my wealth started to grow fast. Plan your estate and wealth to avoid future spats.
#4:Don’t Be Scared To Invest
Learn How to Invest in Stocks and Bonds
Investment is not scary, ignorance is scary. Ignorant investors are WOMD’s. Before you invest a single cent learn how the investment works, there’s a saying that if you can read 20 books on a subject you become an expert. Even if this takes a year learn before you take the plunge and leave your money in a tracker account which is diversified.
#5:Plan for That Elderly Person
Get Retirement Investment Advice
You will get old one day so make sure you buy yourself a better future. When you start paying yourself first set aside some money for retirement and get your employer to pay in and maximize your contribution to your IRA, Roth IRA and 401K. Don’t refuse free money otherwise you’ll be kicking yourself in the future.
#6:Live Well But Live Frugally
Live Frugally in Retirement and Before Retirement
Living well doesn’t mean you have to break the bank, don’t try to keep up with the Jones’s and always look for ways to avoid spending. I always wear designer clothes but I pay less than the generic brands because I buy used! Who’s going to know? Who cares? If you live frugally now your wealth will grow even faster and even bigger. If you live frugally in retirement you could leave more to charity or your loved ones.
#7:Double Your Income Every Year
This might sound insane but why not take up the challenge. Challenge yourself to double your income in a year and try it every year. This will start exercising your mind and you’ll become more orientated towards finding opportunities that make sense. If you can double your income every year you’ll be in a very good financial position.