Seven cures for a lean purse

“Our prosperity as a nation depends upon financial prosperity of each of us as individuals” – George S. Clason

Robert Kiosaki, in his popular book called Rich Dad, Poor Dad says “The primary cause of financial struggle is not knowing the difference between an asset and a liability. In simple terms, he defines an asset as something that puts money in your pocket while a liability takes money out of your pocket. 

A TV is a liability. A book is an asset.

Wealth is power and you don’t have to quit your job to be wealthy. With wealth, many things are possible. Life is great and worthwhile when you have luxuries to enjoy. However, always make it a point to buy luxury items last because they are nothing but liabilities. Buy assets first.

For all individuals, George S. Clason devised the following seven cures’ strategy for a lean purse. It is a practical method that can help you conquer your financial struggles and take you from rags to riches. Let’s look at each of them closer.  

1.    Start thy purse to fatten

“save 10% of all your earnings”

A part of what you earn is yours to keep. Ideally, it should not be less than a one-tenth of what you earn.

No matter how little your earnings or income is, your first rule must be “Pay yourself first.” You pay yourself first by saving at least 10 percent of all our earnings.

According to Robert Kiosaki, “In the world of accounting, there are three types of income

     a)    Earned income

     b)    Passive income

     c)    Portfolio income

The rich don’t work for money; money works for them. This refers to passive income and portfolio income. Passive income, in most cases, is income derived from real estate investments. Portfolio income is the income derived from paper assets, such as stocks, bonds and mutual funds.

On the other hand, the poor and middle class work for money. They rely on earned income: which is the money they work for. The key to becoming wealthy is the ability to convert earned income into passive income and/or portfolio income as quick as possible.

The taxes are highest on earned income. The least taxed income is passive income. That is the reason why you want your money to work for you.

2.    Control thy expenditure

“Budget your expenses that you may have coins to pay for your necessities, to pay for your enjoyments and to gratify your worthwhile desires without spending more than one-tenth of your earnings”

The purpose of a budget is to assist you to have your priorities in order. It is to enable you to realize your cherished desires and help you defend your hard earned cash from any casual wishes.

“Like a bright light in a dark cave, your budget shows up the leaks from thy purse and enable you to stop them and control thy expenditures for definite and gratifying purposes. The unusual truth is that what each of us calls “necessary expenses” will always grow to equal our income unless we protest to the contrary. Confuse not the necessary expenses with thy desires.” - George S. Clason

How do you budget? The first step is track your spending in order to have an idea of how much you spend for all your necessities (Rent, Debit orders, Groceries, Transportation, etc). “What get measured gets managed” – Peter Drucker

After three or four months of tracking your spending, you will know the exact amount to allocate for groceries, for transportation, and so on.

Then you can draft your monthly budget and use self-discipline to live accordingly. Robert kiosaki reiterates that after you set aside 10 percent of your earnings, you can live off seventy percent and still keep the remaining 20 percent for emergencies, debts and related stuff. This is a great plant to keep yourself out of debts and accumulate wealth which is yours to keep.

Knowing your budget, you can use self-discipline and resolve to never again permit your living expenses to exceed seventy percent of your income. Get skilled at budgeting so you may control your expenditure.

3.    Make thy gold multiply

“Put each coin to labour that it may reproduce its kind even as the flocks of the field and help bring to the income, a stream of wealth that shall flow constantly into thy purse"

Money in a bank is satisfying to own and satisfy a miserable soul, but earns nothing. The money we retain from our savings (10 percent) is the money we must use for investments so it multiplies.

“This one-tenth, as it grows it will stimulate you. A new and joy of life will thrill you. Greater efforts will come to you to earn more. Then learn to make your treasure work for you. Make it your slave. Make its children and its children’s children work for you.” – Robert Kiosaki

How do you make it work for you and multiply? By buying assets. “A man’s wealth is not in the money he carries in his purse, it is in the income he builds, the golden stream that continually flows into his bank account and keeps bulging.” - George S. Clason

4.    Guard thy treasure from loss

“The first sound principle of investment is security of your principal. Before you entrust it as an investment in any field, acquaint yourself with the dangers which may beset it.

Consult the wisdom of those experienced in handling money for profit. Don’t trust a lawyer or a medical doctor for financial advice.

5.    Make of thy dwelling a profitable investment (own your home)

“To a man’s heart it brings gladness to eat the figs from his own trees and grapes from his own vines. To own his domicile and to have a place he is proud to care for, put confidence in his heart and greater effort behind all his endeavours.”

“When a house is built, you can’t pay the money lender with the same regularity as you do with the landlord. Because each payment will reduce your indebtedness to the money lender, a few years will satisfy this loan.” - George S. Clason

6.    Insure a future income

“The man who, because of his understanding of the laws of wealth, should give thought to future days. He should plan certain investments or provisions that may endure safety for many years, yet will be available when the time arrives which he has wisely anticipated.

Provide in advance for the needs of youir growing age and the protection of your family. Take care of your family that they may speak well of you. Make a will of record that, in case the leave this world, proper and honourable division of your prosperity be accomplished.

In order to keep a safe and clean credit record, and for the sake of your legacy, make this your resolution, pay all your debts with all the promptness within your power and leave but one manageable account running.

A friend of mine was recently classified as risk customer by MTN because he decided to pay off his clothing account at Markham. So they refuse to offer him a data contract and this happened despite being an up to date client for cell phone contracts in the last 3 years.

Always remember, a credit card is a liability. Never purchase what you are unable to pay

7.    Increase thy ability to earn.

“As the man perfect himself in his calling, his ability to earn increase”

Cultivate your own powers, to study and become wiser, to become more skilful, to act as to respect yourself. Here is the key: More interest in my work, more concentration upon my task, more persistence in my effort. The man who seeks to learn more of his craft shall be richly rewarded.

“Gold is reserved for those who knows its laws and abide by them.” I will conclude with the following five laws of gold as inscribed in the book called The Richest Man in Babylon by George S. Clason.

a)    Gold cometh gladly and in increasing quantity to any man who will put not less than one-tenth of his earnings to create an estate for his future and that of his family.

b)    Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiply it even as the flock of the field

c)    Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.

d)    Gold slipeth away from the man who invests it in business or purposes with which he is not familiar or which are not approved by those skilled in its keep.

e)    Gold flees the man who would force it to impossible earnings or who follows the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desire in investments.