Book
Title : The
Richest Man in Babylon
Author : George
S Clanson
The
First Cure
Start
Thy Purse to Fattening
Always put aside 10% of
what you earn. Imaging every 10 dollar you earn put aside 1 dollar and place
into your other purse, eventually the purse will start to be fatten.
The
Second Cure
Control
Thy Expenditure
People start to ask how
can a man save 10% of what he earns when the money he earns is not enough for
his necessary expenses. Now let me ask you, everyone one of us earns different
amount of money and some have much larger family to support. However most of us
have one thing in common which is a lean purse.
This is happening because
most of us confuse the necessary expenses with our desires. Study thoughtfully
the living habits; there will be some expenses that can live without. Start budget
every expense and make sure put aside 10% of what we earn (net income after tax
and pension fund contribution) every month.
The
Third Cure
Make
Thy Gold Multiply
What to do with the
extra money, make the money works for you even when you are sleeping. This is
what we called passive income. The money can invest in some instruments that
able to make a return such as dividend paying stocks, fixed deposits and etc.
Use the money that the money earned to make more money.
For example if we place
2400 dollar a year (200 per month) into an investment of 3% per annual
(Malaysia current bank fixed deposit rate) from age of 25. When reach the
retirement age of 60 (35 years) the amount in the bank will be 145,109. The
total amount of money that invested is only 84,000 dollar which is 72.75%
return.
What if the investment earning
5% per annual, when retirement the money in the bank account is 216,769 dollar
which is 2.58 times the total investment cost.
The
Fourth Cure
Guard
Thy Treasure from Loss
We must always protect
our money we earn. Warrant Buffet, the world best value investor have only two
rules, rule no 1 “never loss money” and his rule no 2 “never forget rule no 1”.
Don’t go and ask real
property agent for stock market advice and vice versa don’t go ask stock broker
for real property advice. Place the money into the right person hand. Besides
that, always be realistic, there are some investments out there claim able to
have 50% return per annual think twice, Warrant Buffet, the best investor in
the world only able to make 25% annually for the past 50 years.
The
Fifth Cure
Make
of Thy Dwelling a Profitable Investment
Many people out there
pay landlord rental to stay in a house where they got no right for the capital
gain in of the house. If we able to use the rental we pay to the landlord to
pay installments of a house. After 30 years (all the installments had paid out),
we owned the house and all its capital gain. Hence the fifth cure is owned a
house.
The Sixth Cure
Insure
a Future Income
Income come every month
to cover our expense when we are able to work for its (active income). What if
one day we lost the ability of works due to old age or accidents? We shall find
a plan to insure our future income for our self and our family. We can make
these by buying a insurances. There are many insurances out there, life
insurances, medical insurances, car insurances, investment linked insurances
and etc. We shall at least have life insurance to cover our family expenses if
we lost our ability to work and medical insurance to cover our medical fee. We
shall not save money on the insurances premium.
The
Seventh Cure
Increase
Thy Ability to Earn
Ability to earn can be
increase by learning new skills. Besides that, we shall always look for challenges
in our jobs because through challenges only we grow.
Conclusion
“The Richest Man in
Babylon” is a good book to be read by all ages. Its descripted financial
planning and personal wealth in a very
simple languages. If you found yourself struggling to pay off your debt every
month, this book is the book you shall read.
This book can be
purchase from:
MPH online (Malaysia)
:-
Amazon (Others) :-
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