Seven Cures For A Lean Purse
In this chapter, The king of Babylon summons Arkad, and requests him to educate the people of Babylon so that they can be as rich as him.
Arkad suggests 7 ways to become wealthy:
1.‘Start thy purse to fatten’ - Save a minimum of 10% of your savings every month. Compounding takes time. More savings signify a greater degree of compounding. The more time you will save for, the better will be the growth of your savings.
First save, then spend.
For example, Warren Buffet, arguably the greatest investor of all time, had a net worth of $1 million when he was 30, but today he is worth $84.6 billion at the age of 90. This is because the value of his investments have been compounding over the years.
2.‘Control thy expenditures’ -
One can only save a part of their income if they limit their expenses. We should not spend unnecessarily, i.e., do not get confused between your necessities and your desires.
Learn to control your desires. The only way to achieve this is by having proper and disciplined habits of living.
Make a list of your necessary expenses, the things which are not on that list are your desires.
3.‘Make thy gold multiply’ -
Money that sits idle is of no use. It will not grow. To make it grow we need to invest in it. Giving a loan is one of the ways through which you can grow your money. A loan should only be given to someone who has the ability to pay it back over time.
Each time you will give a loan, a credible person will not only repay the capital, but also pay interest.
Over a span of 50 years, Arkad managed to multiply his investments up to 17 times.
4.‘Guard thy treasures from loss’ -
Opportunities of making huge profits over a short period of time come our way frequently. We get to know about these opportunities from our friends and family members. Don't get lured by these. We must 1st understand the scheme properly before jumping into any investment decision making.
‘The 1st sound principle of investment is security for the principal’.
Wealth cannot be generated rapidly, and one must have patience.
5.‘Make thy dwelling a profitable investment’ -
According to the author, a person who owns the house he lives in is far more likely to be at peace when compared to a person who lives in a rented house. Owning a house is a better option because a house’s value can increase over a period of time.
Rent needs to be paid forever, but a loan’s interest payment will end after the tenure of the loan is over.
A person who can rent a house is easily capable of owning the same house .
6.“Insure a future income” -
We should focus on developing a source of income so that in the future, when we retire, we can enjoy our life and our family is financially secure. Make preparations for a suitable income for years to come. Know in advance for the needs of your growing age and protection of your family, and make necessary arrangements of the same.
Diversification is an important factor which one should consider while allocating their savings.
7.‘Increase thy ability to earn’ -
You should have a desire to earn if you want to become rich. A strong desire to earn more is important and tangible. Press this until fulfillment, and you’ll train yourself to accumulate wealth. Desires must be simple and definite. Perfecting yourself will increase your earning potential. You will earn more with persistent effort and increasing your skills. Learn more of your craft and you’ll be rewarded financially.