Learning never exhausts the mind, a famous saying by Leonardo Da Vinci, I believe him. There are seven invaluable lessons taught by George S Clason in his book the ‘Richest man in Babylon’, which are often quoted by the best Money and Finance writers. In this regard, I would like us to start from these seven fundamental and universal rules of money so as to apply the lessons to our personal finance and businesses. For this piece we only get to look at two lessons/rules.
Rule 1: Pay yourself FIRST
This rule he calls start thy purse to fattening but I like to refer to it as ‘pay thyself first’. The statement brings an awakening to me because the reverse means that it is possible to work, pay everyone else but myself, oops not good! So you work 20 or 24 days a month in a Kenyan economy for instance, get an income of say $300 that’s Ksh.30,000 pay tax, rent, water bill, electricity, do some food stuff shopping, keep some away for transport to work, and somehow the money is not even enough to get you through the month, it’s actually too little to tithe or save. Replace the Ksh.30,000 with your monthly income, what is your expenditure like? Do you constantly save or are you living paycheck to paycheck? Unfortunately the rent you expend to your landlord is his/her income, same to the amount spent at your supermarket or grocery store, to the person on the other side of the transaction, that’s an income. What do you get to keep now that you worked one whole month? This is the point the rule applies for each 10 shillings you earn one shilling is yours to keep, you can only spend nine if you must. That means 10% of the income coming to your purse should remain in it, that my dear you guard jealously as an appreciation of your labor.
At this point some people will say, I don’t even earn enough to cater half of all my needs, you could have a point, but that is debatable. If today you lost your job, somehow, you will still survive, even before you got the job you still ate, dressed and moved point to point anyway. That being the case, if you put away at least 10% of your share loyally each month you’ll be just fine and with time the struggle will become a habit. Secondly, we imagine we have too many necessary and unattended needs because we can’t differentiate between desires and necessities. But hear this, desires always surpass gratification, even the world richest has not satisfied all their desires.
Rule 2: Shave your EXPENSES
What are your desires like; buying an Iphone XS, moving to a bigger rented apartment, buying longer wigs, adding to the make-up collection, exploring more food joints? Or is it owning a piece of land, buying a house, investing in real estates? The coins quickly withdrawn from your pulse could easily get the former desires but the accumulated coins over time could get you the latter. The expenditure trap is the one that holds a good number of us captive. Majority, especially women suffer the impulse buying syndrome, anything you come across that appeals to your eyes, in attractive branding or that your girlfriend recommended you buy. And that’s why most women wear less than half of the clothes they own, because we buy and keep buying, nothing is ever enough.
Before shrinking your expenditure for this new month of October get to know exactly how much money you spend monthly or weekly for all your recurrent bills, I recommend that you write it down. After tracking your expenditure, then look at what seems extravagant and unnecessary and cut it off or reduce the amounts spent on it. And don’t forget rule number 1, the expenditure must be below 90% of your income. At this point some people feel like this is a stingy way of thinking, but in essence this delayed gratification of immediate wants is what in future secures you stability financially and hopefully even grows your money.
Let’s be practical
If you fall in this category, prepare a budget for each month before pay day (it’s hard to think past desires with money on your hand). Then highlight what is necessary but within your 90% limit, the rest just forget about it and live past the thoughts. But what about the 10%? If you are too tempted to spend, do what I do, open an M-shwari locked account in your phone or any other limited withdrawal savings account and do a standing order or deposit on the pay day the 10%. The satisfaction from your progress will keep you going.
If you are self-employed, my question to you is, does your business pay you an absolute income or you just take money daily for your personal needs? Well, I know there is also a category (which we discuss later) that is still injecting money into their business which is yet to compensate incomes. Start by adding yourself to the payroll from your company then pay your bills from 90% and 10% SAVE it.
Next week we look at Rule 4 and 5. Be sure to internalize the first two rules and see how best to apply them to your situation.
Once again thank you for hanging out here with me, please let me know your thoughts by commenting below and don’t forget to please like, share with a friend and subscribe. Cheers!