You’re offered two choices—a bank account with so much cash or a masterclass from a financial expert. Which would you choose? Maybe you'll want a lot of cash, but it's agreeable that wisdom lasts longer than fortune.
The Richest Man in Babylon shares wisdom that holds secrets to how some people seem to effortlessly grow their wealth while others struggle. It turns out to be nothing like magic—just common sense and logic that's apparently not common among people. Inspired by the book, here are five timeless laws of gold that could change how you think about money.
Pay yourself first
At the end of the day, you're always paying someone for a service or a product out of what you have. It's either a landlord, the government, the cab driver, Netflix too, or a fashion designer. Without keeping something aside, there would be nothing to come back to.
Keep something aside. If one-tenth of your earnings is first paid to oneself—keeping in savings—then your wallet at least be expanding with time. With consistency, it's only a matter of time when that little you put aside turns into a huge stash.
"Gold comes gladly and in increasing quantity to anyone who will put by not less than one-tenth of their earnings to create an estate for their future and that of their family."
Make Your Money Work for You
Money just kept in savings will not lead one to wealth. Paying yourself first is only the first step, but making that stash of money work for you and bring more yields and have those yields bring even more is how you begin to generate wealth, as the book explains.
"Make your money work for you." Warren Buffet mostly made his wealth by compounding yields over the years. And that's similar to many of the wealthiest people we have in the world today; they understood the concept of making money by birthing children and having those children work for them.
"Gold labours diligently and contentedly for the wise owner who finds it profitable employment, multiplying even as the flocks of the field."
Seek Wisdom Before You Act
You may not know everything about something—maybe an investment program or a type of business you're interested in—but there are surely those that have been through it and have the experience and wisdom to learn from. If you seek their wise counsel, there's more assurance of securing the desired outcome.
"Gold clings to the protection of the cautious owner who invests it under the advice of those wise in its handling."
Stick to What You Know
It is normal to fear missing out, especially in these times when anything could potentially bring your huge returns if you look well. However, likewise, anything that's not scrutinised well could bring one doom. And you could just lose all your stash.
An example of this was the story of a man who gave all his savings in a year to a brickmaker who was going into the jewellery business. The brickmaker clearly didn't have the wisdom to make that new venture successful, and so the man lost it all. That story replays itself across history and even in our lives sometimes.
"Gold slips away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep."
Beware of Quick Riches
"Let your money work for you" was a popular phrase that reeled me into an investment program I enrolled in years ago. It sounded so good, and it was good for a while until it wasn't when I lost it all. It was a good thought of mine to want to make my money work for me, but then I didn't understand better, which this law of gold explains.
They were promising crazy returns on my investment. Something around 25% monthly ROI, and it sounded so good. All was going well, and I was getting the profits. I reinvested most of them, though, but I lost totally everything in the end. The vendor just vanished.
"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 desires in investment."
The Five Laws of Gold may not provide the roadmap you may be seeking to amass wealth, but they teach a way better way of thinking about money. It is safe to say choosing the bank account filled with cash and lacking the financial literacy to manage it, let alone multiply it into wealth, is a sure way to watch that cash dwindle away. The masterclass, on the other hand, equips you instead.
Images are original property of the author
Quotes are from the book
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