Just Do It- Lesson 8

While George Clason had only seven remedies for a lean purse that were taught by his central character Arkad; I would like to add an eighth.  In lesson seven I discussed the onset of the Information Age that has given us an economy based on information computerization and the internet.  1

A computer is an essential tool

The computer can provide us with the means by which we can, and must, track and monitor our income and expenses.

You must know where your money goes

So, why should I track my expenses?  You must know where your money goes and how you spend it.  It takes discipline and hard work but if you don’t, you won’t know what habits you need to change to make your money work for you. Even your small daily expenses, cash and debit cards, can blow your budget.

Spend less than you make

To successfully grow your wealth, and even becoming a millionaire, you must be aware of the money you make and spend. “True wealth is built as you spend less than you make and to do that you need to know what you are spending. If you want to build wealth, then you need to stop wasting money.”2

Create spending plans with PC software

Numerous online budgeting software programs are available to help you set up and stick to a spending plan.  Many of the software programs are available at little or no cost to the individual with most banks providing their customers with online banking options for paying bills and monitoring expenses.  

A budget is essential to taking control of your finances

There are even free Excel spreadsheet templates that you can download to your computer, or you may want to use a notebook or an envelope budgeting system to manage your day-to-day expenses.  Here is the point, A budget is an essential step in taking control of your financial future.

A review of the eight remedies for a lean purse

It is time to do a quick review of what we have discovered from Clason’s teachings about the best remedies for a lean purse.

Lesson 1- Pay yourself first.  Take the first 10% of your earnings and place the money in a savings account.

Lesson 2- Live below your means.  Learn to live on the 90%.

Lesson 3- Make your money work for you.  Set up emergency savings to cover the unexpected expenses that will come your way.

Lesson 4- Protect your wealth from loss.  Invest in only things you know and avoid “get rich quick” schemes.

Lesson 5- Be a successful homeowner.

Lesson 6- Develop a plan for retirement to ensure your future income.  Get to know and understand the eight wonder of the world, compounding interest.

Lesson 7- Do all that you can to be healthy, improve job skills; to become wiser and smarter to increase your ability to earn a higher income.

Lesson 8- Track your wealth and stop wasting money.

So why are you waiting?

My final thought can be summed up by something Arkad said at the end of the chapter.  He said, “Go thou forth and practice these truths that thou mayest prosper and grow wealthy, as is thy right.”

Now, “Just Do It.”

###Larry Marvin

LifeCrafter Money $ense

  1.   ©2016 Larry Marvin, Image Credit 8226451812_e197931e26_o.jpg
  2.  http://moneyfor20s.about.com/bio/Miriam-Caldwell-33737.htm

Insure Future Income- Lesson 6

On the sixth day, Arkad addressed his students about their financial future.  He stresses the importance of having a  plan that will ensure future income to provide financially for old age.  In today’s terms, he challenges the students to start as early as possible to establish a retirement plan. 1  

Carving out additional money for retirement

By this time Arkad has taught us the necessity of paying ourselves first, to control our expenses and to live within our means,  how to save for emergencies and make our money work for us; and how to keep an affordable roof over our heads.  But carving out additional money for our retirement years just doesn’t seem possible in today’s financial environment.

Don’t wait for a “rainy day” to start planning

Arielle O”Shea, in a recent article she wrote for Nerdwallet.com, said, “Planning for retirement is so difficult precisely because you can’t predict the unknowns, like how long you’re going to live or what sort of medical expenses might come your way.” 2 O’Shea believes that you can provide for your retirement if you have a plan, seek wise counsel, and most importantly, start today.  Don’t wait for the proverbial “rainy day” but do it now.

There are many retirement plan options

The options available today for retirement investment plans are many.  There are 401Ks, Traditional IRAs, Roth IRAs, and defined-benefit plans to name a few.  Remember, the sooner we can start putting money away for our retirement the better.  When we start putting money away for retirement early, we take advantage of a magical thing called ‘compounding interest‘3

For example, a 25-year-old earning an annual salary of $40,000 with an annual raise of  3% will have earned an estimated $3 million if they retire at age 65. That means that after 40 years of hard work they could be considered a millionaire.  We should have a retirement plan if we want to retire comfortably.   That is an example of compounding interest which is known as the eighth wonder of the world.

Benjamin Franklin knew the power of compound interest

History tells us that Benjamin Franklin knew all about the importance of compound interest.  When he died, he left 1,000 pounds (about $5,000 in today’s money) to a trust that named his favorite cities Philadelphia and Boston as beneficiaries of the money.  However, there was one provision that the money in the trust would not be available for at least 200 years.  The proceeds of the trust grew to over $7 million dollars, with $2 million given to Philadelphia and a whopping $5 million for Boston.

Start your plan early

In this lesson, Arkad is teaching us to put “time” to work for us by starting early to save for retirement. Time can be our retirement’s greatest friend.  Ben Franklin once said “Remember that money is of a prolific generating nature.  Money can beget money, and its offspring can beget more.”

Don’t miss the next lesson- #7

Lesson 7 implores us to Invest in ourselves by increasing our ability to earn more money. Arkad will show us that continually learning and striving to develop ourselves is the best way we can increase our earnings.  So, don’t wait.  Join us for lesson seven now.

####Larry Marvin

LifeCrafter Money $ense

 

 

  1. ©2016 Larry Marvin, Image Credit:slide8266321242_ae92ad84f7_k.jpg
  2. Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. Email: aoshea@nerdwallet.com. Twitter: @arioshea.
  3.  Books for debt reduction. Richest Man in Babylon, https://www.debtcutter.com.au/books-for-debt-reduction-richest-man-babylon/ (accessed August 03, 2016)

Invest In Thy Ability to Earn- Lesson 7

Women being better investors

One of Arkad’s students came to him one day and was complaining about not having enough money to repay a loan that he had outstanding.  All of the student’s income was used to pay his household bills, and he confessed that he “was a poor customer for the money lender, as he possessed no surplus earning capacity to repay the loan.” Arkad told him, “What you need, young man is to earn more coins. What doest thou to increase thy capacity to earn?”1 2

Working hard but not smart.

The student’s plight was not uncommon even today.  He worked hard, was motivated to do all that he could to provide for his family but was, as we often say today, was working hard but not smart. Clason uses Arkad in Lesson 7 to tell us that the best way we can increase our earning is by investing in ourselves.  

Seek more wisdom and knowledge.

How do we invest in ourselves in this day and time?  We must have a vigorous and definite desire to find more wisdom and knowledge and by continually exploring ways to increase our understanding and skills of our craft is crucial.   Brian Tracy, a  well-known author, motivational speaker, and personal success authority, puts it this way.

“Here are two things you can do immediately to put these ideas into action.

First, look around you at your current job and find ways to create added value every day. There’s always something more you can do.

Second, identify the kind of work you want to be doing in the future and then make a plan to develop the knowledge and skills you will require to do it well.” 3

Most people will benefit and be rewarded for making themselves more valuable at their current job.

We live in the “Information Age.”

We live in exciting times today.   The onset of the Information Age, an economy based on information computerization and the internet, has put endless volumes of information at our fingertips.

“Surfing the Net”

In an article recently published by History.org said,  “Educational opportunities were greatly enhanced because of the wealth of knowledge now placed at the fingertips of any wired individual. “SURFING THE ‘NET” became a pastime in and of itself.” 4

Strive to make yourself well-rounded

There are many things we can learn on our own and should work to make ourselves well-rounded.  Whether we learn to eat more healthy, enhance our current work skills, or learn to make more money, we must take the initiative to invest in ourselves.  Our ability to earn more money increases as our contribution to the organization increases.

###Larry Marvin
LifeCrafter – Money $ense

 

 

 

 

 

 

  1.  ©2016 Larry Marvin, Image  Credit: success-1093891_640.jpg
  2.  8 Lessons from the Richest Man in Babylon (On Wealth .., http://www.enlight8.com/8-lessons-from-the-richest-man-in-babylon/ (accessed August 03, 2016)
  3. http://www.briantracy.com/blog/personal-success/increasing-your-value/
  4.  http://www.ushistory.org/us/60d.asp  Copyright ©2008-2016 ushistory.org, owned by the Independence Hall Association in Philadelphia founded 1942

Make Thy Home a Profitable Investment- Lesson 5

Buying a Home is a Big Decision

George Clason is using Arkad to teach the value and potential profitability of home ownership.  Without question, buying a home is a big decision.  And, for most people, it is the largest investment they will make in their lifetime.  The expenses associated with home ownership are significant too.  However, Clason believes that buying the right house can improve the quality of life for most families. 1

In lesson five, Arkad said, “No man’s family can fully enjoy life unless they do have a plot of ground wherein children can play in the clean earth and where the wife may raise not only blossoms but good rich herbs to feed her family.” 2

Buy What You Can Afford

The main point Clason is making is that to be a successful homeowner we should buy only as much house as we can afford.  We must live below our means, be realistic about our expectations, and carefully study all of the options relating to the current real estate market.  It is imperative to seek advice from experts and friends during the process.  

Renting vs. Buying

The fact is that many people chose to rent a home or an apartment before buying a home.  That’s okay because whether you are looking for something to rent or buy, the same amount of planning, risk assessment, budget constraints and family needs apply to both options.

It Boils Down to Personal Preference

The age-old question remains today, should you buy or rent?  The truth of the matter is that it boils down to personal preference and one real estate professional recently said, “The way you’ll feel about buying versus renting is very much in the eye of the beholder.”  [By Paula Pant, WiserAdvisor contributor]

Keeping a Roof Over Your Head

The argument that if you rent, you are “throwing money away” is still made today.  Whether you are renting or buying, your household expenses add up to one thing, keeping a roof over your head.  So, whether you rent or buy, you are paying money for a desired good or service.  Consequently, the decision is yours.

Enjoying a Home That Is Purely Yours

In the long run, Clason makes a case for homeownership as the best alternative to having a roof over your head.  When you buy the right house, at the right price, with a total expense level that, by today’s standards, does not exceed 25% of your total household income, owning a home will “give you more money to spend on the pleasures of life.”  In other words, one of the biggest benefits to homeownership is, “You’ll enjoy a home that’s purely yours.”  [By Paula Pant, WiserAdvisor contributor]

Lesson Six- The Magic of “Compounding Interest.”

In Lesson Six George Clason emphasizes the importance of developing a plan for your retirement. The younger you are when you begin setting aside money, the more you will accumulate for your retirement years. In this lesson, Clason introduces what many have called the “Eighth Wonder of the World,  the magic of compounding interest.”  Don’t wait.  Please go to Lesson six now.

###Larry Marvin
LifeCrafter – Money $ense

  1.  ©2016 Larry Marvin, Image Credit:https://1702408538_2944e0e533_o.jpg
  2. The Seven (7) Cures For A Lean Purse – rosemis.com, http://rosemis.com/blog/recommended-resources/the-richest-man-in-babylon-george.