Continuing the story from our previous post, the wealthy Arkad from George Clason’s “The Richest Man in Babylon” was sharing his formula in what he called “The 7 cures for a lean purse.” His first cure introduced a concept that is still popular today, and that is to save 10% of one’s take-home pay. The second cure, is actually a perfect way (the only way?) to create the first—“Control thy expenditures.” It is human nature for our monthly expenses to rise to our level of income, otherwise known as our standard of living. In this age of plastic, it is very easy to spend even more that we earn, because the bill doesn’t arrive for another month, right?
Unfortunately, what we cannot pay off each month is automatically added to the bottom of the next month, creating a potential downward spiral that can escalate to an unmanageable obstacle within a very short time. So the idea here is to control our spending, which necessarily means saying “no” to certain purchases. After all, saving is simply postponing future consumption. “Confuse not the necessary expenses with thy desires” Arkad counsels his students, and concludes by imploring them to only live on nine-tenths of their income, setting aside the other one-tenth.
This accountability, therefore, is necessary in order to accomplish the first of the seven cures: “To start thy purse to fattening.”
There are many tools available to help with this crucial step, but working with a financial advisor is often the extra accountability that can make all the difference.