Tuesday, November 17, 2015

The Richest Man in Babylon

This is not about greed, it is not even about wealth necessarily.  It is about return on investment, that is the investment of  your time.  I suggest that everyone visit the library or Amazon.com and look into getting a copy of this book.  The book was written by George S. Clason in the 1920's but it is still relevant today.

The basic principles as I understand them are that "A part of all you earn is yours to keep," and trust your investments to experts.  The concept is that you keep at least ten percent of all of your earnings for your entire working life.  So for example, if you earn $30,000 at your job, live as if you earn $27,000 and bank the $3,000 every year.  If you earn $50,000, live as if you earn $45,000 and bank the $5,000.

It is not enough to just bank the money though, you need to make it work for  you.  That is very difficult in today's economy because of the very low interest rates payed by banks.  This is where the advice about seeking expert help is so important.

Many of us will make the excuse that we need every penny that we earn to live on.  The RMIB theory tells you that you need every penny of the 90% to live on and that you owe it to yourself to pay yourself the 10%.  Over the years, the savings compound and your return on investment of time becomes your wealth.

Consider yourself a personal corporation with your earnings as your revenue and your savings as your profit.  If a corporation achieves a 10% profit margin, that is not very favorable but at least it is profitable.  Why should the expectations be less for an individual.  Shouldn't your "profit" be at least 10%.  By all means, you should not be operating in the negative.

Pick up a copy and read The Richest Man in Babylon.  It is worth the investment of your time.