Most of us are familiar with the theory of making our money work doubly hard for us while we actively seek more income. So the cycle continues with us making money, then using that income to invest so that it makes us more money.
Does it stop there for you? What about the income that’s generated from your investments? Do you spend them or do you re-invest them some more so that they too will make you the next level of income and the cycle goes on and on?
I didn’t give much thought about investing and reinvesting the earnings until I started reading a book called The Richest Man In Babylon.
This book came highly recommended by Jim Rohn.
It does make sense that we should consciously make the additional income from investments work doubly hard too. Only then will you be able to generate endless streams of income, which hopefully is somewhat passively earned too.
So what else did I learn from this best-selling book? Well I have yet to finish reading it but considering that I just started, I took away with me 3 ideas on how to manage money effectively.
1. Pay yourself first – put aside a fixed percentage of income for yourself regularly. This is not money to be spent as you wish though! This is money to be put to work positively for you.
2. Learn to live frugally so that your expenses are kept low – don’t spend unnecessarily! Not easy, I tell you. Especially for ladies!
3. Make all levels of your income work for you – don’t reap your fruits too early on. Keep harvesting more fruits first! I guess this is the same as to practise delayed gratification.
Although all 3 points mentioned above are nothing new and often repeated in many other books and seminars, it’s a good reinforcement. If every great guru is telling you to do such simple things as a means to achieve your financial goals, there must be some good reasons they are repeating it.
Also, as simple as it sounds, not many people are able to put them in practise in real life. Have you been able to do them all consistently and not missing a beat?
I will also write a review of this book once I’ve finished reading it. If you’re keen to find out if it’s worth the money and time to read this book, stay tuned to find out soon. Meanwhile, try out the 3 simple steps above and see if you succeed with ease.
{ 5 comments… read them below or add one }
This is a good yet simple book. I’ve recommended this to few people since it’s quite affordable too – around RM 30 -40. And the concepts are dirt simple esp the one with invest 10% of monthly income. If anyone wants to start saving, 10% is a good start. If you can’t even come out with 10% then forget about everything.
Also, it’s necessary to reinvest the money you gained from investment. I m doing that because I tend to spend it all up !
Buying stuff (wants) once in a while is okay. We need to pamper ourselves anyway. But use the salary you get, not the return of your investments.
Drawing a proper line between the 2 can be hard (salary n return fr investment) but i believe it is one of the key to success
Agree with your view on the 10% to be put aside for making more money. It takes a lot of discipline for many people to achieve this. Good for you on doing this. You seem very good at managing your funds
Must learn from you!
Great Review!
Simple yet effective tips for becoming rich
But sadly, a lot of people saved but they do not invest.
They fear the risk and are content with the miserable deposit rates.
And sadly, unless you have the earning power of a top executive, savings won’t get you anywhere.
Hope more people will pick up the book and pick up the courage to be in charge of their financial life.
I enjoy reading this book. Very educating. Its impact to me, after I read it, is so strong — as if it was only yesterday I read it (I read it more than a year ago). Its main strength: the words used are simple laymen’s English — there is no ’stock market’, ‘appreciation rate’, ‘earning per share’, ‘return on equity’, ‘prospectus’ — really good for those who are enemies with financial terms/jargons, like my wife (sorry, honey); and yet we still get the messages that the author wants to deliver. Its main message: pay yourself 10% of your income before you pay others.
I even bought one and give it to my ex-colleague as his birthday present. Recommend this book to every one!
It is a good book. I have it in ebook version. Very simple but workable ideas.
Beside paying 10% to ourselve first, proper planning on spending and fund allocation are also required to ensure your money is working hard for you to achieve your financial target.