How to Become Wealthy – Money Lesson #1

I found this little 4 part series I wrote in a journal back in Nov. of 2014. It is clear that I was reading a great deal on finances, as I was still unemployed at this time and pretty scared I had ruined my family.

I think I remember even posting this on LinkedIn and my sister was like, “yeah if it was only that simple.” Well, it really is in the end, isn’t it?

As I come across these older writings, my thoughts now are why have I not implemented what I wrote? I think I would be better off had I done so. All the same, please enjoy!

Nov. 2014

“A part of all you earn is yours to keep

George Samuel Clason, The Richest Man in Babylon

Save 10-15% of your income. It doesn’t matter if you are employed by a company, are self-employed, receive bonuses or tax returns. Save 10-15% of everything you intake.

This one simple beginning will make you wealthier than the majority of people around the world. Why? Two reasons: you are not spending what you are saving and the power of compound interest.

When you save your money you can put in into a bank or the market and receive interest. The reason you get interest is because money is worth more now than in the future. Since money is worth more now you are compensated with interest when you receive your money back.

As you continue to save your money and earn interest, the interest compounds (multiplies) and over time this can bring you back significant returns. This also helps protect you from inflation (more money into the market, which lessons the purchasing power of the money).

What is Money? Money is a commodity. It is no different than wheat or gold other than it is accepted as legal tender to exchange for goods or services. You trade your services (time, talents and labor) for a piece of paper that you can then use for your wants and needs.

In this way money is a blessing. Let’s say you really want a turkey and you can trade a ham for that turkey. This is the barter system. This will work if the person you are trading with wants a ham. What happens if they do not want a ham for their turkey? You either have to find someone who wants a ham for a turkey or you have to find a third person who wants a ham that also has what the seller of the turkey wants. This is not a very efficient system.

The solution to this scenario is to have something of value that is accepted by everyone (in this case money) that can be exchanged for the goods or service. You can then sell your ham for money and then exchange the money for the turkey.

Money is amoral – it is neither good nor bad. What you do with money says more about your relationship with it, than about the money itself. Money is simply something that is widely accepted for goods and services. Nothing more, nothing less.

If you would like more money, then you need to save what you earn. You will need to use the power of compounding to multiply the money to at least keep up with inflation. There is nothing magical here. It is a matter of discipline.

Next Post: Staying out of Debt – Do you really need that thing?

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