7 Tips of Earning More Money While Doing Job │The Richest Man in Babylon│Book Review

Hey friends, welcome back to my blog. Today, we will see a short summery of part of The richest man in Babylon, An evergreen book for personal finance. Here, we have a male character named Arkad, who used to be the richest man in Babylon city. Once the king of Babylon Sargon asked Arkad to guide the citizens about money, asked him to share his wisdom and how he became the richest man in Babylon. Arkad agreed happily. 

The Richest Man in Babylon

On one fine day, Arkad, other citizens of Babylon and the king Sargon gathered in auditorium. There he shared his wisdom about money. He shared 7 timeless tips of getting rich with them.  Today, we will see those 7 tips one by one. So, let’s get started.

Tip No.	Description
1	Pay yourself first
2	Control the expenditure
3	Multiple your source of income
4	Secure your investment form loss
5	Own your own home
6	Secure the Future
7	Improve your ability to earn

 

Tip 1: Pay yourself first

It means when you get money (Well in our case, it’s salary), keep at least 10% of it for yourself. You pay taxes, phone bill, light bill, paper bill, grocery, then maintains and at the end if some money left then you think about saving or investing, am I right…? You are paying everybody except you, right…? If you keep going like this then you will never save and you won’t get rich. 

As soon as you get salary or money, keep at least 10% of your income aside (if possible, you can keep aside more) and make your monthly expenditure plan as per remaining 90% amount. Now, the question is what to do with that 10%? Most of us will answer that open saving account and keep that 10% in bank or spent it on your favorite things. Well NO, don’t do that. Instead, invest it in something which will give you considerable returns. This is like planting seeds, it does not matter how big your seed is. The way you plant that is what makes the difference. Let the seed grow. Let it become tree which will give you sweet fruits. 

Pay Yourself First

Don’t touch that 10% if you have no plan of investing it else you will pull up the tree before it grows completely. You can spend a month with that 90% without any issue. Give a shot. Remember my friends, always pay yourself first.

Tip 2: Control the expenditure 

Now, we kept 10% aside. Let’s talk about 90% which remained for our monthly expenditure. For this we must know the difference between Want and Need. ‘What I want’ and ‘What I need’, these two are different even if they sound alike. Once you get the difference between them, you will start to control your expenditure without any further guidelines. 

Take a look on chart below. This chart will not only help you to control your expenditure but also change your perspective about Want and Need.

Want Vs Need

   A. Low want, Low need:

This is something which is actually worthless spending time or money. It covers those things which you don’t want and you don’t need. For example, wasting time on watching worthless web-series. Things which don’t give you motivation or pleasure are fall in this quadrant. So, don’t go for it.

   B. Low Want, High Need:

This section covers those things which you don’t want much but are necessary to do. For example, attaining boring lecture in college, right? You, (even me also) attained lectures which actually we never wanted to sit for. But for what purpose we attained that? because that lecture was necessary, that lecture was need of our exam. Another example is doing exercise. Exercise is a thing which most of us don’t want to do but we do that because we need that for health and fit life.

So, try to find out and prioritize the things which are low want and high need category.

   C. High Want, Low need:

Things like mobile back cover. We actually don’t need new mobile back cover every 6 months. But practically we buy it. It is a great example of high want and low need. Another thing is shoes, just ask yourself whether you really need a new pair of shoes every 6 months? 

 

Whenever you go to market and want to purchase something, just ask yourself: “Do I really need this?” “Do my life become difficult if I don’t have it?” The question to this answer will give you the difference between want and need. 

   D. High want, High need:

Just go for it. If you think that spending money on something is your want and need then go for it. For example, taking online courses. If it is your job requirement then obviously you want it and you need it. So, don’t think much and get that course. 

So, my friends, I guess this is enough to understand the want and need difference and to understand where and how to control the expenditure in 90% of your income. You can read my other post Absolute income Vs Relative income to know more about income and expenditure.

Tip 3: Multiple your source of income

Now, you have 10% money aside and you know how to control your expenditure. But this is not enough to make your rich. Make your money works for you. You are an employee of your company. You work for your company so that your company will grow and for that your company pays you salary. Same way, make your 10% income your employee, but how? Investing it in stocks, shares, mutual funds or any profitable business. These investments will bring you more money (Make sure that you know the field where you’re investing the money).

That invested money in shares, stocks, bonds will give you good returns, better than bank. Again, reinvest that returns (This is what we called Compounding). Even Warren Buffett says that “Compound interest has changed the world.”

I have given a list of 7 types of income a man can have. Comment below if you want detail description of these 7 types of income.

Sr. No	Description
1	Earned Income for Job
2	Profit
3	Interest Income
4	Capital Gains
5	Dividend Income
6	Royalties
7	Rental Income

Multiple source of income a person can have

 

In short, start multiple source of income. Don’t live on paycheck to paycheck, don’t depend on single source on income else you will work till your death.

Tip 4: Secure your investment form loss

“Don’t put all your eggs in one basket”, says Warren Buffett (Again). Same way, this book tells you that before making any kind of investment, make sure that you know that field very well where you’re planning to invest. Don’t get blind in hunger of money. Think twice before investing your money. Take advice from those who know that particular field inside out. 

Secure your investment form losses

Remember my friends, things which come quickly, go quickly. Things which come slowly, go slowly. It is true for money also. So, before investing, make sure that at any worst condition, your principal amount will be secured. 

Tip 5: Own your own home

Instead of paying rent to your land owner, make your own home. It gives you satisfaction, a feeling of pride and confidence.  It not only saves your monthly income but also you will get considerable amount for investment. Also, your family would love to live in their own house. My friends, remember house is just four walls with roof, your family makes it home.  

Own Your Own Home

Tip 6: Secure the Future

“If you don’t find a way to make money while you sleep, you will work till death”, says Warren Buffett. 

Secure the Future so you can live when your are not earning

Someday, you will be old and will not be able to work. How will you service then? Always have future fund/emergency funds which will help you when you have no active source of income. Active income means you have to engage your time to earn money. Passive income means you will get money even when you are not trading your time. Passive income will pay you even when you are not working. It includes mutual funds, rent from rental property, dividend from stocks. Here you don’t need to engage your time always but still these things are making money for you. So, make more passive income sources than active income which will help you in future.

Tip 7: Improve your ability to earn

If you want to earn more, you need to learn more. Life does not stop teaching so don’t stop learning. That’s the only way to earn more money and knowledge. As an employee, if completing any certified course would increase your chance of getting good hike in salary then you must do it anyhow, doesn’t matter how much you tired. If you want it, then you have to do everything it asks for. The more you learn, the more you earn.

The more you learn, more you earn

Remember my friends, people say this many time that, “Money is not everything, money does not buy happiness”. I agree with them but up to some extent. Money does not buy happiness but it makes the way to the happiness less painful. Money is good thing to pursue. It is very important to be financially stable so that you can give your family a good and healthy life. But make sure that you trade only your time and skill for money, not your ethics and soul.

Well dear fellow, these are the 7 tips Arkad taught to the citizens of Babylon. I hope you found something interesting in it. 

You can read my other post regarding 6 Things About Money Every Middle-Class Person Must Know which is book summery of ‘Rich Dad Poor Dad’. It is one of the most loved books in personal finance.


Click here to purchase The Richest Man in Babylon.


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