I now present to you the fifth money lesson from “The Richest Man in Babylon”.
This lesson gives a lot importance to financial education. The question that I got when reading this money lesson is, “If you were to choose between P50,000 cash and 5 valuable lessons on acquiring riches, which one would you choose?”. It is very tempting to take the P50,000 cash since it is already cash right in front of you, but if you think long term, the wiser decision would be to take the 5 valuable lessons on acquiring riches.
The reason why the 5 valuable lessons on acquiring riches is the wiser choice is because it will make you richer in the long run, if you choose the P50,000 cash and don’t invest it properly and just spend it on luxuries not necessities, it will be gone very quickly. As for the 5 valuable lessons, once you digest them and apply them, you will have them forever. This is the long-term investment you can do for yourself.
Here are the 5 laws of money:
- Money comes gladly and quickly increases to anyone who will set aside 10% of his earnings for investments that he and his family can rely on in the future. The more money you save, the more easily money seems to come to you and money coming in seems to keep increasing. The money you invest together with its earnings will keep on increasing and increasing.
- Money works hard for the wise owner who invests the money in the right places. Money invested in the right places and patiently left to grow will multiply as the years go by.
- Money clings to the owner who seeks the advice of experienced and trusted mentors. Did you notice that investors who seek advice from well known, experienced and trusted investors have a higher success rate at becoming rich than those who are careless with their investments? Those who seek wise advise in financial education gets better in handling their finances and learn how to avoid jeopardizing his future financially.
- Money slips away from those who invest in businesses or investments they are not familiar with. Some people who have money now but are not financially literate will be deceived by wrong investments. Those who are not financially literate get excited at every investment opportunity, and think that the investment is very attractive and very profitable, but when analyzed by people knowledgeable on that business or investment, it actually turns out to be a losing investment.
- Money flees from those who foolishly fall for impossible earnings or those who fall prey to investment scams. Some people who have money now but are not financially literate will be deceived by wrong investments and scams thinking that any investment is a good investment. Those who are not financially literate may easily fall for those get-rich quick scams, again, if an investment seems to good to be true, it probably is. Before investing your hard earned money in anything, seek advise of others who have already invested or are currently investing in that.
So there you have it, the 5 laws of money. Understand them, absorb them and apply them. Abide by these rules and your journey to financial freedom will get easier.
I hope you learned and got inspired from this lesson, stay tuned for Lesson 6, in my next blog post.