7 Rules Of Saving | Richest Man In Babylon | Lab Of Rich

7 Rules Of Saving

In this blog, you will learn about the 7 Rules Of Saving. This information is taken from the book “Richest Man In Babylon” by George S. Clason. 

Many of us have a question: Is it possible that you are living in an expensive house, wearing expensive clothes, driving luxurious cars and still your wealth is growing? The answer is yes it is possible. 5000 years ago lived a man named Arkad. He was very rich and lived a luxurious lifestyle and then also his wealth kept on increasing.

Now many of us must be thinking that what did he do to afford this lifestyle? This same question arose in Arkad’s friends 5000 years ago and to know the answer to these questions they went to meet Arkad.

Arkad told them that he had earned all this money by knowing the rules of money, not by luck. Arkad told his story that he met a man named Algamish and he told Arkad a valuable lesson regarding money. He told:

“Every gold piece you save is a slave to work for you. Every copper it earns is its child that also earns for you. If you would become wealthy, then what you save must earn, and its children must earn, that all may help to give you the abundance you crave.”

In simple language it means that the money you invest will become a slave for you and the money it earns will also work for you and by the magic of compounding, you will become rich. But the money you spend will go away from you forever.

Now Arkad shares 7 Rules Of Savings which he has learned from his life experience.

Rule No 1 - Pay Yourself First

This rule says that you should save at least 10% of your income. If your income is Rs 10000 then you must save Rs 1000 as soon as your salary arrives.

And when you make a habit of saving money then gradually increase the amount you save. If you will not pay yourself first then you can never become rich in your whole life.

Rule No 2 - Live Below Your Means

This rule says that you should live below your means and should know the difference between needs and wants. 

• Needs are those things which are necessary for living like food, clothes, and shelter.
• Wants are those things which are not necessary for you like a new phone, a new car.

As soon as you know the difference between wants and needs, try to reduce your wants. If you will not follow this step then as your income will be increased so will your expense will be increased and you will never become rich.

Rule No 3 - Make Your Savings Multiply

This rule says when you have formed a habit of saving and have controlled your expenses then now it's time to multiply your wealth and it is only possible with investing. You should invest your money and reinvest the returns you get from that money and continue this process.

When you keep following this process, because of compounding, your money will grow very quickly and you will be financially free very quickly.

Rule No 4 - Never Lose Your Money

This rule says that you should invest your money only where you are sure that your money is safe and it will grow because when you lose money, you also lose the money which you could have earned by investing.

Warren Buffet also says: Rule No 1 in investing is “Never lose your money” and Rule No 2 is “Never forget rule no 1”.

Rule No 5 - Make A Profitable Investment

This rule says that having your own house is better than having a rented one because when you live in your own house then it is a profitable investment and those who were about to pay the rent also save it.

Rule No 6 - Make A Retirement Plan

This rule states that you should have some money deposited for retirement so that you will not face any problems in your retirement. 

You have to plan for your retirement well in advance so that the amount invested can grow with the power of compounding.

Rule No 7 - Increase Your Income

This rule states that you have to make a side income and for that, you have to learn a skill so that you can earn money. Because no matter how much you desire to become rich, if you do not have much money to invest, then you will not be able to become rich.

Passionate about what you're working on and keep learning new skills.

“The best investment you can make is in yourself because investment in knowledge pays the highest dividend and forever.”