10 Laws of Building Wealth

From the book, Richest Man in Babylon, these are the lessons of building wealth from the oldest civilization in the world. 

Just like in bowling, there is a perfect technique for delivering the striking shot. And perhaps that is why some wise guy once said that “You are the root of your financial success or failure. If you work on the roots, the fruits will take care of themselves.” That means taking care of the little you have by adopting wealth building habits and adopting a well-heeled state of mind.

I intend to share the tried-and-true tested 10 laws of building wealth, which will completely transform your life, as they have for many over the years and inch you closer to financial prosperity.

Here we go…law no. 1…

Adopt a Well-Heeled Mindset

Did you know that rich people always knew they would be rich and because of that mindset, they became rich? Don’t think about money like a broke person or a person in debt. Adopt a different mindset like a billionaire, it will not only open your eyes to new possibilities but will steer you in the right direction. So, you may be asking, “How can I do that?” I would say, “Read. Read. Read.” There is a wealth of finance knowledge out there. Seek it out.

Give

It is the oldest tale told, but a true one. We can’t be a financial success unless we give some of our money away. The more we have, the more generous we ought to be. The Bible says to tithe 10% but, I think we should not only stop there, giving other things like money, talent and time to the less fortunate would also be great too. By doing so, we will never fall short of what we need and in addition to that, we will have an abundance of things.

Pay Yourself First

For every shilling we earn, we pay ourselves at least a tenth of it and place it into savings, investments or retirement before paying anyone else as the reverse never works. This is the first rule that governs wealth building and the greatest difference between rich stable people and broke poor people is abiding by this rule. When our pay comes in every month, we should have a standing order to transfer money automatically giving us no room to think or plan for it when we get paid, as it is already done like clockwork!

Live Beneath Your Means

If we have paid our 10% tithe and 10% to ourselves, that leaves us with 80% or less to live on.  Our means at this point lies at 80% of our income, and the ideal is to live well below this 80% margin. This calls for us to just ditch excess spending habits and live by spending less than we earn.  However, all this is just talking unless we adopt a well-heeled mindset that clearly defines what money really is for us and differentiating needs from wants. With this, we can track our expenses, and maintain them well below our income, which we will be increasing over time thereby accumulating sustainable wealth over time.

Increase Your Earning Power

The best way to increase our earnings power is to invest in knowledge and skills that will make us more valuable to us, employers or business. We can do so by always continuously learning, and striving to improve ourselves in areas we may fall short. For instance, mastering new technologies and skills will always translate to more wealth. Your finances will thank you later!

Put Your Money to Work

While you go on vacation, your money should not. We can put your money to work through the three paths of wealth accumulation infused into a proper wealth plan which starts with building up a savings nest, a 6-8 months emergency fund and serious investment plan into various investment vehicles. This allows you to take advantage of the power of compounded interest by building sustainable wealth in mutual funds, real estate or even your own business.

Invest Wisely

Two aspects jump out here, firstly, what sort of investments will we make? Will we make risky investments or conservative investment choices? How much wealth would we like to have accumulated at the time of retirement? These are some of the questions we will have to ask ourselves when investing. But my advice would be, don’t place your money in securities you do not understand, and if you must, get an investment manager to oversee your portfolio.

And secondly, being that homes are the greatest investments that anyone can make; will we buy a home or comfortably rent? If you must buy, then make your home a profitable investment, with everything that is happening in the real estate market, be wise and live beneath your means.

Get Insured

Insurance protects our wealth and allows us to guard our treasures against loss. There is a wide array of assets like our cars, homes, businesses, health and even our income, but first, we should safeguard ourselves the greatest asset, by absorbing any potential loss from the unseen eventualities and mitigating our financial situation by getting some life insurance.

Beware of Unwise Debt

It is the parasite that will latch on us serving as a drag on our finances and life. Living debt free is the most liberating thing ever, so make a plan to get out of it and work that plan to completion.

Track Your Wealth

In order for us to know where we stand, we must be brutally honest about our current situation.  This we can do by tracking our current net worth and lack thereof, a particularly very difficult exercise but we must face our income versus expenses, in order to know where we are headed. If you have not done so, it’s an eye-opening experience which will empower you to make better plans and decision that will eventually land you in the land of the financially free.

In Greek mythology, Caerus was the personification of opportunity, luck and favorable moments. Since he only had hair at the front, so that when he comes up close it is easy to grab a hold of it but when you let go it is impossible to grab it again.

That is the reason why it is not possible for you to grab an opportunity that has already gone by. Now is the opportunity….grab it, apply and hit the nail on the head with these 7 laws of building wealth.

Happy Building!

Here are some other related articles you may be interested in:

• How to Build Wealth Rapidly
• 3 Steps to Build Wealth
• 5 Habitudes of Successful Wealth Builders
• How to Make Millions in Stocks
• 3 Paths Of Wealth Accumulation
• What You Can Do to Avoid Investment Fraud