It seems like money is everyone’s concern nowadays. The cost of living is going up, gas prices are soaring, and the effort to save money in any possible way is far more trendy than it used to be. People everywhere are under more financial pressure than we’ve seen in the last few years and its really sad.

In George S. Clason’s book, The Richest Man in Babylon, he tells the story of similar times in the ancient city of Babylon. The majority of wealth in the city was held in the hands of a few men and the common people had become so frustrated with the state of things that news of it reached the king’s ears.

The king summoned the richest man in Babylon, a man by the name of Arkad, and asked him to teach the worthy subjects of his domain the secrets of acquiring wealth. Arkad accepted the task and asked the king for a class of one hundred men to teach his secrets and said, ” I will teach to them those seven cures which did fatten my purse, than which there was none leaner in all Babylon.”

Arkad, with his class assembled, began by explaining to his students that his beginning was just as humble as theirs, and that wealth is within reach for any man who desires it. He told his students that he would teach them how to fatten their purses, that they might go out and teach others the way to solve their money problems. The students, eager to remedy their poverty, listened with curious ears as Arkad gave them the Seven Cures to a Lean Purse.

The First Cure to a Lean Purse:

“For every ten coins thou placest within thy purse take out for use but nine. Thy purse will start to fatten at once and its increasing weight will feel good in thy hand and bring satisfaction to thy soul.” – Arkad

If you earn $100 and you spend $100, then your wealth will never grow. It sounds simple because it is, and if you read The Five Laws of Gold, then you will see that this rule is repeated, and it’s because it is so important. When you save $10 for every $100 you earn, you begin to save more than you spend and your wealth begins to build.

Every time you get paid, pay yourself first by saving away 10% of your earnings before you start paying bills, shopping and spending. This “reverse budgeting” concept is designed to ensure that you develop a consistency with your wealth-building, it treats your savings as a non-negotiable expense.

Most people calculate, if they calculate at all, their bills and monthly expenses first and then maybe save whatever is left over. By paying yourself first, you save 10% and then you adjust the rest of your budget to live off of the remaining 90%. It may seem a bit extreme, but when you don’t have that non-negotiable 10% savings, your budget will usually expand to the full 100% of your income.

By placing a side that 10%, you can build wealth and still make ends meet with the remaining 90% and prevent yourself from sabetoeging your wealth-building by saving before you spend. If its close to the end of the month and you are the typical spend-first-then-save type of budget person, then the likelihood of spending that 10% you should’ve saved is very high.

When you’ve already put away that 10% and you’re living on the remaining 90%, then you’re much more likely to actually be disciplined with your money because you have less available to spend in the first place. When you don’t save first and you have that little financial cushion, then the temptation to use the cushion to spend on miscellaneous things is often too powerful to resist and every month you end up spending as much as you earned with little to show for it except for things you probably didn’t need anyway.

Arkad asked his students what they truly valued, if it was the gratification that comes from spending on fleeting things, or if it was from the substantial belongings like land and investments. He warned them that the coins taken from their purses would satisfy the first and that the coins left in their purse would bring about the latter.

It’s common sense. How do you expect to build wealth if saving a part of what you earn isn’t your priority? Pay yourself first.

A practical way to do that is to set up an automatic transfer from your checking account to your savings account at the beginning of every month. The less you have to think about it and the less effort it takes, the more likely you are to succeed.

“Surely it is a law of the Gods that unto him who keepeth and spendeth not a certain part of all his earning, shall gold come more easily. Likewise him whose purse is empty does gold avoid.” – Arkad

The Second Cure to a Lean Purse:

“Budget they expenses that though mayest have coins to pay for thy necessities, to pay for thy enjoyments and to gratify thy worthwhile desires without spending more than nine-tenths of thy earnings.” -Arkad

As mentioned in the above paragraphs, there is some strange law of finance that what we deem ‘necessary expenses’ tends to grow to the size of our income unless we take a firm stand and protest against this phenomenon.

“Confuse not the necessary expenses with thy desires.” – Arkad

Everyone has more desires than they can possibly gratify. It’s often the reason why people have more credit card debit than they can handle because they ‘needed’ this thing and that thing. The way you become wealthy is NOT by satisfying your every desire. This is especially true when your purse is already lean.

If this hits home for you, then heed the words of Arkad:

“Study thoughtfully they accustomed habits of living. Herein may be found certain accepted expenses that may wisely be reduced or eliminated. Let thy motto be one hundred percent of appreciated value demanded for each coin spent.” -Arkad

A useful exercise to practice in regard to the Second Cure is to write on a list all your necessary expenses, all your desired purchases and spend only on those necessary expenses and save that one-tenth, and whatever is left from that nine-tenths can be used to gratify those desired expenses.

Or, what you can do is once you have your list of necessary expenses and extra desires, you can cross those desires off the list and choose not to spend on them, taking at the end of the month all the money that would’ve been spent on those extra desires and save it away, and your purse will fatten even quicker. The better you budget, the richer you will grow.

“The purpose of budget is to help thy purse to fatten. It is to assist thee to have thy necessities and, insofar as attainable, thy other desires. It is to enable thee to realize thy most cherished desires by defending them from thy casual wishes.” -Arkad

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