* This is the second in a seven part series based on George S. Clason’s “The Richest Man in Babylon.” To see the first part, click here.
I don’t normally write about the finance books that I read, but George S. Clason’s “The Richest Man in Babylon” has some really sound financial principles that I want to pass along. It’s a tiny little book, only 140 pages and since it’s older you should be able to pick it up at your library or on Paperback swap if you want to read it yourself.
“The Richest Man in Babylon” is the fictional story of Arkad, a man who started life as a simple peasant and has now become extremely wealthy. From his castle the King of Babylon sees the poor in his country continue to suffer as they mismanage their resources. He asks Arkad to teach the citizens the secrets to achieving financial security.
The lessons Arkad teaches he calls the “Seven Cures for a Lean Purse”. While they are not revolutionary, their simplicity makes them very valuable information.
Cure #2: Control Thy Expenditures (A Frugal Chick’s translation: Reevaluate your spending!)
For many Americans, their stuff controls their lives. And they are paying for it- with interest. This “stuff” is setting the standard for what is considered normal in this country. With the average American household $10,700 in just credit card debt I say normal isn’t good. We need to reevaluate “needs” verses “wants” and decide what is really important.
Arkad says “Confuse not the necessary expenses with (your) desires. Each of you, together with your good families, will have more desires than your earnings can gratify.”
Sit down with your bank statements for the last six months and look at your spending.
– When was the last time you checked rates for car insurance (I just saved 50% by talking to my current agent- I did not even have to change companies)?
– When was the last time you called your credit card company and asked if they would lower your interest rate (yep, I did that too and it worked)?
– How often do you use your gym memberships, magazine subscriptions, Netflix account or tanning membership?
– How much money do you spend eating out? (I am SO guilty with this one!)
Each of these is a potential way to cut your expenditures- some without even changing your lifestyle. Every little bit you can cut will make it even easier to build up that savings account!