Control Your Spending – Never Get in Debt

The 2nd rule from The Richest Man in Babylon is “ Control thy Expenditure ”.  In simple terms, control your spending.

There is this saying that I once read and I have shared with many people and how true it is.

“ We buy things that we do not need, with money that we don’t have or can ill-afford, just to impress our friends or neighbours that we don’t even like “.

How many times have we done that ourselves ? Have you ever  made the same mistake?.  I urge you to rethink again.

Practice Frugality and Delayed Gratification.
Save and invest 10% of what you earn, the balance 90 percent is spend after saving the 1st 10 percent  for yourself.

Practice frugality in all things and exercise delayed gratification. Be careful with your money on what you spend. Question yourself, is this really necessary? Question every spending. Is it necessary or can I afford this. Resist the urge to buy something on impulse. A major reason many people retire poor is because of impulsive buying. They see something or their friends have something and they buy it with very little thought whether they really need it or rather because they want it just to impress someone else.

It does not matter how much you earn. It is what you do with what you get than it is with what you get. I learn this from the late Jim Rohn, whom I admire and respect for his wisdom. It is More Important with What You Do with What You Get Than It is with  What You Get !

What does this mean ? It’s about your philosophy. Its about your habits. Its about what you know and how you feel about it and what you do about it.

Supposedly, we have 3 persons. In one of the sharing with young school-children, I asked them this question. Person A earns $500 per month. B earns $5,000 and C earns $10,000 per month. Who is the richer person? Invariably, everyone will raise their hands and say the Person C is richer.

From our external perspective, it would seem like a person C earning more money will be richer. But what they do with what they earn is more important.

Person A has a philosophy of paying himself first of 10% each month.
In a year, A will have save and invest $50 x 12 months = $600 in a year.

Person B, earning $5000, always spend all that he earn during the month. A becomes a victim of what is known as “ Parkinson’s Law ”, which says that “ expenses will rise to meet income ”.  So B  spend all that was earned and there is no savings for the month.

Person C, although earning the highest, have form the habit of spending more than he earns each month with the aid of Parkinson’s Law working against him. No matter how much he earns, he tend to spend that much and a little bit more besides. C spend $12,000 each month, spending $2,000 more each month with the aid of easy credit from credit cards or personal loans.

Person C not only did not save, but is now in debt of $2,000 each month and over a year, C debts has grown to $24,000. C never gets ahead and never gets out of debt.

So when I asked the school children again, who is richer now after a year. Person A is richer because A learns how to save and control the spending.
The less you spend , the more you have for savings.

Never become a victim of Parkinson’s Law.

So the next time you want to spend, resist the urge to spend. The money save, will be use to work hard for you.  Because you work hard for your money, and to live a good life, you want your money to work hard for you. That will be for the 3rd cure for a lean purse from The Richest Man in Babylon.

I hope you have enjoyed my sharing. To your success and financial abundance.

By Michael Tay   www.michaeltay.com

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