The Richest Man (and Woman) Today
In 1926 George S Clason wrote the classic “The Richest Man in Babylon”. The book is short and quite an easy read. It attempts to explain the tenets of financial success as applicable to the Babylonian era which was a dominant and wealthy society thousands of years ago.
The book has many principles that are equally applicable to men and women in business today.
The eight laws of wealth creation as detailed in the book are:
- Pay Ourselves First (Build Savings) Irrespective of your level of income you want your business to thrive and for earnings to occur
- Live Within Our Means (Control Expenditure) You want to have an excess of earnings over business costs and living expenses so you have extra to invest, to cover for a bad debt or unseasonal business losses/costs
- Make Our Money Work for Us (Invest Money to Generate a Return) You want to invest any excess in a nest egg or an investment pool so that eventually you have reserves for retirement
- Insurance Protects Our Wealth (Guard Wealth from Loss) Accidents and illness do happen. Insurance is a cost but it prevents the risk of an even larger loss. When looking at insurance consider your home, car, and income replacement among others.
- Our Home Is Our Biggest Expense (Make it a Profitable Investment) Your home is a tax concessional investment as it is generally Capital Gains Tax free on disposal (sale). It is also exempt from the Aged Pension asset test. Make your home work for you.
- Have a Retirement Plan (to ensure a Future Income) Save monies for when your career is over and invest it. Superannuation is tax concessional. Any nest egg whether inside the superannuation system or outside of superannuation is a great idea.
- Invest in Yourself (Improve the Ability to Earn) Learning does not finish at School and University. Aim for continuous improvement over your life – even if it is the “one-percenters”. Such minute improvements compound over time.
- Track Your Wealth (Know Where you Are and Where You are Going) Record keeping is important to monitor progress and to affirm your financial plans and goals
I’m sure you’d agree that many of these points are still relevant today.
Who would you speak with to discuss these matters? Your friends? Your family? An acquaintance?
An accountant is able to provide clarity, support and advice about how you are tracking, your financial plans, your business goals, your income and your living costs.
A good accountant:
- has the expertise and skill to help crunch the numbers and explain the details in a way you can understand.
- can report on your financial strengths and advise about areas that need improvement.
An accountant can only offer product recommendations if suitably licensed or they can liaise with associated professionals like financial planners who are.
If such matters are not offered by your accountant then maybe it is time to ask why not?
If the response is unsatisfactory then consider a change. It’s your future.