Personal Finance Seven Cures for a Lean Purse for Financial Success and Security

Personal Finance

Written by leahb

April 1, 2023

My favorite Personal Finance book is The Richest Man in Babylon. It is simple, timeless, and universal. If you feel like you need Personal Finance lessons, this is a great place to start. Every Personal Finance Guru out there uses variations on the themes in this book. There are a few different themes in this book, but the main theme is “The Seven Cures for a Lean Purse”.

Cure 1: Start thy Purse to Fattening

In the world of Personal Finance, this means to pay yourself first. Put away a minimum of 10% of your income before you spend any of it. This 10% will grow over time and allow you to take advantage of opportunities for investment. You can also use it as an emergency fund. This action has both a practical and psychological impact on your Personal Finance journey. Deciding to save 10% of your income forces you to start paying attention to your finances. There is also a sense of comfort knowing that you have money in the bank.

Cure 2: Control thy Expenditures

This cure makes you take an even closer look at your Personal Finance situation than the first cure. Now you aren’t just saving, you are actively evaluating what spending is necessary. The story cautions about mistaking luxuries for necessities. Most of us have things that might be a luxury and we can’t live without. Is that OK? It depends on your circumstances. I bet all of us have at least one thing that we are paying for that we don’t really need and can easily give up. Controlling your expenses means to live below your means and decide how you can increase your savings.

Cure 3: Make thy Gold Multiply

This is the investment cure. It isn’t enough to just save. If you aren’t investing your savings in something, then you are losing money to inflation. And if you want to be wealthy, your money needs to work for you. Not the other way around. For most people this means the stock market, high yield savings account, mutual funds, or other vehicle that you can put money into with the help of a financial advisor. Or you could do it on your own. There are other types of investments though. Real Estate, a business, commodities like gold, or certificates of deposit.

Cure 4: Guard thy Treasures from Loss

This cure is all about caution with your investments. If you are serious about meeting your Personal Finance goals, you have to be careful where you invest. Get rich quick schemes are a fast way to become poor. Make sure you are working with reputable people and investment methods. Most investments come with some risk of loss, but it is possible to manage and mitigate that risk. Do your due diligence. Research the opportunities. Get advice from people who are knowledgeable on the subject. And make sure you trust those people.  

Cure 5: Own thy Own Home

This is the one cure that I will admit is not for everyone. Psychologically, you might not be cut out for the stress that can come with home ownership. Or. You might find that you have a sense of pride in having your own real estate.

But. It still almost always makes sense from a Personal Finance perspective. Owning your own home is an investment. A tangible asset you can leave to your heirs. As you pay for it, you earn equity. In general, homes increase in value over time. So does your equity.

Cure 6: Insure a Future Income

For me, a future income is the whole point of Personal Finance. Sure, it helps you manage your money, but having a decent living after retirement… Well, that is the part that takes planning and work. The earlier you start, the better off you will be. Because your money has longer to grow. The more time your money has to grow, the less money it takes to get to your desired level. There are many ways these days you can do this. Several methods are listed above. To those I would add pensions, retirement accounts, and annuities. Consult your trusted financial planner to decide which is best for you.

Cure 7: Increase thy Ability to Learn

My favorite cure for a lean purse. I think this is the last cure because all of the earlier cures are about control and management. And those are the most important to your overall goal. Increasing your ability to earn is not something everyone can do. If you can, this is the fastest method to save more. Having a budget is great, but there is a limit to how much of your expenses you can cut. Picking up new work skills is never a bad idea. Knowledge is something that no one can take away.

Conclusion

There you have it! The Seven Cures for a Lean Purse from The Richest Man in Babylon. I said in the beginning that these cures were simple. They are. But they aren’t necessarily easy. They take time. Effort. Consistency. Self-control. And sometimes a bit of luck.

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Written by leahb

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