The Internet is littered with web sites and blogs of people looking to make money online. Everyone has an angle. You’ll see pages singing praises of a program that will help you make $10,000 per month with tons of testimonials saying they don’t have to work anymore, they can buy boats, cars, new homes, etc. Every single time I see one of these pages talking about how many cars they have, I just shake my head in wonder.

Too many people are looking for the fast buck. Even if the seller isn’t buying those fast cars, the ads don’t lend themselves to creating responsible businessmen. If you’re looking to make money online, or in real life, you’re a businessman. Everyone sells something. Even if you don’t own a business and just work at a job, you’re still a businessman. You are selling your time and effort in exchange for money, health insurance, 401k, etc. Personal income and business income should be treated the same in regards to spending.

I want to bring up an excerpt from The Richest Man in Babylon by George S Clason. I just love this book. The selection I’m mentioning today is a set of rules about money, its nature, and its care. All of the laws are simple to understand and to follow.

The Five Laws Of Gold

1. Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.

The first law simply says pay yourself first. Look at your paycheck, commissions check, or dividend check. Before taxes are taken out, pull out no less than 10% of the gross income. Put that amount away in a safe, secure place. Make due with the remaining 90% for all your needs. While there will be those that talk of investing that 10%, don’t do that yet. You need to get into the habit of saving that 10% and living on the rest.

2. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.

Investment, pure and simple investment. Think of your money as employees, working for you, creating more employees via dividends, commissions and interest. Use the 10% per week you save and invest in opportunities that will make a profit. Keep things simple. While some will say stay away from savings accounts or money market accounts, they’re safe and secure. Wait until the next two rules before going forward into more complex investments.

3. Gold clingeth to the protection of the cautious owner who invests it under the advice of wise men in its handling.

4. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keeping.

Always research and think about what investments you look to use your money. The return of your investment should be your prime concern. Don’t go for the quick buck. Invest with wise men who know money, how to use it, and make more money. The Richest Man in Bablyon uses two examples to illustrate this. A brick maker offers to go and buy gems for the investor. The brick maker, who knew nothing about gems, was scammed out of the investor’s money and bought worthless colored glass. On the other hand, the shield maker would borrow money to buy copper to make his shields, and then pay the borrowed funds back plus interest once the shields were made and sold.

5. Gold flees the man who would force it to impossible earnings or who followeth the advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.

The easiest example of this shows up almost daily in the stock market. A prime example is Novastar (NFI). For years, NFI would pay out large dividends. Those in the know, the minority, would question this and wonder how they could possibly pay out that amount of dividends. The company would report they used funds from previous quarterly profits to fund future dividends. And this worked, for a time. Eventually the sub prime market crashed when those lenders felt the crunch of foreclosures due to their creative loans. NFI finally couldn’t afford to pay out the promised dividends and the price fell from $25-$30 per share to $4-$5 per share. Those wise men that knew that something was not right said so, but greedy investors didn’t want to listen and kept following the high dividends. When the share price crashed, it wasn’t pretty.

I would add something to these rules of gold.

Make sure, above all else, to continue to afford to continue your current income generating activities.

In simple terms, if it takes so much money per week to pay for gas to go to work, make sure to have that amount of money set aside to pay for the gas. No matter how dire the need for funds, if you spend that gas money, you won’t be making any more money. In business, it’s the cost of doing business, expenses that the business must pay to keep current operations running. Trucking companies have to pay for fuel and payroll at the least; trucks won’t run without fuel and drivers won’t work without being paid. No trucks running and no drivers to drive them, then there is no income to run the business.

If you enjoyed this post, make sure you subscribe to my RSS feed!

Related Posts