There are limitations to physics on earth, and a set of rules that tell us what those limits are. The same idea applies to money - there are rules and limitations that govern what money can and cannot do. It's much easier to play a game (and win) if you know the rules before you begin.
In a fantastic book that I would highly recommend you read, these rules are laid out and explained. The book is called, The Richest Man in Babylon and we'll be talking about it a lot when it comes to finances. Top financial companies all over the world use this book as part of their training program for their financial advisers and investors. Get it here if you don't already have a copy.
Here is a brief list of the rules in summation:
1. Start thy purse to fattening
2. Control thy expenditures
3. Make thy gold multiply
4. Guard thy treasures from loss
5. Make of thy dwelling a profitable investment
6. Insure a future income
7. Increase thy ability to earn
I'll be going a little more in depth with each of these rules, discussing the parables as we move along through the book. Just consider it your own personal money Bible for now.
Yesterday we discussed Budgeting for Lazy People however, the budget I'm currently trying to work with is what I call the Babylon Budget. It's a budget derived from the principles described in this book. Just quickly so you can get an idea of what I'm talking about, it looks kind of like this:
Of All that You Earn,
1/10 is yours to keep (savings)
2/10 goes towards paying down debts
7/10 is for living expenses
So as an example, your budget might look kind of like this:
Well get further into how to properly classify your expenses in the next post.
Always cheering for you!!
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