One consistent challenge business owners have is feeling like they should be further ahead.
Often, that feeling comes from money being allocated to the wrong areas in their life.
The Richest Man in Babylon
“The Richest Man in Babylon” is a book written in 1926. It uses parables set in ancient Babylon to teach seven of the most valuable financial concepts that still hold true today.
From investing, saving, and growing money, to spending wisely, it has personal finance lessons that will help you achieve financial success.
(Too many business owners are making these 5 financial mistakes that are easy to fix!)
The 7 Timeless Financial Rules
These are the seven timeless financial rules and how they can help make sure your money’s going to the right areas today and accomplish your goals.
1. Start thy purse to fattening
The concept is about paying yourself first before spending. You want to be setting aside 10% of your income to invest so that money is growing. Over time, you’ll build up an accumulation of funds to accomplish your goals.
2. Control thy expenditures
It’s extremely important to know where your cash flow is going. If you’re unclear about your cash flow, it’s likely not going to the most important things in your life and you may be overspending on the things that don’t matter. To organize your cash flow, you should prioritize allocating your money in this order: goals, committed expenses, and spending what’s left over. What most people do is spend first and save what is left over. Distinguish between your needs and wants. If you don’t prioritize your goals, you’ll end up feeling you should be further ahead. Committed expenses are expenses you must pay each month, but never emotionally overspend on, such as your mortgage, rent, gas, heating, hydro, internet, cable, etc. They should also be taken care of before you spend on other things.
3. Make thy gold multiply
Money will lose its value if it’s just sitting there. Seek investment opportunities to grow your wealth so you don’t have to work for your money forever. It will be growing in such a way to help you achieve financial freedom.
(You don’t want to miss these 3 ways to maximize the returns on your investment property)
4. Guard thy treasures from loss
Protect your assets. This does not mean avoiding riskier investments altogether, but make sure it aligns with your financial goal, and it’s only a small component of your portfolio. Having a diversified portfolio will minimize risk. Consult with professionals on how you can protect and grow your money.
5. Make thy dwelling a profitable investment
Owning property is a valuable way to grow your wealth. If you’re renting, you don’t have an appreciating asset that you could leverage and benefit from. One of the biggest benefits is your principal residence is completely tax-exempt. As a business owner, you have the option to buy your home inside of your corporation. If you intend to purchase the property with money held inside your corporation, it’s often best to own your home inside your corporation so you don’t have to take that money out and pay a layer of personal income tax. Your corporation can also be a tool to own other real estate, such as rental or vacation properties.
6. Insure a future income
Plan adequately for retirement by securing a steady income stream for years to come. There are many different ways to build a future income. You can enjoy financial freedom with funds from your corporation, RSPs, pensions, insurance strategies, or a combination. One of the most essential things when retirement planning is minimizing the tax bill you owe the CRA and finding ways to keep more money in your pocket.
7. Increase thy ability to earn
One of the best investments you can make is investing in yourself. Enhancing your skills and educating yourself will increase your earning potential.
Are you ready to build a customized financial plan that implements these 7 financial principles? Book a call today to get organized and make your goals a reality.