Trick Yourself to Save More
In this video, I’m going to share with you trick which you can use to save more money.
But first, let me tell you a quick story of the richest man in Babylon, named Arkad and
how he was able to acquire such huge amounts of wealth over time.
The rules of money and wealth creation have remained about the same since ancient times,
and Arkad’s teachings, even though they are 4000 years old, are actually still applicable,
even today.
In the words of Arkad himself, I will teach you his strategies which you can use and implement
to acquire great wealth for yourself.
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Story of Arkad (The richest man in Babylon) About three thousand years ago in the city
of Babylon, on a sunny afternoon, a poor man called Bansir was sitting in front of his
house on a low wall.
That day, he was supposed to be creating a chariot to better deliver goods for his client
and thus earn more gold for his family.
However, Bansir couldn’t focus on creating the chariot, his mind was somewhere else.
He was feeling sad and depressed, and he kept pondering and thinking about something.
His best friend Kobbi, a musician, stops by to borrow two Shekels from him.
Bansir replies gloomily, “If I had two Shekels” and informs his friend, “to no one could
I lend them – not even to you, my best of friends; for they would be my fortune.
No one lends his entire fortune, not even to a best friend”.
To which, Kobbi replied, “Then why don’t you work on the half-built chariot today so
you can earn some shekels for your family”.
Bansir tells Kobbi that last night, while he was sleeping, he had a dream, in which
he was a very rich man and could afford all the nice things in life.
He also gave a lot of money to the poor as well.
However, the dream ended abruptly, and he woke up and since then he has been sitting
on this wall sulking.
Bansir asks his good friend Kobbi, “Have you wondered why we have worked our entire
lives and earned a lot of Shekels, but still, we don’t have two Shekels between us”.
After a minute or two of thinking, Kobbbi says, “Bansir! my friend!
I have an idea.
I passed our old friend Arkad on the streets today.
His purse is never empty and some even say that he is the richest man in Babylon.
Let us go to him and ask for his advice.
He can teach us how to always have a full purse, accumulate wealth and how to keep our
hard-earned Shekels”.
The two men go to Arkad who is very pleased to meet them.
Arkad is a friendly person and upon hearing the dilemma of his two friends, he is more
than open to the idea of teaching them his ways of achieving financial independence.
The first lesson that Arkad teaches is “Start Thy Purse to Fattening – Save at least 10%
of your income”.
This sounds so simple, yet only a few of us really do this.
The idea is that when you earn money, the first thing to do is to pay yourself.
You can do this by keeping 10% of those earnings while you can spend the rest on your daily
expenses like your car insurance, mobile expenses, internet subscription, kid’s college expenses,
mortgage payment and so on.
For example, if you earn $2000 a month after tax, the first thing you need to do is save
$200.
This is called paying yourself first before you pay any of your bills or shopping you
need to save at least 10% of your income.
After doing this, then you pay your other bills.
You see, you want to save first because given the opportunity our desires and undisciplined
nature, will quickly want to gratify our short term needs and craving and desires like buying
a new car or a new smartphone, or maybe shoes, or even expensive food, instead of fulfilling
the long term objective of achieving financial freedom.
The second lesson that Arkad teaches is “Control Thy Expenditures”.
Every human being must live within his means.
Yes, at times, it will be difficult for you to control your urges to buy material things
like a new car, a new watch, fancy clothes, or an expensive vacation, or maybe it could
even be something simple like buying takeout or a daily Starbucks coffee.
You need to control these temptations and keep in mind your long-term objective of achieving
financial freedom.
Many people often when they get a raise at work will immediately upgrade their standard
of living, which is why at the end of the day they have little to no savings.
The rule of thumb when you get a raise is; forget it ever happened!
Sounds weird, right?
Well, if you mentally trick yourself into believing that you are still earning the same
amount as before, you won’t fall into lifestyle inflation.
The third lesson by Arkad is “Make Thy Gold Multiply”.
Make your money work for you.
Rich people put a lot of value on their time, and so they choose not to slave away their
work hours like the rest of society.
The rich know that there are only three ways in which you can earn money.
You can either leverage your own time, someone else’s time, or your money.
Every person has only 24 hours in a day, so how much can one person really work and leverage
his own time.
The rich start making money and investing from a young age and make use of compounding
interest.
If you are interested in learning more about compounding interest we have actually made
a video that explains how your wealth can exponentially grow if you can harness its
power.
I’ll leave a link to that video in the descriptions.
The fourth lesson is “Guard Thy Treasures from Loss”.
The first principle of making any investment is security of the capital and prevention
of any loss.
The penalty for greed and trying to make quick money is usually one ending up losing it all.
So, stay away from risky, get rich quick investments and go for those investments that promise
“an adequate rate of return”.
Losing money is a very terrible thing to do to yourself, even that one dollar could have
made a huge difference in your life.
Think of it in this way, if you initially have 100 gold coins and you lose 50% of it,
so that now your investment is worth only 50 gold coins, how much profit do you now
need to make to recover your loss?
If you answered 50%, you are wrong.
That is because now you will need to make a 100% profit on the remaining 50 gold coins
to bring your investment back to the original amount.
Do you see how this works?
So, when Arkad says guard thy treasures from any loss, he knows what he is talking about.
And this should actually be every investor's number one rule; Never lose money.
The fifth teaching of Arkad is “Make of Thy Dwelling a Profitable Investment – Own
your own home”.
It makes more sense to make payments that will eventually become equity rather than
giving rent every month to your landlord.
When the payments for your property are made and eventually you get full title and ownership
of your home, you and your children will have the peace of mind that no matter how hard
life gets you’ll always have a roof over your heads which you own.
Arkad’s sixth lesson is “Insure a Future Income – Provide in advance for your lean
years and your family”.
This boils down to retirement planning and insurance.
It’s nice to know that you will always have a steady stream of income once you retire.
So, start planning for that income from today.
The seventh lesson from Arkad’s lecture is “Increase Thy Ability to Earn – Always
seek to learn more and become wiser, which will help you financially”.
Position yourself to make more money by improving your skills and making yourself more employable.
Train yourself, go to classes, take jobs on the side; whatever you chose, set specific
and measurable performance goals and start working to earn more money.
So hopefully by now, Arkad’s teachings should have made you realize the importance of savings
and the do’s and don’ts that go along with it.
However, knowing that savings and investments matter is only half the battle, the other
half is implementing his teachings in real life.
Do you find it hard to save your income?
Do you have mounting credit card bills?
Is your expenditure more than your income.
If the answer to all these questions was a resounding “yes”, don’t worry; we have
some tricks and tips that could help you save more of your income.
Tip # 1: Automate your savings: The simplest way to do this is to set up an automated savings
plan.
You can configure your bank account in such a way, that the moment your paycheck is received
in your account, 10% of it is automatically transferred to another savings or investment
account.
Tip # 2: Increase savings incrementally: Once you are on an automated savings plan, the
way to really build your savings is to increase those savings by 1% every six to 12 months.
For example, if you are setting aside 10% of your paycheck, reset it to increase by
1% to 2% the following year, and every year thereafter.
Tip # 3: Bank your bonuses: The trick is to rewire your brain to think of a bonus as “extra
money”.
Any time you get a raise at work, a year-end bonus, a cash reward, or any other type of
financial gift, put it immediately in your savings or investment account.
As Arkad puts it “Pay yourself first” and “Control Thy Expenditures”.
Tip # 4: Name your account: If you give your savings or investment account a name like
“Financial freedom” or “Paris vacation” or perhaps even “The American dream home”,
you might find yourself hitting your savings targets more often than before.
This kind of goal-based savings approach is also called “mental accounting” in behavioural
finance.
Tip # 5: Make access to your funds difficult: Convenience is great, but it does not allow
you to achieve your long-term objectives.
Most funds allow you to access your capital 24/7.
However, being able to access your money so easily can be dangerous for some people with
bad spending habits.
One option is to put a maximum withdrawal limit to it.
Another approach could be to delete the smartphone app, telephone number or webpage that you
access that account from.
Tip # 6: Start a savings competition: Find a friend who wants to save his money just
like you.
Set targets and goals together for each to achieve.
Compare your performance with that of your friend every week.
The more frequent you compare your savings, the higher your motivation to do better than
them.
Competition can be the best form of motivation.
Tip # 7: Visualize your future self: Research has shown that creating mental images of yourself
doing something actually shapes your brain’s processes much in the same way as actually
doing something does.
Visualizing yourself as a good saver who achieves their financial goals can help you to take
the actions necessary to actually do it.
These are some tips and tricks I would urge all of you to try.
If something else works for you better, maybe try that.
Every person’s psychology is different, and you will have to find something that works
for you.
Whatever trick or strategy you use, the ultimate goal is to save more.
Best of luck on your path to financial freedom and happy savings!
And with that said, please like, subscribe and I’ll see you in the next one.