Latest update March 19th, 2024 12:59 AM
Aug 20, 2017 News
Dr. Terence Smith, Deputy Governor, Bank of Guyana
LEARNING FROM THE EXPERTS TO BUILD WEALTH
The sole purpose of this financial literacy article is to provide you with more tips on money
management and introduce you to the financial advice of an expert, King Solomon. In fact, this lesson is one inspired by King Solomon and in this article, we will discuss some of the wisdom of the King “the richest man who even lived.”
As you recall, in my previous articles, we have discussed the wealth building and money management tips from other experts and persons of significant financial wisdom such as Benjamin Franklin of the United States and Arkad of ancient Babylon.
Before we discuss a few of King Solomon’s money management tips, let us reflect on the idea of money and money management. Like time and oxygen, money is a part of reality, “a principle of life that cannot be escaped.” Money means freedom and power in a million different ways. Money is important because it means less financial worries and “life is not a constant effort at keeping your head above the water.”
To let you know, at the basic level money takes two forms: cash money that consists of coin and paper currency and chequebook money that people use to pay many bills.
Now, money management is the real difficult part for most people. Learning how to manage your money is the key to wealth building. Some of the richest people in the world started with no money and in a few decades have become very wealthy. Brian Tracy, Canadian-born American motivational public speaker sums it up nicely when he said that, “We have never seen such wealth creation in all of history. It absolutely baffles the mind.” The key question is: are you getting yours!”
WEALTH COMES FROM WISDOM, UNDERSTANDING AND KNOWLEDGE
Wealth actually comes from wisdom. When you think about wisdom, it must be the foundation for wealth-building. When you use wisdom as the foundation to build family wealth you will then gain an understanding on how to continue the need to grow your wealth, eventually you will reach a level of knowledge that will reward you with true prosperity, and you will enjoy the benefits and rewards of budgeting, money management, saving and basic investing.
So let us discuss five of King Solomon’s suggestions for managing money. Some of these tips are well known, but others are not taught in any business school, at least not in any of the numerous business schools that I have attended.
1. Get financial wisdom – We must educate ourselves with respect to financial matters. In short, we must acquire wisdom. King Solomon alluded to the fact that money without wisdom is not going to last long in the hands of a fool, meaning someone not fully understanding of the rules of wealth preservation. Do not be that fool. The literature indicates that many lottery winners’ lives became notably worst after they got super rich, and they managed to lose it all quite quickly. Their lack of financial judgement cost them their winnings. Nevertheless, not all is lost; the United Kingdom government did a study on how lottery winners have contributed to the economy and found that through their spending on properties, cars, and travel, the study concluded that each winner keeps six people in a full time job for a year.
2. Be diligent and scrupulous in all business transactions – Citizens, please avoid “get rich quick” schemes. King Solomon indicates that, “Wealth gotten by vanity shall be diminished: but he that gathered by labour shall increase.” When you think about all the Ponzi schemes and the lost monies and opportunities, King Solomon was correct in his advice. Bernie Madoff defrauded approximately $50 billion of other people’s money. By the way, a Ponzi scheme is a fraudulent investment where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities or profit of financial trading.
3. Live by a budget – Always spend less than you earn. We all have good intentions, but in order to have financial success, we must discipline ourselves to live by a budget. This is a very basic principle to help you stay out of debt and yet it can be difficult to follow. Generally, if you are a spendthrift you cannot prosper. As the literature explains, “It is not the high cost of living hurting you, but rather the cost of high living.” Wise men do not spend all they make, but fools do and die poor.
4. Pay your bills on time – Your bills are a financial priority. You should never make a purchase when you have bills you should be paying with that money. Plan your purchases. Do not make major purchases until you have built up some savings and made a plan for how you are going to pay for everything. As our expert King Solomon states, “Withhold not good from them to whom it is due, when it is in the power of thine hand to do it. Say not unto thy neighbour, go, and come again, and tomorrow I will give.”
5. Build wealth over time – You need time to build wealth. Refuse to go into debt and always spend less than you earn. Saving money is a great idea. Live beneath your means. Have the wisdom to show restraint on what you buy. King Solomon states that, “One man pretends to be rich yet has nothing; another pretends to be poor yet has great wealth.”
In conclusion, remember this, your discipline and your resolve to continue saving, year in and year out, will have a great effect on your character, so when your retirement comes around you will be handsomely rewarded. In fact, “the foundational building block for those desiring to increase their wealth is that a part of everything you earn is yours to keep.”
This means that you should pay yourself at least one-tenth of all you earn before paying your debts. For our prosperity as a nation, depends upon the financial prosperity of each of us as individuals.
Next week we will discuss the seven principles of the millionaire next door. Thanks for all your comments and support. As usual, please send your comments or questions to [email protected]
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