Budgeting

Hi Wealth Seekers

I must confess that the following ideas on budgeting are not mine but nevertheless are extremely useful. An

interesting book called, "The Richest Man in Babylon" by George S. Scott advocates that with budgeting you must do toTWO things to be successful.

Firstly, you must budget 10% of all earnings towards SAVINGS. What does this mean? If you earn $40,000 per year

you must save $4,000 per year and these savings can only be used to purchase assets. An asset is something that

increases in value over time. This does not mean holidays, nightclubs and clothes for example. Why only10%?

It is like deciding that you are going to run a marathon everyday. Can you do this? Would you have any other life?

Think about this! What impact over the course of a year would cutting back on 10% of your spending have on your

lifestyle? Try to picture what you may have spent this 10% on. Picture your lifestyle by increasing you savings to

50% (doing the marathon). What things would you have to cut out?

Secondly and absolutely the most important aspect to this. When budgeting this 10% you MUST pay yourself first.

That 10% has to go to saving FIRST and you live off the remainding 90%. You do not pay this expense and that

expense then what is left you save. All lifestyle expenses must fit into 90% of your income.

If you think this is too simplistic please ponder this for a moment. Think back to your first pay check. Create an image

in your mind of saving the 10%. Now project this image of saving 10% of all earned over 10, 20 or even 30 years.

Do not forget compounding interest. What does this mean? I will put this to you:

Would you like $1 million dollars today or 1 cent ($0.01) doubling everyday for 30 days?

I will answer this next week for you.

Always keep thinking!

Michael