Necessary ingredients in adopting sound money management

George S. Clason, the author of The Richest Man in Babylon, was quoted to have said that money is plentiful to those who understand the simple laws which govern its acquisition. Well, talking of plentiful of money, not only did he mean enough to sustain an individual for a few months but in essence a generational treasure. There is a fairy tale about a proverbial Indian merchant that you probably could have heard about. In a nutshell, it talks about an Indian trader who always rode a small motor cycle to and from his shop and yet he could afford a Mercedes Benz to do the same. The trader however kept growing his business and eventually turned it into a huge manufacturing company and after that bought himself a jet worth millions of dollars. What if the tale was true? We could therefore credit that trader for his superb money management habits. George S. Clason gives a detail of incredibly simple money management principles that each of us ought to pay close attention. It’s my pleasure to detail them to you.

Save a tenth of your earnings  
Top on the list is the need to save not less than 10% of your earnings consistently and invest it wisely.
There is a saying that consistency is the mother of success, 10% of your monthly salary may be quite a paltry sum of money but if aggregated for a year it could mean a worthwhile investment.  With the ten percent off your earnings, it implies that only 90% should cater for your expenses. Well, you could be tempted to creep onto the ten percent before the next pay date.  To avoid such a mishap, adopt a culture of budgeting for your necessary expenses as well as entertainment to ensure they do no surpass the 90% limit. This can be facilitated by always striving to achieve 100% value on whatever you decide to spend your money on.  
Look for a profitable investment vehicle
Once you have aggregated the consistent ten percent saving, invest it. You could opt for a passive or an active investment. A passive investment does not require your active involvement and hence you will only need to collect a return on the principle after a certain period of time. An investment at the Uganda Securities Exchange, for instance, will be a passive one. On the other hand, an active investment will require involvement by the investor on the running of the day to day operations. The ideal investment will however depend on the individual in question. 

Seek investment advice
It is recommended that you seek investment advice from credible persons. The question is can a stock broker offer advice about real estate? Well, not in the least.  As such the person offering the advice should either have reasonable experience in the field in question or at the very least be qualified and authorized to do so. The downside of not seeking advice is that you will pay the price of your inexperience with your hard earned capital input. 

Know whatever you are doing
Quite important, there are caveats to investing one of them being, ‘Never invest in ventures you have no knowledge about whatsoever.’ Not so long ago, I was approached by someone with this ‘hot’ investment that would eventually enhance me to bid good bye to my crafty world. My urge for more details about the investment however got me a wonderful reply, ‘Don’t worry about the details, you’ll understand them once you put in your money.’ He did not realize it but his reply meant my not investing at all.   

Be practical
The paradox about money is that the moment you’ve got it stashed in a bank account waiting for a viable investment you get lots of people coming your way with ‘great’ ideas of how you should invest it. Most of them will seem quite lucrative but you have to put them on a test first. An offer such as, ‘100% guaranteed return on the money invested with no risks whatsoever’ would be quite farfetched. Why? The current cost of borrowing, mind you not from loan sharks, is on average 30% and hence the minimum acceptable rate of return on your investment under normal trading conditions.  The general rate of inflation, on the other hand, has been on the increase and would therefore effectively reduce the real worth of the return derived. 

Well, money is a resource that definitely defines every part of our lives. Some people say that it is the root of all evil. On the contrary, money is simply a tool. When mismanaged money becomes the source of distress, hate and all the evil you could probably name. On the other hand its proper management leads to not only better living but the acquisition of a lifetime treasure.


  1. Anonymous12:18:00 AM

    Superb,fantastic advice,,,we need more please!!