7 Cures for a Lean Purse

1. "Start thy purse to fattening." - "For every ten coins thou placest within thy purse take out for use but nine. Thy purse will start to fatten at once and its increasing weight will feel good in thy hand and bring satisfaction to thy soul."


There is no Santa Clause, there are no tooth faeries, and a large pile of money is not going to fall in your lap. If you keep ten percent of everything you make for yourself, over time, your purse will begin to fatten. This is largely covered by the first Law of Gold, but is important enough to briefly emphasize again. The only way your purse will fatten is to set aside 10% of all money you make.


2. "Control thy expenditures." - "Budget thy expenses that thou mayest have coins to pay for thy necessities, to pay for thy enjoyments and to gratify thy worthwhile desires without spending more than nine-tenths of thy earnings.

The amount of money a person makes is important, but it is secondary to the degree to which that person controls his expenses. Budget and plan your expenses earnestly. Demand value for the dollars you spend.


3. "Make thy gold multiply." - "Put each coin to laboring that it may reproduce its kind even as flocks of the field and help to bring to thee income, a stream of wealth that shall flow constantly into thy purse."


4. "Guard thy treasures from loss." - "Guard thy treasure from loss by investing only where thy principle is safe, where it may be reclaimed if desirable, and where thou will not fail to collect a fair rental. Consult with wise men. Secure the advice of those experienced in the profitable handling of gold. Let their wisdom
protect thy treasure from unsafe investments."

If you're going to throw any money towards risky investments, do it with the money you have not set aside for debts or savings. If you have money beyond the 10% savings to throw away, and you have no debt to pay off, you should set up another savings account, and pop a percentage into it. Use that for your hot stock tips, or risky investments. Never jeopardize your true savings by loaning it to friends, family, gambling, or risky stocks.

5. "Make of thy dwelling a profitable investment." - "Own thy own home."

A house is arguably one of the best investments one can make. It certainly ranks in the top 3, and you'll still find people arguing to have it in first place. If you spend 10 years in a house, making regular payments on it, you own a good portion of that house. You can sell it, usually for a huge profit. If you live in an apartment for 10 years, you own no part of it. You can't sell it, you can't modify it, and you have gained nothing. A house is every bit as much of an investment as an IRA, stocks, and savings accounts.

6. "Insure a future income." - "Provide for in advance for the needs of thy growing age and the protection of thy family."

You won't have your health forever, and sometimes bad things will happen. Insurance, while sometimes costly, is not a scam. Get insurance. Get home insurance, get car insurance, get health insurance. The savings in health insurance alone are immeasurable later on down the road. aside enough that you can live comfortably off the interest alone. And when you die, your children will have a nest egg to start their own wealth off with. Thus brings us to another point in this: You must teach your kids these rules if the success of your riches is to pass from generation to generation.

7. "Increase thy ability to earn." - "Cultivate thy own powers, to study and become wiser, to become more skilful, to act as to respect thyself."

In time you will be able to look at everything in terms of how much money it can make for you, and since you will have very few money problems, you'll probably have a lot of free time on your hands. If you have a hobby, it can usually be turned into money. Got a passion for art? Start collecting works by talented painters who are old. Got a hankering for golf? Enter competitions. Got some great ideas? Start typing and write a book. You can enjoy life, and even manage to profit off that enjoyment. Our single greatest asset is time, and if you use yours wisely, you will have more money than you will know what to do with.

Mind your spendings

Putting up a new business can be so demanding and stressful that even rational people can sometimes fall into the overspending trap. In your enthusiasm to make your business succeed, you yourself may fall into this trap and face the following undesirable situations:

High rental cost. By getting office space that's much too big for your startup business, you can get strapped for cash due to your high rental cost. This mistake would be all the more painful if your business doesn't pick up soon enough contrary to your expectations.

High depreciation cost. It's not advisable to buy top-of-the-line office equipment and furniture when they are not essential to the success of your business. They not only will be a big drain to your initial capital investment but also result in high depreciation expense.

Too many employees. In your desire to make everything in your business move smoothly, you may end up hiring more employees than you really need. To avoid bloating your payroll, see first if you or your manager could handle the functions of the positions you want to create.

Overstocking of inventory. Because you want to take advantage of a supplier's volume discount, you might order initial inventory that's way above your normal operating requirements. This can prove to be a bad deal when the cost to maintain the excess inventory proves to be higher than the supplier's volume discount.

Credit line abuse. You can end up acquiring unnecessary debt when you take on your bank's offer of a very high credit line. You can then be tempted to treat your credit line as capital infusion, enticing you to go on an expansion binge that invests heavily on capital expenditures. Because you used short-term financing for the long-term investment, however, you soon begin experiencing cash flow problems and abnormally high interest costs.

There are many ways to cut down on your expenses and minimize your cash outflows, but the most important are the following:

Develop a budget. You need to draw up a budget for each department of your company, listing all monthly expenses, and then make it a point to monitor and evaluate this budget regularly. Budgets are a reliable benchmark for measuring your actual performance. By sticking to your budgets, you will be able to curb your impulse purchases more effectively.

Promote accountability. Once you have drawn up your budget, you need to authorize only a few specific people including yourself to approve or make purchases on behalf of your company. By coming up with a formal approval system, you will be able to develop greater accountability and stronger control over expenses.

Update your bank account regularly. You need to monitor your cash position daily to avoid unexpected cash shortfalls. By knowing your cash position at any time, you will not make the mistake of tapping your bank credit line to finance expenditures for which you have enough cash in the bank in the first place. You will thus be able to avoid unnecessary interest expenses.

Try to barter your services and products. The barter system or "ex-deal" is a good way to reduce your inventories, increase sales, improve cash flow, and use the excess capacity of your business. For example, if you are in the restaurant business and you need to hire a marketing company, you can offer to pay for its services with free meal vouchers instead of cash. This way, you not only reduce your cash outflow but also reduce your inventories and put your restaurant's excess seat capacity to use.

Prioritize your capital expenditures. You should invest in capital assets such as computers, equipment, and transportation only when you absolutely need them. Make sure that they will create a positive return on investment for you in the long term. For example, before purchasing a new computer, you need to first compute the net savings you will get by investing in it as a replacement for your old one, whose slowness could be costing you a substantial sum in overtime pay and delayed sales deliveries. Make the purchase only if the net savings are big enough.

Create an incentive system. You can encourage your employees to cut down on company expenses by developing an incentive system for savings generation. For instance, in a particular department, you can reward the employees a certain percentage, say 10 percent, of the total savings they realize at yearend from their approved budget. In this way, you not only cut down on company expenses but also share with your employees the benefits of the savings generated.

In some rare instances, it may be a good idea to spend heavily on such crucial aspects of the business as marketing and advertising. This may be unavoidable particularly if you are just starting up with a new brand. Still, such expenses should always be carefully budgeted and monitored, and if you are having difficulties justifying them and certain other major expenses, it is always advisable to consult your accountant or a financial advisor.


Source entrepreneur.com.ph/