Golden Rule and Golden Eggs

The Golden Egg and The Ten Percent Account

One profitable skill that is probably the most important, yet the least carried out, is budgeting. I am not talking about budgeting necessarily for the week’s groceries or the monthly mortgage payment. They are of course part of the budget. What is the first consideration or allocation you should calculate?

The answer is you. You and your family’s financial future. The golden rule is to allocate 10% of any monies coming in, and place it in a 10% account. Anyone who has read ‘The Richest Man in Babylon’ will know exactly what I’m talking about.

I read the book years ago, but one thing that I remember so clearly was the example of a man whose income relied on the production of his hen’s laying eggs. When listening to ‘The Richest Man in Babylon’ and his teachings of the 10% rule, he replied he did not have much, just a few eggs. He was asked what would happen if he placed just 1 out of every 10 eggs into another basket. The man replied the basket would overflow. Hmmm ‘The basket would overflow.’

The 10% rule applies to everything you earn. If you earn an extra $100 put aside $10. You may be saying right now, I can’t do that, it’s impossible, I have too many bills and commitments, to put aside 10%.

Well I am going to be a little bold and say, you can! How many times has something come up unexpectedly and you have found the money to do or buy it? It has happened to all of us at some time or other.

Set up an account; call it your 10% account! If you can’t rely on your actions to put it aside, have it taken from your pay packet before you see it. If it was another credit card payment, or personal loan payment, you would accept it as a matter of course, and budget what was left, without even thinking about it.

For some psychological reason people often assume if it is savings, there is something wrong, because there is no way they can save. Maybe in the future, when…

I was told by a millionaire once (I am embarrassed to admit this) that I had ‘broke mentality.’ At the time I thought I was doing really well, but the slap I got, made me realize he was right. I did what the 1% does not. If there was money in the bank, I spent it. I thought I was spending it wisely, but he pointed out that because I had become so use to having a zero bank balance, when I saw money in there it wasn’t right, it had to be spent!

So, that is why I consider the 10% account a very profitable skill. The 1% population, that all do it, can’t be wrong.