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Financial
freedom comes to the person who saves ten percent or more of his
income throughout his lifetime.
One of the
smartest things that you can ever do for yourself is to develop the
habit of saving part of your salary, every single paycheck.
Individuals, families and even societies are stable and prosperous
to the degree to which they have high savings rates. Savings today
are what guarantee the security and the possibilities of tomorrow.
Start With Yourself
The first
corollary of the Law of Saving comes from the book The Richest Man
in Babylon by George Classon. It is to "Pay yourself first."
Begin today to
save ten percent of your earnings, off the top, and never touch it.
This is your fund for long-term financial accumulation and you never
use it for any other reason except to assure your financial future.
Develop New Habits Regarding Money
The remarkable thing is that when you pay yourself first, and force
yourself to live on the other ninety percent, you will soon become
accustomed to it. You are a creature of habit. When you regularly
put away ten percent of your earnings, you soon become comfortable
living on the other ninety percent. Many people start by saving ten
percent of their income and then graduate to saving fifteen percent,
twenty percent, and even more. And their financial lives change
dramatically as a result. So will yours.
Take Every Advantage
The second corollary of the Law of Saving says, "Take advantage of
tax deferred savings and investment plans." Because of high and even
multiple tax rates, money that is saved or invested without being
taxed accumulates at a rate of 30% to 40% faster than money that is
subject to taxation.
Self-made millionaires, according to Dr Thomas
Stanley's book The Millionaire Next Door, are almost obsessive about
accumulating their funds in assets such as real estate, self owned
businesses and equities that increase in value without triggering
tax liabilities.
Invest in company pension and retirement plans, 401(k) plans, IRA's,
Keough Plans, Roth IRA's, Education Investment Accounts, stock
option programs and whatever else has been approved by the IRS for
long term financial accumulation. Make every dollar count!
Action Exercises
Here are two things you can do to apply this law immediately:
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First, begin today to put away ten percent of your earnings. Set up
a special account for this purpose and treat your contributions to
this account with the same respect that you do your rent or mortgage
payments each month.
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Second, become a lifelong student of money. Read the best books,
take courses and subscribe to the most helpful magazines. Know what
you are doing so you can always make intelligent decisions when you
invest your funds.
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