I continue to be amazed about how much a difference 10 percent can make.
The 10 percent principal can make a huge difference in business finance and a person’s finances.
What is the 10 percent principal?
Put 10 percent of your income into a savings account.
I learned about this principle from George Clason’s book The Richest Man in Babylon.
In the book, he gives us many lessons about key money management.
Pay yourself first is continuously repeated throughout the book.
All of us spend so much of our week working to make a living.
Then we take the money we earn and start paying our bills.
If the focus is always about making sure everyone else gets paid, then usually there is no money left for me.
To change our fate, we need to make a simple change.
Before I pay any dime to anyone else, I pay 10 percent to myself.
It’s straightforward because I have a separate savings account for my 10 percent.
I look at the deposit I make and drop a zero.
If I have a $1,000 deposit, I immediately transfer $100 over to my savings account.
I’m not quite sure why this works so well.
I do know that if I have money in my checking account, I’m apt to spend the money.
When the money is in my savings account I don’t want to spend.
There is a good reason why it is called a savings account and not a spending account.
There is something about segregating the money that makes me less inclined to spend the money.
When there are lean times, I can dip into my savings if I need to.
It’s just beautiful to have some money set aside in savings.