9. The Law of Time Perspective: The most successful people in any society are those who take the longest time period into consideration when making their day-to-day decisions.
The higher a person rises in any society, the longer is the time perspective or time horizon of that person. People at the highest social and economic levels make decisions and sacrifices that may not pay off for many years, sometimes not even in their lifetimes. People with long time perspectives are willing to pay the price of success for a long, long time before they achieve it. They think about the -17- 17 consequences of their financial choices and decisions in terms of what they might mean in five, ten, fifteen and even twenty years from now. People at the lowest levels of society have the shortest time perspectives. They focus primarily on immediate gratification and often engage in financial behaviors that are virtually guaranteed to lead to indebtedness, poverty and financial problems in the long term. You begin to move up socially and financially from the day that you begin thinking about what you are doing in terms of the possible long-term consequences of your actions. As you begin thinking longer term and organizing your financial life and priorities with your future goals and ambitions in mind, the quality of your decisions improve and your life starts to become better almost immediately. The first corollary of the Law of Time Perspective says: Delayed gratification is the key to financial success. Your ability to practice self-mastery, self-control and self-denial, to sacrifice in the short term so you can enjoy greater rewards in the long term, is the starting point of developing a long time perspective. This attitude is essential to financial achievement of any kind. The second corollary of this law says: Self-discipline is the most important personal quality for assuring long-term success. Self discipline was defined by Elbert Hubbard many years ago as, “The ability to make yourself do what you should do, when you should do it, whether you feel like it or not.” -18- 18 Your ability to discipline yourself to pay the price of success, in advance, and to continue paying it until you achieve the goal you have set, is the true mark of the winning human being. The third corollary of this law says: Sacrifice in the short-term is the price you pay for security in the long-term. The key word here is “sacrifice.” When you resist the temptation to do things that are fun and easy and instead discipline yourself to do the things that are hard and necessary, you develop in yourself the kind of character that virtually guarantees you a better life in the future. When you continually invest your time and money in improving yourself rather than frittering it away in idle socializing or watching television, you are putting yourself on the side of the angels. You are virtually guaranteeing your future.
10. The Law of Saving: 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 do 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. 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. -19- 19 Begin today to save ten percent of your income, 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. 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 income, you soon become comfortable living on the other ninety percent. Many people start by saving ten percent of their income and then move to saving fifteen percent, twenty percent, and even more. And their financial lives change dramatically as a result. So will yours. The second corollary of the Law of Saving says: Take advantage of tax deferred savings and investment plans. Because of high tax rates, money that is saved or invested without incurring taxes accumulates at a rate of 30% to 40% faster than money that is subject to taxation. 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. Begin today to put away ten percent of your income. Set up a special account for this purpose and treat your contributions with the same respect that you do your rent or mortgage payments each month. If you are in debt and ten percent is too much for you, start by saving one percent of your income and living on the other ninety-nine percent. When -20- 20 you become comfortable living on ninety nine percent of your income, increase your saving rate to two percent. Over time, work the rate up to ten, fifteen and even twenty percent of your income.
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