The First Law of Gold

chestofgold

“Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.”

- The Richest Man in Babylon

As the story of The Richest Man in Babylon continues, we enter a chapter called The Five Laws of Gold. The first law is actually pretty similar to the first cure for a lean purse. While some might feel that this is getting a bit repetitive, I would argue that it simply underscores the extreme importance of setting aside one-tenth of your income.

I know from my own personal experience that when you first start putting 10% on your paycheck into a separate account, it feels like it simple isn’t enough to make a difference. Then you will try to rationalize that the amount is so small that it isn’t even worth bothering. But if you don’t set aside some savings, you are surely going to end up blowing that money on something unnecessary. My personal weakness in this area is Amazon shopping.

In order to become wealthy, you have to start somewhere. The same is true for becoming a serious trader. The trading capital has to come from somewhere. Starting out trading too small is one of the biggest mistakes that many traders make. They simply don’t appreciate the commission drag that can implode smaller accounts.

In order to trade successfully, you have to have a decent sized stake. In order to have a decent sized stake, you have to save money. The proven best way to save money consistently is to draft 10% of every paycheck into a separate account that you don’t even think about. Then, before you know it, that account will have grown into a decent amount of capital.

But what if you aren’t disciplined enough to save your money? Well then how in the hell do you expect to be disciplined enough to become a successful trader? Everything really does circle back to the fact that you must be willing to stash away one-tenth of your income!

Photo Credit: albarber3 via Compfight cc