Paul Makepeace ;-)

July 28, 2004

Savings systems

Posted in: Drivel

I've been pondering my finances quite a lot recently, and how to escape the rat race i.e. have enough residual income ("earning while sleeping") not to have to work. I've read plenty of theory on this Rich Dad, Poor Dad etc but as yet not put a lot of it into practice (on account of simply not having a stable enough-looking income to get a house).

And then I found a book with some immediately applicable goodies...

A short book I've was enjoying a earlier this year, Richest Man in Babylon is written as a tale of how a wealthy man imparted the secrets of his success to other city dwellers. Despite its mildly irritating "and I thus did do..." mock-ancient writing style it's pretty dense with observations and suggestions I could relate to.

I'll note just one now and how it's worked out. The author talks about what is almost a truism: that we spend whatever our income permits us to. Whether serf or sultan we manage to just use it all up. Our bank balances have a comfort zone. My comfort zone when my work supply is erratic has been "slightly in debt". It's amazingly consistent.

Now, the book's strongest recommendation comes early: save at least 10% and under no circumstances touch it. Treat it as though you don't have it. So I tried this, boldly setting up a savings account (having inexplicably closed my ten-year old one in 2002) and a monthly standing order for a pretty decent amount. Enough for me to be aware of but not cause any especial consideration.

Well, what happened? Several months down the line I'm still slightly in debt. But I have several thousand quid saved up!

So the obvious thing for me to do is to double the standing order and continue the experiment...

Posted by Paul Makepeace at July 28, 2004 17:31 | TrackBack

That's a very interesting concept, one I've never heard before. Find your comfort zone and undercut it to get the motiviation you need, I like it!

Posted by: landscape at March 29, 2006 22:40
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