The tradition of making New Year’s resolutions originated with the ancient Babylonians about 4,000 years ago. Promises were made to their gods to pay debts and return all borrowed objects. If these promises were kept, they believed their gods would grant them favorable health in the new year. They were also the first to host New Year’s celebrations with a 12-day festival called Akitu when they planted their crops – although their new year began mid-March. As we wait to ring in 2020, I recommend those of us who have not yet retired to save more and follow the teachings of Arkad in George S. Clason’s book titled The Richest Man in Babylon – a classic personal finance book made up of a collection of ancient Babylonian parables. In his book, Clason states that saving at least 10 percent of your earnings is one of the cornerstones of financial independence.
Clason’s book highlights the following Five Laws of Gold:
Save – 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.
Make money work for you and compound – Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
Be cautious and seek expert advice – Gold clingith to the protection of the cautious owner who invests it under the advice of men wise in its handling.
Don’t invest in something you don’t understand – Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.
All that glitters is not gold – Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers.
New Year’s Budgeting Resolutions
Budgeting is a valuable life skill. There are numerous methods including putting pen to paper, creating spreadsheets, and using software. Some of the most popular personal budget software programs include You Need A Budget (YNAB), Quicken, Mint, Acorns, and Every Dollar, among others. The key is to find one that matches your needs and that you will consistently use.
As an example, here are four rules of budgeting used by YNAB:
- Give every dollar a job – Where does the money you earn need to go versus where it goes when you emotionally spend?
- Save for a rainy day – Debt is not the only option. Set goals for your big and infrequent expenses, including holiday gifts, vacations, property taxes, etc., and fund them monthly.
- Roll with the punches – Overspending in some categories does occur. Be flexible and move funds from other categories.
- Live on last month’s income – You’ll break the paycheck-to-paycheck cycle by following the other rules. This way, it’ll be easier to pay your bills as they come in.
As you begin to set your financial goals for 2020, we hope you consider saving as one of the top priorities on your list. May your list of worries be shorter than your New Year’s resolutions.
Secure your future wisely.