Thursday, December 2, 2010

Laws of Success Lesson 4: The Habit of Saving

It sure would be nice to actually have a stack of money like that... Okay enough daydreaming.
 The next chapter in Napoleon Hill's Laws of Success, focuses on the Habit of Saving. I thought this was kind of odd that he would do this considering that it doesn't seem like, off the bat, saving money has anything to do with success, unless you were making money to be able to save. So what gives? Well it began make sense to me why he wrote the chapter as I read further.

1.) We waste money at an alarming rate. Have you ever gone through a substantially large amount of money in a short amount of time and don't really have anything to show for it? It happens to the best of us. Even Mr. Hill acknowledged that his purpose for adding this chapter, was due to the fact that he had made this very same error.

2.) It's a matter of discipline. As an American in a society that spends, and wants everything right now, I can think of few things that require more discipline than saving money. This is especially true if you don't have a lot of money to begin with. Can you imagine how bad someone's pockets are burning that have $100,000 in savings but only make $30,000 a year.

3.) It's about Opportunity. This is one of the key points in the chapter and the one I, of course, never thought of. In the book Napoleon Hill offers this statement:
"Formation of the Habit of Saving does not mean that you shall limit your earning capacity; it means just the opposite - that you shall apply this law so that it not only conserves that which you earn, in a systematic manner, but it also places you in the way of greater opportunity and gives you the vision, the self-confidence, the imagination, the enthusiasm, the initiative and leadership actually to increase your earning capacity,".
To elaborate further, there are probably some investment opportunities you could think of right now, that you would jump on in a heartbeat, "if you only had the money". What about the business opportunities you know you could get off of the ground "if you only had the money". How about that seminar you wanted to go to that would provide much needed knowledge and networking opportunities "if you only had the money". (Authors Note: I am actually beating myself up here. I am sure you get the point by now).

4.) It's about attraction. What happened to spend money to make money? Actually that is a lie. You actually save money to make money. Money attracts money. Savings attracts interest. Plus that "spending" in the quote is not really spending. If you do it right, it is investing. So stop telling yourself that stupid quote.

5.) It's about combating debt. The book has a part in it about how terrible debt can truly be. The stress related with debt hinders ability, and promotes poverty. Debt has even caused suicides. Napoleon Hill believed that because we are creatures of habit, the only way to truly get rid of a negative habit is to replace it with a positive one. In other words, debt is caused by a habit of spending. If you replace your spending habit with a habit of saving, then you have essentially beaten debt.

6.) It's about trust. Another great point that is brought up in this chapter is that no one will trust someone with their money, that can't manage their own. Yes a credit score is important, to a degree. But the reality of it all is that Cash is Always King. Walk into any car lot with a down payment of $20,000 and I guarantee you won't be denied. When you apply for a small business loan and you show that your collateral consists of $50,000 in the bank already, you will get a loan. I figure it has to be easier getting a mortgage too if you can show that you save your money instead of spend it.

Yes saving your money is an integral part of becoming successful. The sooner you learn to regularly save, the sooner you will be able to become financially independent and follow your dreams; whether you make money living them or not.

Feel free to comment with any questions, or additional thoughts and experiences. 

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