Laws of Money

Written by admin on December 5th, 2010


The Laws of Money

 One of your major goals in life should be financially independent. You must aim to reach the point where you have enough money so that you never have to worry about the money again. The good news is that the financial independence is easier to achieve today than it has ever been before. We are surrounded by more wealth and affluence than ever before. Your job is to get a fair share of wealth for yourself.

 Today, money has become extremely essential to our lives in society. It is also neutral. It is neither good nor bad. It is only the way that it is acquired and the uses to which it is put that determine whether it is helpful or hurtful.

 There is perhaps no other area where universal laws are more in evidence than in the acquiring and keeping of money. Let us understand these laws before practicing the same. The law does not care who you are, where you are from and from which place you belong to. So far as you follow the laws of money, it will flow towards people in abundance. 


The Law of Abundance. We live in an abundant universe in which there is sufficient money for all who really want it and are willing to obey the laws governing its acquisition.

 –         People become wealthy because they decide to become wealthy. People become wealthy because they believe they have the ability to become wealthy. Because they believe this completely to such an extent, they act accordingly. They consistently take the actions which are extremely essential to turn their beliefs into realities. And you can always tell what your beliefs really are by looking at your actions. There is no other way.

 –         Analyze yourself honestly and determine your biggest block, your major self-limiting belief that holds you back from becoming more successful financially. Resolve ceaselessly to act from now on as if this block no longer exists.

The Law of Exchange. Money is the medium through which people exchange their labor in the production of goods and services for the goods and services of others.

 –         Money is a measure of the value that people place on goods and services. Your labor is viewed as a factor of production or a cost by others. The amount of money you earn is the measure of the value that others place on your contribution. You will always be paid in direction to three factors: i) the work you do, (ii) how well you do it, iii) the difficulty of replacing you. How much you are paid will be in direct proportion to the quality and quantity of your contribution in comparison with the contribution of others, combined with the value that other people place on your contributions.

 –         To increase the amount of money you are getting out, you must increase the value of the work that you are putting in.

The Law of Capital. Your most valuable asset, in terms of cash flow, is your physical and mental capital, your earning ability.

 –         Your most precious resource is your time. Your time is really all you have to sell. How much time you put in and how much of yourself you put into that time largely determine your earning ability. Time and money can be either spent or invested. To a certain degree, your time and your money are interchangeable. If you spend them, they are gone forever. On the other hand, you can invest them, in which case you get a return on them that can go on and on. If you invest your time or money in becoming more knowledgeable and better skilled, you can increase your value.

 –         Build your intellectual capital, your personal value, and your earning ability continually. This commitment to regular and continuous personal and professional development will pay off for you in greater measure than you can believe. 

–         Just as a piece of productive machinery represents capital; you are also a form of mental and physical capital that can produce large quantities of goods and services if you are developed to your highest and best use.

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. 

–         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 consequences of their choices and decisions in terms of what they might mean in five, ten, fifteen and even twenty years from now. 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 extremely essential to financial achievement of any kind.

–         Self-discipline is the most important personal quality for assuring long-term success. Your ability 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 a winning human being. When you continually invest your time and money in improving yourself rather than frittering them away in idle socializing or television watching, you are putting yourself on the side of the angels. You are virtually guaranteeing your future.

The Law of Savings. Financial freedom comes to people who save 10 percent or more of their income throughout their lifetime.

–         The remarkable things are that when you pay yourself first and force yourself to live on the other 90 percent; you will soon become accustomed to it. When you regularly put away a certain percentage of your income over the years your financial lives change dramatically. 

–         Become a life long student of money. Read the best books, take courses, and subscribe to the most helpful magazines. Know what you are doing so you can always make intelligent decisions when you invest your funds. 

The Law of Conservation. It’s not how much you make but how much you keep that determines your financial future.

–         The true measure of how well you are really doing is how much you keep out of the amount that you can. Successful people are fastidious about putting away chunks of money regularly and paying down debt during prosperous times so that they have reserves set aside when the economy or business turns downward.

Parkinson’s Law. Expenses always rise to meet income.

 –         The law says that no matter how much money people earn they tend to spend the entire amount and a little bit more besides. Their expenses rise in lockstep with their incomes. Many people are earning today several times what they are earning at their first jobs. But, somehow, they seem to need every single penny to maintain current lifestyles. No matter how much they make, there never seems to be enough.

 –         If you allow your expenses to increase at a slower rate than your income and you save or invest the difference, you will become financially, independent in your working lifetime. If you can drive a wedge between your increasing earnings and the increasing costs of your lifestyle, and then save and invest the difference, you can continue to improve your lifestyle as you make more money. In other words, by consciously violating Parkinson’s Law, you will eventually become financially independent.

The Law of Three. There are three legs to stool of financial freedom: savings, insurance and investment.

 –         One of the major responsibilities, to yourself and to the people who depend on you, is to build a financial fortress around yourself over the course of your working lifetime. To be fully protected against the unexpected, you require liquid savings equal to two to six months of normal expenses. Further, you must insure adequately to provide against any emergency that you cannot pay for out of your bank account.

 –         Your ultimate financial goal should be to accumulate capital until your investments are paying you more than you can earn on your job. Your life is divided into roughly three parts, although theses three parts tends to overlap. First, there are your learning years, where you grow up and get an education. Then there are your earning years, from approximately age twenty to age sixty-five years. Finally comes your yearning years, when you can retire, with the average life expectancy today approaching beyond 75 years due to advancement of medical technology.   

The Law of Investing. Investigate before you invest. 

–         The only thing easy about money is losing it. It is hard to make money in a competitive market, but losing it is one of the easiest things you can ever do. A Japanese proverb says, “Making money is like digging with a nail, while losing money is like pouring water on the sand.” If you think you can afford to lose a little, you are going to end up losing a lot. There is an old saying “A fool and his money are soon parted.” There is another saying: ‘When a man with experience meets a man with money, the man with money is going to end up with the experience and the man with the experience is going to end up with the money.”

–         Invest only with experts who have a proven track record of success with their own money. Invest only in things that you fully understand and believe in. Take investment advice only from people who are financially successful. Play it safe. It’s better to hold onto your money rather than to take a chance of losing it, along with all the time it took you to earn it.

The Law of Compound Interest. Investing

Pages: 1 2

Tags: , , , , , , , , , , , , , ,

Leave a Reply