Once there was a farmer who had a goose and one morning he found a golden egg that was laid by the goose. Intrigued, he waited to see what would happen the next morning. Again! There was another golden egg laid by the goose. This happened every day for a few days in a row. The poor farmer was over the moon as he could sell these eggs and make a fortune.
However, one day the farmer decided to get a bit clever. If the goose is laying golden eggs daily then there must be a whole bunch of them inside the goose, thought the farmer. Growing impatient and wanting all the golden eggs at once, he grabbed his axe and chopped the goose in half. To his disappointment, there was nothing inside and even worse, he had killed the goose that laid golden eggs.
How is this story relevant to our lives? Well, I believe the reason why most people are not rich is because they have a get rich quick mentality. They want everything the next day and they want overnight success. They are like the farmer in the story, they can’t wait. They want wealth the microwave way, in an instant and they sabotage themselves trying to get it.
But the type of wealth that lasts doesn’t come that way. The true path to wealth is a journey and a pilgrimage. It requires patience and it requires momentum. The way you build wealth is by accumulating the golden eggs that are laid daily and then use those to acquire another goose that lays even more golden eggs. And another, and another and another.
It really is as simple as that. And it starts with the act of carving out a portion of your income to turn into investment capital so that you can buy the golden geese.
In the timeless classic “The Richest Man in Babylon” the first maxim states: “A part of all I earn is mine to keep”.
The book advocated setting aside 10% of your paycheck and only touching it when you find a way to make it grow. Never for anything else. You pay yourself the 10% first and then use the rest to pay other people, usually in exchange for goods and services like food, housing, entertainment, etc.
Then, when a great opportunity (like a goose that lays golden eggs) comes your way, you’ll be prepared and can decide to use your savings to invest in it. Each investment, if executed successfully, will take you one step closer to financial freedom.
I know what you may be thinking – “That’s great Monty, but I’m never going to save enough from a normal job to make a difference in my life.”
Let me address this.
The path to slow financial freedom is very simple. Save enough money, make it grow and eventually live off of the interest. The sooner you start and the more you save, the earlier you can retire.
Here’s How To Save More Tomorrow
Time is going to happen anyway, so be like an engineer and design it. To get on this path you need to answer three simple questions:
1. How much do I need to retire? Take a moment to run the math and calculate the numbers for yourself. For added effect, write them down on a piece of paper and stick it in your wallet, next to your cash, to never forget them.
2. How long will it take? I guess by now you have checked the compound interest calculators to see how long it will take to earn your financial security goal. And it’s probably a depressingly long time. However there’s a trick you can use: Save more tomorrow! See step 3.
3. How can I make my money grow? First commit to saving a small amount today to build up the habit, even if it’s just 1% of your income. Then commit to saving a percentage of every raise you get. Suppose on average your income goes up 4% each year. Use half of it (2%) to make your life better and save the other half (2%). Sometimes great things happen in life. You get a 10% raise. You switch jobs and double your income. You get a big bonus. Here’s the key: Always add a percentage of those gains into your savings account. Do this for a few years and your savings will skyrocket. Even if you start with saving just 1% per month, in just a few years that number can grow as high as 20%, with no conscious effort required. This is in effect, buying additional geese that lay golden eggs with the golden eggs from the previous geese.
I often say, if you do what everyone else does, you’ll get what everyone else gets, which isn’t much. What everyone else does is that they want everything today. They go and kill the goose (their savings) believing that the short term satisfactions are going to bring happiness to their lives. Only later do they realize that they have put themselves in a worse situation than they were before.
If you’re already saving money, that’s great. Continue to save money and squirrel away as much as “new” money as possible going forward from raises, bonuses, etc… You can’t miss what you don’t already have.
If you’re not saving, then I want you to make that commitment now. Commit to paying yourself first and saving something, anything, the next time you get paid. If nothing else, transfer 1% to a separate account and never touch it again, except when investing in something better.
You Are The Golden Goose
Do you think your most valuable asset is a possession? Your home or your car? No, none of these things are your most valuable asset.
The most valuable financial asset you own is not a possession, but your personal golden goose. Your ability to work and produce something valuable is the goose that lays golden eggs for you. The more ability you have, the more golden eggs you can earn. You are the golden goose.
Continue to educate yourself, build your farm of geese that lay golden eggs. Take action. Invest all your spare time into yourself. If you do one thing every day, to improve your golden goose, you will soon have all the golden eggs you need!
Be free. Nothing else is worth it.
Ready for more tips on how to achieve the free life? Check-out these articles from the blog archives below: