One day, a young man eagerly told his mentor, “I’ve been saving faithfully. I gave my money to Braden, the shield maker, to use for his work. Every fourth month, he pays me rent for using my savings.”
The mentor smiled. “That’s a good start. And what do you do with the money Braden pays you?”
The young man replied, “I throw a big feast with sweet honey, fine drinks, and fancy cakes. I also bought myself a bright red robe, and soon I’ll save enough to buy a young donkey to ride.”
The mentor chuckled and said, “You are spending the children of your savings! How can you expect them to grow and work for you? First, grow a strong army of gold coins, and then you can enjoy many feasts and luxuries without worry or regret.”
Lesson 1: Save and Let Your Money Grow
The young man’s first step was smart—he saved his money and put it to work by lending it to Braden, who used it for his trade. In return, Braden paid him regularly, which made his savings grow.
But instead of reinvesting his earnings to build more wealth, the young man spent them on temporary pleasures. This slowed down his financial growth.
The key takeaway is this: Don’t spend your returns too soon. Let your money grow by reinvesting what you earn.
Think of your savings as seeds. If you plant them and let them grow into trees, those trees will bear fruit for years to come. But if you eat the seeds right away, you’ll never have the chance to enjoy the orchard they could become.
Lesson 2: The Power of Reinvesting
When you save money and invest it wisely, it grows. But when you reinvest the returns, your wealth grows even faster. This process, called compounding, can turn small amounts of money into significant wealth over time.
Here’s how it works:
- Imagine you save $1,000 and earn $100 in returns. Instead of spending the $100, you reinvest it.
- Now, your savings grow on $1,100 instead of just $1,000. Over time, this creates a snowball effect, making your wealth grow faster and bigger.
Lesson 3: Build a Financial “Army”
The mentor’s advice to build an “army of gold coins” is a simple way to think about financial independence. Your goal should be to grow your savings to a point where they can work for you, generating enough income to support your dreams.
Here’s how you can build your financial army:
- Save Consistently: Always set aside a portion of your income, no matter how small.
- Invest Wisely: Put your savings into things that can grow, like a business, real estate, or investments.
- Reinvest Your Earnings: Don’t spend your returns right away. Let them add to your savings to grow even more.
- Be Patient: Wealth-building takes time, but the results are worth the wait.
Once your financial army is strong enough, it will provide for you, allowing you to enjoy life without the fear of running out of money.
Lesson 4: Don’t Rush into Spending
It’s tempting to spend your money on fun and flashy things as soon as you start earning. While it’s important to enjoy life, spending too much too soon can slow down your long-term financial growth.
Instead, focus on growing your savings first. Once your financial foundation is solid, you’ll be able to enjoy luxuries without regret or fear of financial struggles.
The Takeaway: Grow Your Wealth Before Enjoying It
This story teaches a timeless lesson: saving is important, but what you do with your savings matters even more. If you spend your earnings too soon, you’ll lose the chance to build lasting wealth.
Instead, focus on growing your financial “tree.” Save regularly, invest wisely, and reinvest your earnings. Over time, your savings will grow strong enough to provide you with financial freedom and the ability to enjoy life’s pleasures without worry.
So, ask yourself: Are you spending the children of your savings, or are you letting them grow into a thriving army of wealth? Start today, and let your financial journey flourish.
