Page 69 - Benjamin Franklin\'s The Way to Wealth: A 52 brilliant ideas interpretation - PDFDrive.com
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30 SAVING THE DAY
For all that Franklin talked about working hard he was explicit about the fact that
hard work alone does not necessarily mean wealth. ‘A man may, if he knows not how
to save as he gets, keep his nose all his life to the grindstone, and die not worth a
groat at last.’
Learn to save your groats, and buy your nose a break from that grindstone.
DEFINING IDEA…
Blessed are the young, for they shall inherit the national debt.
~ HERBERT HOOVER, ON WHY YOU NEED TO PROTECT YOUR EARNINGS FROM
TAX
Savings often seem like a luxury that you simply can’t afford. It’s hard
enough to find the money to get by, let alone the money to put by. But
that’s a false economy because your regular outgoings are only part of the
story and sooner or later you’re going to be on the receiving end of a far
larger demand. Savings are also a way of taking a firm grip on outgoings
and showing them who’s boss. Holidays, for example, often swallow all
your available cash (but hey, you deserve it, right?) and stop you making
any further savings, but if you take it just a bit easy this year you could
put the money saved aside for next year’s holiday. That way you have a
year to profit from the rising interest rates and add that extra sum to your
holiday spend—and tax free if you’re smart about it.
Don’t underestimate the importance of ensuring savings are tax free, either.
If you’re in the UK and paying tax at the higher (40%) rate then £9,000
will earn £495 in interest over a year at a rate of 5.5%. The same sum in a
savings account paying the same rate would only earn £297 after tax. The
easiest way of (legally) dodging the tax is to use ISAs (Individual Savings
Accounts) which allow a limited sum to be stashed away every year without
incurring tax and without it even being declared on tax returns. Do be
careful if you intend to use that cash in the next year or so, however. The
ISAs offered by major UK banks are sometimes postal accounts which
means that while you could theoretically take out money whenever you
