At the age of twenty-eight, I filed for bankruptcy.

The upside to bankruptcy is that it gives you time and space to reflect. As a young entrepreneur, I had learned how to set goals, drive revenue and get everyone moving in the same direction. What I didn’t like or respect was the discipline of money management.

At this most critical time in my life when I was looking for a new way forward, I remembered a little paperback I had read ten years earlier: The Richest Man in Babylon was written by George S. Clason in 1926–almost 100 years ago.

Clason’s words filled my heart with the hopes and dreams I had lost along the way. Using short stories and parables, set in babylonyian times, he shares what he calls the “Golden Rules”, or “Laws”, that govern the creation and management of all wealth. Classon made it clear that no matter how challenging your circumstances might be—these principles work: “Like the law of gravity the laws of money are universal and unchanging”.

My wife and I embraced this new financial way of life together over thirty years ago. These principles have acted as a financial road map—a compass—in good times and bad.

The Six Proven Principles I summarize below are my contemporary attempt at communicating the same “Golden Rules” we discovered years ago. As you read them I offer only one caution: Do not be fooled by their simplicity—truth is always simple.

Principle #1 – Save

Is the first and most important of the six proven principles. It is the foundation that the others are built upon. If you get this rule right your confidence and enthusiasm will grow with your bank balance—and the rest will fall into place.

The day you start saving 10% of all you earn is a turning of the tide in your financial life, forever. By doing this, you’re putting yourself first, protecting your financial future from the endless demands, pressure and purchase decisions of everyday life.

In the beginning you will be tempted to look at your 10% account as a fallback or emergency fund, especially when money is tight. Don’t. Think of your 10% account as a “Self Managed Retirement Savings Plan”, or “SMRSP”, where your savings are invested and compound for the future.

Saving 10% of all you earn, right off the top, and living on the rest, is the best way of defending yourself from yourself.

Pro Tip: To keep yourself from being tempted to use the funds, consider transferring your 10% savings immediately into a separate savings account you cannot easily access, or even go so far as to transfer it into another bank that can’t be accessed with a debit card.

Principle #2 – Control

Controlling your expenses today is a short-term sacrifice you can make for a better tomorrow.

If you save 10% of all you earn and force yourself to live on the balance, you may experience an uncomfortable lifestyle adjustment. You will be moving from a from a mindset of ‘I want it now’ to one of impulse control and delayed gratification, which can be uncomfortable at first.

But consider the peace of mind you’ll have when you decide to take charge of your financial life and you see your savings grow. I promise you it’s worth it.

When you look at controlling expenses, examine your ‘wants’ and ‘needs’ closely to see where you should be spending your money. Some needs are more obvious than others. You need a place to live, clothes to wear, and healthy food to eat—these are the basics required for survival.

Your needs could extend to include things like insurance, health care, transportation and debt repayment. And of course your savings. While saving 10% of your income may feel like a ‘want’ it should be at the top of your list of “needs”. If you get this rule right today, tomorrow will take care of itself.

And then there are your ‘wants’.

It is important to be honest with yourself here. This is an area where we can talk ourselves into almost anything. Your “wants” include eating out, concert tickets, vacations, and that new ‘it’ bag or must-have pair of shoes. ‘Wants’ can also extend to upgrades on things you actually need. You need transportation to work, but you don’t need a brand new car or the monthly payments that come with it.

Embrace the idea of short-term sacrifice for long-term gain. Remember that less is ultimately more, that delaying gratification of a desire today can pay huge dividends tomorrow.

Pro Tip: Creating wealth is a long game. There are no shortcuts. The sooner you start the better. Saving 10% of all you earn, and living on the rest, won’t make a big difference in the short-term—but it will radically transform your financial future.

To make the adjustment of controlling expenses easier, visualize a new and better future filled with options and opportunities, free from the bondage of debt. Make it a point to recognize and give thanks for the things you have, instead of focusing on the things you don’t.

Principle #3 – Multiply

Money never sleeps. It’s a tireless laborer, working twenty-four hours a day, seven days a week.

At a rate of 7% per year, a conservative long-term rate of return in the stock market, your money doubles every ten years. Compounding investment returns is the most awesome force of financial nature there is. Those who understand it, earn it. Those who don’t, pay it.

Let me give you an example. If you earn $60,000 a year and save 10%, or $500 a month for a year, you’ll end up with $6,000. If you are financially intelligent and continue to save the same amount for the next 10 years, you’ll have saved $60,000.

BUT, because your dollars have been compounding at 7% annually, you now have $85,000. That’s $25,000 MORE than you actually invested.

Successful investing is a long game. So the sooner you start the better it gets.

After twenty years, the $120,000 you saved has grown to over $250,000–more than DOUBLE your savings.

After thirty years, the $180,000 you saved will have grown to $590,000

And after forty years, the $240,000 you saved will have grown to over $1.2 million dollars.

When it comes to compounding, time is your friend So, the best time to start saving 10% of all you earn—is now.

Pro Tip: Compounding is the least appreciated, most awesome force of financial nature there is. It has been called the “eighth wonder of the world”. Everyone talks about it—few really understand it. I know I didn’t. It took me more than a decade of investing for the importance of compounding to really sink in. TRUST ME—IT WORKS!

Principle #4 – Protect

There are very few things I hate more in life than being taken advantage of.

In 2005, I invested in a large condominium project. I was introduced to this opportunity by a business associate who was helping the developer, a retired professional athlete, raise money. My first meeting with the developer was over lunch with one of his famous friends, who was also his largest partner. I soon discovered that most of the investors were professional athletes.

A few years later, when the project went into receivership, it was discovered that this affable, charismatic real estate developer was actually a fraudster who had been stealing money from the company. He had been flying around in private jets with friends and former teammates while defrauding investors on a grand scale.

In retrospect, my decision to invest in this project was not made from a rational point of view. I knew nothing about the true state of the financial affairs of the company and nothing about the development business. I put blind trust in an inexperienced retired athlete running a privately owned development company.

After the smoke had cleared, I looked closer and asked myself why I had gotten involved and allowed myself to be taken advantage of. The short answer is pride. I was blinded by my desire to be a part of something “special” with a bunch of famous athletes.

I share this story to illustrate the importance of Proven Principe #4 – Protect. Do your research and protect your investments, and your future, from con artists and bad financial decisions.

Many investors have lost everything by making poor investment choices, expecting huge returns with little risks. But it doesn’t work that way; risk and reward are inseparably linked. If something sounds too good to be true, it usually is.

Pro Tip: Don’t try to ‘game’ the market. Many investors try to time the market, waiting until stocks are at a low price and then selling them quickly once they go up. Sometimes this works, but there can be huge risks and potential losses involved. Fear and greed can drive you to make emotional decisions in the heat of the moment, rather than logical ones. Successful investing is a marathon, not a sprint.

Principle #5 – Own

Homeownership is the cornerstone of most people’s retirement savings plan. Owning your home has two features that make it a unique and powerful investment. The first is pride of ownership. The second is leverage. With a relatively small down payment, you can ‘lever’ the bank’s money to own a large asset that will go up in value over time.

Thirty years ago, we bought our first home, a townhouse, for $125,000 with a $12,500 (10%) down payment. Out of interest, I went online recently to see what a townhome in our old complex sells for today.

Thirty years later, the exact same type of unit we bought for $125,000 is selling for $560,000. That’s an average annual return of 13.5%.

Owning a home is one of the best long-term investments you can make. Not only does it protect you against inflation, it’s also a form of forced savings.

Buying a home is a personal decision and may not be realistic for everyone. If you have to move frequently, or live and work in an area where home prices are quickly becoming unaffordable, it may not be the best decision for you. But don’t discount it. If you can see yourself living there for 10 years (a safe holding period), it could be an excellent financial decision.

Pro Tip: If you have to, get creative when buying real estate. Consider partnering with siblings or parents on a home with in-law accommodations. Or purchase a home with income potential, such as a basement suite or an over-garage apartment. Not only can this help you acquire a larger asset than you could potentially afford on your own, the monthly rental income will help offset your own mortgage payments.

“Owning your own home is safer than trusting someone else to manage your money.” -David Ash

Principle #6 – Increase

Working hard is admirable, rewarding and necessary. Particularly when you’re starting out in life. However, working smart is what counts the most when trying to get ahead in life. Earning more is always better than working more.

If you are not currently in your dream job, do not be discouraged or distracted by the short-sighted, negative people around you. No matter what you do for a living, always go the extra mile. Look at your work as a necessary next step, a transition to bigger and better things.

Raagini and his wife Botum, or Ra and Bo as I call them, exemplify this principle perfectly. They met in a refugee camp on the Thai side of the Cambodian border, before eventually being granted asylum and moving to Canada as penniless refugees. They settled in a small town. Bo found a minimum wage job at a coffee shop, where she stayed for 25 years. Ra secured full-time employment on the assembly line at a local factory and took a part-time job in the kitchen of a Vietnamese restaurant. He kept both jobs for 25 years.

I met Ra and Bo for the first time as tenants of a commercial property we own. They were in the process of buying a business from one of our tenants. I don’t meet most applicants; we pay property managers well to handle these negotiations. However, when I received their offer and heard their story, I had to meet them.

What I found so exceptional about Ra and Bo’s offer was the financial statement attached to it. They had $250,000 in a savings account and owned a home with $300,000 in equity.

Neither Ra nor Bo have a strong command of the English language, or much in the way of formal education. They did the best they could with what they had. Ra increased his ability to earn by taking a part-time job in a restaurant. They lived well within their means and saved as much as they could to buy a house, and then a small business that employs their whole family–their dream come-true.

Pro tip: Don’t be discouraged by the short-sighted, negative people around you. Instead, be enthusiastic. Always go the extra mile, in whatever you do. It gives you a huge edge. And above all, never stop learning and exploring new ideas.

You’ll be surprised by the number of opportunities that come your way, and the doors that open for you when you step out of your comfort zone.

When my wife and I embraced these principles thirty years ago, we had no idea how they would change our lives. Our hope is that these Six Proven Principles for Financial Freedom shared in Simple Wealth will change your lives as well.