Concept
Insure a future income
Insure a future income is Clason's sixth cure: set aside, while you are earning, the means to live when you can no longer work, and to protect your family if something happens to you, so that old age and bad luck do not arrive empty-handed.
Arkad's sixth lesson in Babylon looks past the savings purse to the years when the purse can no longer be refilled. Every working life ends, sometimes earlier than planned, and the income that paid for everything stops with it. Clason's Babylonians provide for this by putting aside small sums that grow, buying property that will pay rent, or lending carefully at interest; he also looks forward to a time when people could pool such risks, which is the idea behind insurance. The modern translation has three parts. The first is a retirement stream: a pension scheme, regular investing, or both, started early because time does most of the work. The second is protection for dependants: life and disability cover sized to the years they would need help, not to a salesman's target. The third is an emergency reserve so that a short shock does not raid the long-term money. None of this is exciting, and that is the point: it is the part of a plan that is easiest to postpone and most expensive to have skipped.
A real-life example
Ayşe, an accountant in Bursa with two children, has savings but no plan for the day her income stops. She joins her employer's pension scheme at the contribution that gets the full matching, takes out term life cover equal to several years of her salary, and keeps three months of expenses in a separate account. The whole set-up takes one afternoon and a modest monthly amount.
How to use it
- 1Join a pension or regular investment plan now, at least at the level your employer matches.
- 2If others depend on your income, size life and disability cover to the years they would need support.
- 3Keep an emergency reserve so that short shocks never touch the long-term money.