Pay Yourself First

Continuing with the Rich Dad Poor Dad: What the Rich Teach Their Kids About Money-That the Poor and the Middle Class Do Not!
theme - another topic that Kiyosaki feels strongly about is the idea “Pay Yourself First”. He may not have been the first to think of this - and cites The Richest Man in Babylon: Now Revised and Updated for the 21st Century as possibly the first book to put this idea in print - but he rightly gives is prominence, as does my current favourite Prosperity Consciousness: How to Tap Your Unlimited Wealth.

The idea is straight forward enough and a quick exercise will prove its worth:

1. Think of all the money you earned last year (what did you declare as ‘income’ on your tax return?)

2. Divide that number by 10

3. Imagine how much better off you would be if you managed to keep this amount for yourself each year.

Sound simple, but how do you do it? (Of course, you might already be doing it, in which case Congratulations! Now please share your secret with others using the comment box below....)

Well, there are probably various methods, but each one involves planning and having purpose. The number you calculated above sounds great, but what would you do with it if you had to spend it today? Not as a down-payment or to pay off part of the mortgage, but if you really had to spend it. Could you? Would you know what to do?

OK, we can all hit the shops and randomly spend money on whatever we see, but that doesn’t inspire us to keep the money in the first place: “I’m going to save it so I can visit the mall and spend it,” isn’t going to inspire you to set aside money each payday.

So what will?

Have a think about that question - what would inspire you to save the money? See if you can come up with a list.

We’ll talk more on this topic next time