Pay Yourself First

I first came across the term "PAY YOURSELF FIRST" in Robert T Kiyosaki's book "Rich Dad Poor Dad" and I thought to myself "How can I pay myself when I am working for others?" Then again I learned something from Rich Dad Poor Dad...... that is "Don't work for money, let money work for you". Another simple but mind boggling statement. What Robert Kiyosaki meant by "Pay Yourself First" is actually self-discipline. The power of self-discipline!! If you cannot get control of yourself, do not try to get rich......if you are on the quest to learn to invest, you are indeed trying to get rich, so there, listen to the financial guru. It make no sense to invest, make money and blow it. It is the lack of self-discipline that causes most lottery winners to go broke soon after winning millions - people like to say this "easy come easy go" and its true because what the lottery winner is lacking is "self-discipline". You see, it is the lack of self-discipline that causes people who get a raise to immediately go out and buy a new car or take a cruise.

The Richest Man in Babylon, by George Classen, is where the statement "Pay Yourself First" comes from. Millions of copies have been sold but while millions of people freely repeat that powerful statement, few follow the advice.
The 21 Success Secrets of Self-Made Millionaire by Brian Tracy mentioned "Pay Yourself First" in his Success Secret #8 and I share with you what Brian Tracy has to say ......

Resolve today that you are going to save and invest at least 10% of your income throughout your working life. Take 10% of your income off the top of your paycheck and put it into a special account for financial accumulation. If you save just RM100 per month throughout your working lifetime and you invest that money in an average mutual fund that grows at 10% per annum, you will be worth more than RM1 million by the time you retire. This means that anyone, earning minimum wage, if starts early enough and saves long enough, can become a millionaire over the course of his or her working lifetime.

(If you are in your 20s, this is the best time to start saving but if you are already into your 40s, its still the right time to start saving...... If you want to know how much you are worth, key in "What will my savings be worth?" on any search engine and it will tell you how much you are worth when you are in your 40s, 50s, 60s or even 70s. The point here is its never too late to change your mindset and start saving. By 40 you will probably be earning more and if you heed Warren Buffet's advice and not purchasing brand you will probably have more to put aside that those who are in their 20s.)

Developing the lifelong habit of saving and investing your money is not easy. It requires tremendous determination and willpower. You have to set it as a goal, write it down, make a plan and work on it all the time. But once this practice locks in and becomes automatic, your financial success is virtually assured.

(If you have read my first posting and if you are serious about getting rich, you would have by now calculated your worth, the least would be that you will have a mental plan of what you want, so let me nudge you a little....get on with it, put your thoughts and feelings into action....... write down your goals and set a plan and put it into action. Remember, if you fail to plan, you plan to fail.)

Practice frugality, frugality, frugality in all things. Be very careful with every penny. Question every expenditure. Delay or defer every important buying decision for at least a week, if not a month. The longer you put off making a buying decision, the better your decision will be and the better price you will get at that time.

(I like this simple statement above, thank you Brian Tracy! It works for me. If it works for me, it can work for you too. You will be surprise how many things you don't really need to buy. Majority of people, includes you and I, BUY ON IMPULSE.)

A major reason that people retire poor is because of impulse buying. They see something they like and they buy it with very little thought. They become victims of what is called “Parkinson’s Law”, which says that “expenses rise to meet income”. This means that no matter how much you earn, you tend to spend that much and a little bit more besides. You never get ahead and you never get out of debt.

(There you are..........resolve not to be a victim of "Parkinson's Law".......resolve to retire rich......)

If you cannot save 10% of your income, start by saving 1%. Put it away at the beginning of each month, even before you begin paying down your debts. Live on the other 99 percent of your income. As you become comfortable living on 99%, raise your savings level to 2% of your income, then 3% and 4% and so on.

(IMPORTANT: Once you receive your salary, the first person you pay is yourself!!! Transfer that all important 10% of your salary to your Investment Account -- DO NOT PROCRASTINATE!!)

Within one year, you will be saving 10% and maybe even 15% or 20% of your income and living comfortably on the balance. At the same time, your savings and investment account will start to grow. You will become more careful about your expenditures, and your debts will begin to be paid off. Within a year or two, your entire financial life will be under your control and you will be on your way to becoming a self-made millionaire. This process has worked for everyone who has ever tried it. Try it and see for yourself.

(CONGRATULATIONS......if you have come to this point, I know you are serious about getting rich and taking control of your life --- Take charge!!)

“A part of all you earn is yours to keep,

and if you cannot save money, the seeds of greatness are not in you.”

W. CLEMENT STONE

Put Your Thoughts and Feelings into ACTION

Open a special account for financial accumulation today. Make a deposit in this account, no matter how small. Then, look for every opportunity to add to this account. Begin to study money so that you understand how to make it grow. Read books and magazines by experts on the subject. Never stop saving, learning, and growing until you become financially independent.

(Remember that this account is not meant as a spare resource where you can withdraw during time of emergency. You must have another spare cash resource as I have mentioned in my earlier posting. If you are serious about getting rich you will "forget" about this account, put this savings into a trust fund that can churn you a minimum of 10 to 12 percent of earnings, compound this over 30 years...... you will retire rich!!!)