Pay Yourself First – Great Idea But What Does it Mean?
In Robert Kiyosaki’s Rich Dad Poor Dad books it’s not uncommon to see him using the phrase “Pay Yourself First”, this was taught to him by his Rich Dad as a means to begin investing. But what doe “Pay Yourself First” mean? Well think of how most people handle their finances. They receive a paycheck every two weeks, pay all their bills and maybe there is something left over. What do they do next? Few of them will save or invest the free cash; unfortunately most will find something to spend the money on maybe dining out or buying that new cool game or piece of electronics.
Worst case they will use the extra cash flow and take on some debt like a car payment etc. The idea with Pay Yourself First is that you first give yourself a chunk of your paycheck just like you would any other bill. That chunk maybe 10{3b63f2b93addb01cd0650b04902555609b90507e3f2ce2f684711c3a8631e3e2} or 20{3b63f2b93addb01cd0650b04902555609b90507e3f2ce2f684711c3a8631e3e2} goes into savings or investment. You are just as important as your creditors are you not? Then the rest of the funds should be added to a budget to pay your bills. If you do not have enough left over you need to carefully examine your budget and make cuts sufficient to pay your bills. This may mean paying only the minimum payments on your credit cards to make it all fit. If you find that after paying yourself your budget is to tight you must increase your income or lower your expenses.
Many people after trimming expenses find they still have an income problem. The answer to this is to train for a better job, take on additional work or a part-time job or start a small business, perhaps something as small as a website or blog with Google AdSense to bring in some additional money. Meanwhile as your trimming expenses and working on building additional income your still getting paid, saving for investment or emergencies that will either build long term wealth, or will keep you from adding any additional debt in case you find one of life’s emergencies headed your way. So remember, the next time you get paid to Pay Yourself First then use the balance of the funds to manage your day to day expenses. Fit those expenses in the balance or increase your income to suit the lifestyle you need to maintain.
