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At age 3, success is not peeing in your pants.
At age 16, success is “gettin’ a little”.
At age 25, success is graduation and a wedding.
At age 35, success is about career and family.
At age 55, success is about graduations and weddings.
At age 70, success is “gettin’ a little”.
At age 90, success is not peeing in your pants.
Note: This is the first post of 14 consecutive posts from 2nd to 15th of April about how to get rich. Check back daily or subscribe to the RSS feed
There probably isn’t a person in the world that does not want to be financially free. The idea that one day you have enough money to do whatever you want thrills everyone from children to grown ups.
But as we all know - some of us make it rich and some of as don’t.
The laws of success are universal and by following them carefully it is possible for anyone to get rich.
Today I am going to talk about the most important rule on getting rich:
This is the single most important and also most overlooked principle on how to get rich. The concept of “pay yourself first” is so easy that even a 3 year old can understand it but few of us are actually using it.Most people think that getting rich can’t be as simple as paying themselves first and tend to skip this step.
BIG MISTAKE! Not following this principle automatically reduces your chances of getting(and staying) rich by 90%. In fact I would go as far as to say that if you are not willing to start following this principle there is no point in reading this post any further - you will not get rich. Go back to work!
What does it mean “pay yourself first”?
Each and every time you get paid, immediately take a portion of your money and set it aside - you can not spend this money. This is the money that is going to make you rich. You can simply save this money on your bank account or better yet - invest it wisely.
This money is going to generate interest and grow your investments. The compounding interest from your money will eventually be more than the money that you have set aside. Albert Einstein didn’t say “The most powerful force in the universe is compound interest” without a reason.
Remember: It is important that immediately after getting paid you should put aside an amount of money that you have predetermined. It is of the utmost importance that you do this before paying any bills, shopping or spending some of the money on something else. Whenever people decide to start saving money they will usually pay for all their bills first and then live as frugal as they can only to discover that they have spent all their money and there is nothing to set aside. It doesn’t work this way!
The natural law of money says that our spending habits will expand until we spend everything available. For example if you have 1000 dollars until the end of the month you will spend it all by exactly the end of the month. If you put aside 500 dollars from your paycheck immediately after receiving it you will have only 500 dollars left until the end of the month but this will almost always be enough. In fact depending on the amount of money you set aside you might not feel any difference. The only difference will be that in the end of the month you have some money set aside that otherwise wouldn’t be there.
By paying yourself first immediately after getting your paycheck you will make sure that you will stick to your plan of collecting money - Always sticking to the plan is the best way of realizing your goals and getting rich.
The government also uses the pay yourself first principle in order to secure the money that they have already budgeted for.
Have you ever thought why does the government take taxes from your paycheck before you get paid?
They are simply making sure that they will get their share of the money. If you would have to pay your taxes in full at the end of the month with the money you have left from your paycheck there would be awfully lot of people who would not be able to pay. If the government uses the pay yourself first principle why shouldn’t you?
The easiest way to start paying yourself first is to open a separate account where you can deposit your predetermined amount of money from your paychecks. It is also a good idea to make sure that it is not easy to spend this money.
If you are using online banking it might be possible to set it up so that the transfer to another account is made automatically after receiving the paycheck. If you can do this it is highly recommended. For example my online bank is set up to transfer a predetermined amount of money every month to an account with a brokerage firm. It saves me the hassle of doing it myself and ensures that I follow the pay yourself first principle of getting rich.
Always remember that part of your money belongs to yourself
If you spend all your money by the end of the month it means that all of it belongs to someone else. What’s the point of working for money when it does not belong to you?
The reason that you are already not rich is probably because you do not follow this principle. You might know it, but that’s not enough. In order for it to work you have to use it!
Check back tomorrow for the second most important principle of getting rich.
A young man wanted to know how to be successful.
He was sent to a wiseman who made him promise to follow his instructions very carefully.
He agreed and the wiseman took him to a river. The wiseman asked him to kneel down in the water and submerge his head. Once under the water, the wiseman grabbed his head so he couldn’t come up for a breath. After the young man failed and fought for a minute, the wiseman released him, threw him up on the bank, and started walking away.
“You crazy old man!! How did THAT teach me how to be successful?!”
The wiseman turned and said,
“You will be successful if you want something as bad as you wanted that breath of air”
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