One of the first things that caught Robert Kiyosaki’s attention at an early age, is how differently his 2 Dads paid their bills. His Poor dad paid everybody else first (his bills), mortgage, utilities etc and whatever little crumbs he had left over at the end of the month he would save (pay himself), and many months he didn’t have any money left over to save. this is the way that most (97%) of the population handles their bill paying.
Rich dad did the exact opposite. First thing he would do when he got paid was put 10% aside in to a savings account ( paying himself first), and then he would use what was left to pay all his bills.
Robert was astounded at this concept, he told Rich dad “Are you saying don’t pay your bills on time?”, Rich dad said, “No, Im not saying that at all, I believe in paying all your bills on time, But I think its most important to pay yourself first”.
Personal Story:
My wife's grandfather became a very wealthy real estate developer by using this one simple and easy concept of paying himself first. After the war, he moved from a small town in Oklahoma to California. He worked in a cannery with and would save 10% of his paycheck and sometimes 20, 30, 40 or even 50% of his paycheck. And little by little he accumulated enough to go in with his mother on a piece of property. His strategy was to purchase farmland and farm it to earn a living, until the city where he lived incorporated that land into their development path. At that time he would rip out the crops or trees and subdivide the land and either sell the lots or build homes on the lots and then sell the homes. Now, he became tremendously wealthy in this exact way and it all started by learning to Pay Himself First.
Robert then asked “ What if you don’t have any money left at the end of the month?” and Rich dad said, “Good Question, Who do you think would scream louder if they didn’t get paid, me or my creditors?” and Robert said, “Your creditors of course”. “Right” said Rich dad, “ and I don’t like to be screamed at by my creditors, and there was plenty of months, especially when I was pretty broke and just starting out where I didn’t have enough money to pay my creditors, even now there are months where my accountants think I’m crazy for paying myself first, when all they can see is that I don’t have enough money to get all my bills paid.
“So what do you do when you don’t have enough money at the end of the month?” asked Robert. “ Simple!”, Rich dad said. “On months I ran out of money before paying my bills, I would do what ever it takes to get them paid. I would work extra hours, Ive mowed lawns, washed cars, thought of a way to make a little extra in my business, I’ve even started another business, basically what ever it takes!”
This is how Rich dad got started, saving little by little and then he had enough to buy his first small investment property and then another and another, very simple concept and very powerful.
