First and foremost, I want to give credit for this philosophy to Robert Kiyosaki. Basically its a fundamental change in the way we should think about money. This single paradigm can determine your future wealth, its that simple. The formula is this... invest in yourself and your assets FIRST no matter what, and then pay off bills and expenses. Take a minute and think about this:
think:think:think:think:think:think:think:think:think:think:think:think:think:think:think:think:
Okay come back.
The way the average American uses his or her money is all flip flopped. The average person will use their weekly paycheck and use that money to first pay off debt, pay for rent, pay for gas, pay for food, pay for insurance, then if any money is left over, the average person will go to the mall and then buy a new pair of shoes or a new spring jacket. THEN after all of this, the average American will save whatever is left over for future use. This future use we will call "savings" and "assets".
An asset is fairly simple. Its something that you buy, purchase, put away, store away that creates returns. So an easy example would be a stock that pays a dividend (meaning each share you own, the company will give you a certain % of money in return), or a savings account that pays you 1% interest (worst option). Many believe a car is an asset, however this is wrong. With a car, you always loose value unless its a classic antique or something. Many believe electronics are assets. Im sorry but electronics are not assets, they are money pits.
SO back to this idea of investing in yourself and your assets first. From each paycheck, prioritize a certain % you will NO matter what set aside even in times of hardship. For example, say you have a weekly paycheck of $500. Make it a priority to invest 10%, so take $50 a week and open an ROTH IRA retirement account, or open an online broker account and buy stocks, buy precious metals, or stuff it in a sock and place it under your bed. Whatever it is, set aside money FIRST.
After investing and saving for YOURSELF, then use the other $450 and begin by paying off your rent, insurance, gas, car payments. If you start to do this, I believe you will slowly begin to see your life change. There will be times when you wont have enough to make a car payment, or fill up your gas tank, but then you will realize maybe you need to change your lifestyle to maintain your savings. Never change your savings plan to accommodate lifestyle habits! Perhaps you can learn to carpool, or take a bus, or ride a bike. Perhaps its time to sell that nicer car and downgrade to something with better gas mileage and reduce monthly payments. In the meantime your assets will grow at a steady pace and before you know it, your money will begin to work for you instead of the other way around.
Like the top of my page reads,
"It doesnt matter how much money you have, it matters how much you keep".
Let that quote sink in and really rattle around in your brain for a bit.
My hopes are that this post can change your life. That by simply reading this blog, this post, can change your spending habits. Take charge of your future and invest in yourself first.
