How To Get Rich? Pay Yourself First!

(70/30 Rule)

Most everyone we know spends what they receive, whether it is a job, small business, or licensed practice. Ancient Babylon is known as one of the wealthiest civilizations in the history of mankind. Why? People from ancient Babylon were known to pay themselves first. This means that as soon as they received their pay, they would pay themselves first before paying their bills. At least 10 percent was devoted to church/charitable missions, 10 percent was devoted to their savings, and 10 percent to investments/business. This is known as the "70/30 Rule."

People today do not pay themselves first. This has become a forgotten financial principle that the Jewish culture practices to this day and people wonder why the Jewish culture is so rich. They might be considered "greedy" in many ways from those outside of their communities, but they are smart when it comes to finance. I was guilty of not paying myself first for most of my life. In fact, when I was 18 years of age I devoted most of every paycheck to building my business. When my one-man-bandwagon went defunct, so did my personal finances. I hardly devoted any of my earnings to my church and I did not save anything. Everything else went to my monthly bills. I set myself up for failure.

Today, the rules are no different. When we follow the "pay ourself first" habit we might notice something real quick. We are not paying "ourselves" anything. When we devote any given percentage of our income to the three different categories I mentioned above, none of the monies technically result in our own immediate benefit. Business requires that we service others, church or charity requires that we service others, and putting some aside in savings services others - whomever we choose to leave it with after we leave this earth. When we save and if we have any sense of self-control and discipline about ourselves and respect for money, those funds are out of our hands forever.

If you have never heard of the story of the late Paul J. Meyer (1928-2009), you are in for a real treat and a good illustration of my point. Mr. Meyer was known as the "father of the motivational industry" after he founded Success Motivation International, Inc. in 1960. Near the end of this life, Mr. Meyer had a single goal and that goal was to die broke after having earned many millions over the length of his career. How did he plan to accomplish this? He hired two accountants with the primary job of giving his money away to worthy charitable causes. The problem he ran into real fast was that for every dollar he gave away he would generate a multiple of this through his business. Before long, he quickly began receiving more cash-flow from his business than he ever had in the previous years of his life whereas he passed away as a rich man with a net worth of $2.5 billion. Moral of this real life story? Pay yourself first!

Pay Yourself First