Evergreen Rule of Wealth Building Rule 1: Pay Yourself First
This is one of the greatest lessons, which has changed the lives of many and mine too. When I sought the advice of my very rich and wealthy friends, almost everyone advised me to keep aside the money for yourself first. The language from these wise and experienced persons was different but the message was same.
Earlier I used to pay everyone first such as vendors, salaries, miscellaneous bills and if something was left, I would save a little for the next and then take something home. Though it was difficult but when I changed to “Pay Yourself First:, things changes miraculously.
Nowhere, there is a message for you that you should not pay others or underpay them. On the contrary, there is a message to the Universe that this is your monthly personal need and for the rest there are already bills on your table. The law of attraction will get activated to ensure that both the needs for money are met.
In other words, the money earned or the inflow of money increases!
Still not convinced? Irrespective of the country you live in – USA, England, India, Russia, there is a rule which lets the person paying you to deduct a percentage and deposit it in government treasury. It is called TDS (Tax Deducted at Source). This is means that it is perfectly legal and ethical to pay yourself first.
The implication of this rule is that we cannot accumulate wealth if we do not save what we earned. Wealthy and Rich individuals pay themselves first whereas poor people do not.
Begin by keeping aside 10% of your total monthly money receipts. Before you start paying others or start spending the money you earn, you need to pay yourself first.
Evergreen Rule of Wealth Building Rule 2: Make your money earn money.
Almost everyone has heard “Rich get richer, poor get poorer”
Certainly one can earn money by parking it in Savings Account or Fixed Deposit in Bank or in some safe financial instruments which yield income at fixed rate of interest. However there is a deeper lesson in it.
You should also invest your saved money to ensure that there is a stream of a steady and safe income by taking advantage of compounding interest. The younger you start better would it be – since time is your biggest ally. The money you get from the interest earns interest and this is how you multiply your money over a period of time.
This lesson is about investing our money and letting it work for us.
Evergreen Rule of Wealth Building Rule 3: Make others work for you
It means employ people or find people to work for you who can work better than you or more efficiently than you. Of course, this is investment of money to let you earn money but there is a much deeper meaning to it.
You can never have enough time do everything yourself. Neither can you be efficient and master at doing everything yourself. So employ or hire the best talent which your money can get. While you continue to work at what you are trained for and are skilled at – which I presume is better than most and let the work done by others for a price complement your endeavor.
This will let you increase your inputs by many times over, compared to what you would have managed by doing it all by yourself. With more going in the execution of your business idea in the same amount of time naturally the output will be greater too.
Following this rule shall let you to do more of wealth building.
Evergreen Rule of Wealth Building Rule 4: Live within your means
Budget all your expenses; keep aside for unexpected or sudden expenses too and all this should be your confirmed regular income. This way controlling your expenses will let you save regularly and keep you away from borrowing when you go in for a big ticket item. Paying from your savings for buying your house or car ( even partially) will let you save the money which otherwise would have gone towards the payment of interest.
Many people are in the habit of living much beyond their means – leave alone equating their monetary earnings with the expenses. Thanks to the plastic money, credit cards, easy loans, EMI etc. This leaves them with no savings or very limited savings. This habit will take away from them the ability to follow rule numbers 2 and 3 of Evergreen Rule of Wealth Building.
The compulsive habit of spending keeps increasing your requirements of money every month and it becomes very difficult to control. . For example, if you get a $2,000 – $3,000 raise, it would be very wise to invest it as per the rule numbers 2 and 3 but if the habits of shopping and aspiration for higher standard of living are not checked the process of wealth building will suffer badly.
Keep in mind that increased income does not necessarily equal increased wealth. Most people who flaunt their material possessions but actually have a low net worth because of their higher rate of spending.
Follow these Evergreen Rules of Wealth Building and improve your life style by raising your true standards of living.