Even more than our education, our habits reflect our lives. Habits are very easy to develop and very hard to break, and once they’re developed, they control our behavior—sometimes in ways that we don’t even recognize. Often these bad habits lead to other bad habits. It’s a vicious cycle.
For instance, many people want to be in shape. In fact, we’re only a few weeks away from that time of year when people start making resolutions to go to the gym and get fit. Emboldened, they go sign up for a membership and begin working out. Soon they realize that working out is hard and that it hurts.
That’s when the bad habits they’ve developed over the years creep in. They start hitting the snooze button. “Just ten more minutes and then I’ll get up and go to the gym,” they say.
Then ten minutes turns into an hour. “I’m running late for work! I can’t go this morning, but I’ll go at lunch,” they say.
At lunch, a friend wants to go get hot wings. “I’ll skip just this once,” they say. And so on. Before long, they’ve canceled the gym membership, and they’re back to their old unhealthy ways.
You can’t afford not to take action when it comes to your finances. And as I write today’s letter, a colleague of mine is gearing up for the biggest interview of his life. He’s going to show you exactly how you can break your bad money habits at 1pm EST today. And has blueprint to follow is not nearly as difficult as sticking to your workout plan.
When It Comes to Money, Most People Have Bad Habits
Many people I talk to want to be rich. They even read my books and understand what it would take for them to reach their financial goals.
But they lack the discipline to become rich. They may come to a seminar and leave excited about, and committed to, building their asset column and financial education, only to have their bad financial habits derail them.
For instance, they may want to set aside money for investing every month, but then they see a sale on some shiny new object they’ve wanted for a while.
“I’ll start investing next month,” they say. “I need to get this now so that I’ll save money.” Then, when the next month rolls around, they realize that they’ve gone out to eat a little too much and that they won’t have any money left over after paying their bills.
“I have to pay my bills,” they reason. “I’ll start investing next month.” Then another month comes and they’re in the same predicament. “I should adjust my budget,” they think.
But then they remember their favorite TV show is on. “I’ll do it tomorrow.” Before long, they give up on their goal of investing and let their bad habits win.
Rich Dad said that the rich had a very simple way of breaking bad money-habits. “The poor pay themselves last, and that is why they’re poor,” he said. “But the rich pay themselves first, and that is why they’re rich.”
The Difference Between Rich Dad’s Budget and Yours
Rich dad’s budget was different than most people’s because he treated his asset column as an expense—and his most important expense. Every month, no matter what, he put money aside for his investments, even if he didn’t have enough money for his other bills. As a young man, I didn’t quite understand.
“Are you saying you don’t pay your bills?” I asked.
“Of course not,” said rich dad. “I firmly believe in paying my bills on time. I just pay myself first…before I even pay the government.”
“What if you don’t have enough money?” I asked.
“I still pay myself first,” said rich dad.
“But don’t they come after you?”
“Yes,” said rich dad. “That’s why I always find a way to pay.”
How Budgeting Motivates the Rich
For rich dad, paying himself first motivated him to work harder and smarter to make sure to pay his bills and creditors. He used the fear of not being able to pay his bills, sometimes a situation created by paying himself first, to motivate him to make more money.
He worked extra jobs, started companies, traded in the stock market—anything he could to make sure he met his obligations. After paying himself first, he used the pressure from creditors to form good money habits.
“If I’d paid myself last,” said rich dad. “I would have felt no pressure…but I’d also be broke.”
Kim and I put rich dad’s advice into practice early in our marriage. We found that, just as he had promised, we learned to get motivated to find creative ways to make money. In the process, we learned more about ourselves and how to make money out of thin air.
What Does it Take to Get Rich?
Anyone who says that money isn’t important obviously has not been without it for very long.
The year 1985 was the longest and hardest of my life. Kim and I were homeless; we were unemployed, had little-to-nothing left in our savings, our credit cards were maxed out, and we were living in an old, brown Toyota.
After three weeks of that, a friend found out about our financial situation and invited us to stay in a basement room. We stayed there for over nine months.
During those times, Kim and I often fought and argued. Fear, hunger, and uncertainty has a way of shortening our emotional fuse, and we usually end up fighting with the one we love the most. Yet, love held us together through those hard times.
Get a Job?
We kept our financial woes quiet for the most part, but when a friend or family member found out about our struggles, the first question they always asked was, “Why don’t you get a job?”
At first, we attempted to explain ourselves, but it didn’t do much good. To someone who values a job, it’s difficult to explain why you might not want one. We had a few odd jobs here and there, but those were only to keep us fed and gas in the tank.
At the time, the idea of a safe, secure paycheck was certainly tempting. But we didn’t want safety and security. We wanted to be completely independent in the financial aspect of our lives.
By 1989, we were millionaires.
By 1994, we were in a position to never work another day in our lives.
No Money, No Problem
I often hear people say, “It takes money to make money.” This is not true. For Kim and me to go from homeless in 1985 to millionaires in 1989, and then to independence, money-wise, in 1994, it didn’t take money. We had no money when we started, and we were deeply in debt.
It also didn’t take a formal education. I have a degree, and I can tell you that achieving independence financially had nothing to do with what I learned in college.
I didn’t find much demand for my skills in calculus, spherical trigonometry, chemistry, physics, French, and English literature in the real world.
What Does It Take to Get Rich?
I’m often asked, “If it doesn’t take money to make money and schools don’t teach you how to become independent, money-wise, then what does it take?”
My answer: It takes a dream, a lot of determination, a willingness to learn quickly, the ability to use your God-given assets properly, and to understand how money works and can work for you.
All of the qualities necessary for getting rich, start with financial education—a type of education that you can’t get in a traditional school.
My financial education started with my rich dad, my best friend’s dad, and continues today through books, seminars, learned lessons, and mentors. From all these sources, I learned about cash flow, debt, business and investing, taxes, and more—and how to use each to make myself rich.
If you want to be rich, I can’t stress the importance of starting your financial education today. Take some classes, read a book, attend a seminar, and find a great coach.
It’s the most important investment you can make.
Editor, Rich Dad Poor Dad Daily