Pay Yourself : Rich Dad Poor Dad

After first getting paid, what is the first thing you do? What I used to do was immediately run and and buy myself something new, something cool. The issue with this is that it leaves you broke for the remainder of the time until your next pay day. This is a dangerous cycle.

What if an emergency comes up?

What about if there is something big that you really need? Will you be able to save up for it?

The Rich Dad solution is to "pay yourself first."

Honestly, this never made any sense to me. Pay myself? Didn't I just get paid? What this means is to SAVE YOUR MONEY before you ever buy anything. In the book Rich Dad Poor Dad the suggestion is to save 10 percent of your total income.

I disagree.

It is important that the first thing that you do when you get paid is to save and to invest, but it should be more than 10 percent. I am personally a huge fan of the 50-30-20 budget rule.

If you invest 10 percent, you are limited in you options. I prefer to take 10 percent and invest it safely, 5 percent for aggressive (high-risk/high-reward) investments, and I save (in an actually savings account) the remaining 5 percent for money in case of economic downturn or unemployment.

Hope that helps!