Here are the two posts in case you missed it: Why You Need An Emergency Fund Right Now and The Emergency Fund: Tips on How to Build It.
Also, I've been stressing over our internet connection. It has been five days since the last day we had a connection. We've called PLDT twice already and still haven't seen any action. Hello, PLDT?
Anyway, last night, I was reading this very short e-book sent to me via email. It's called Managing Your Money, and it is written by Robert Kiyosaki. Yes, the Robert Kiyosaki who wrote Rich Dad, Poor Dad.
Image from store.richdad.com
Unsurprisingly, it contained an anecdote from the latter, and I'd like to share it with you because it reminded me so much about our discussion on emergency funds. (I don't think it's illegal to do so since this is just a mini-book that is shared freely over the internet.) Here it is:
I remember asking my rich dad about the habits of the rich. Instead of answering me outright, he wanted me to learn through example, as usual.
“When does your dad pay his bills?” rich dad asked.
“The first of the month,” I said.
“Does he have anything left over?” he asked.
“Very little,” I said.
“That’s the main reason he struggles,” said rich dad. “He has bad habits. Your dad pays everyone else first. He pays himself last, but only if he has anything left over.”
“Which he usually doesn’t,” I said. “But he has to pay his bills, doesn’t he? You’re saying he shouldn’t pay his bills?”
“Of course not,” said rich dad. “I firmly believe in paying my bills on time. I just pay myself first. Before I pay even the government.”
“But what happens if you don’t have enough money?” I asked. “What do you do then?”
“The same,” said rich dad. “I still pay myself first. Even if I’m short of money. My asset column is far more important to me than the government.”
“But,” I said. “Don’t they come after you?”
“Yes, if you don’t pay,” said rich dad. “Look, I did not say not to pay. I just said I pay myself first, even if I’m short of money.”
“But,” I replied. “How do you do that?”
“It’s not how. The question is ‘Why?’” rich dad said.
“Okay, why?”
“Motivation,” said rich dad. “Who do you think will complain louder if I don’t pay them—me, or my creditors?”
“Your creditors will definitely scream louder than you,” I said, responding to the obvious. “You wouldn’t say anything if you didn’t pay yourself.”
“So you see, after paying myself, the pressure to pay my taxes and the other creditors is so great that it forces me to seek other forms of income. The pressure to pay becomes my motivation. I’ve worked extra jobs, started other companies, traded in the stock market, anything just to make sure those guys don’t start yelling at me. That pressure made me work harder, forced me to think, and all in all, made me smarter and more active when it comes to money. If I had paid myself last, I would have felt no pressure, but I’d be broke.”
“So it is the fear of the government or other people you owe money to that motivates you?”
“That’s right,” said rich dad. “You see, government bill collectors are big bullies. So are bill collectors in general. Most people give into these bullies. They pay them and never pay themselves. You know the story of the 98-pound weakling who gets sand kicked in his face?”
I nodded. “I see that ad for weightlifting and bodybuilding lessons in the comic books all the time.”
“Well, most people let the bullies kick sand in their faces. I decided to use the fear of the bully to make me stronger. Others get weaker. Forcing myself to think about how to make extra money is like going to the gym and working out with weights. The more I work my mental money muscles out, the stronger I get. Now I’m not afraid of those bullies.”
I liked what rich dad was saying. “So if I pay myself first, I get financially stronger, mentally and fiscally.”
Rich dad nodded.
“And if I pay myself last, or not at all, I get weaker. So people like bosses, managers, tax collectors, bill collectors, and landlords push me around all my life—just because I don’t have good money habits.”
Rich dad nodded. “Just like the 98-pound weakling.”
I haven't read Rich Dad, Poor Dad yet, but now I'm interested. What are your insights on the excerpt above? I'd love to hear them!
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