Dear Money & Crisis Reader,
Last week, we were discussing moneymaking strategies with Robert Kiyosaki, author of the #1 bestselling financial book of all time, Rich Dad Poor Dad.
Robert’s a smart guy. Obviously. You don’t get to be #1 without knowing a thing or two about a thing or two.
But I have to say, I wasn’t expecting the landslide of emails we received over the weekend wanting to know more about his strategies.
In particular, folks were curious about Robert’s “Pay Yourself First” strategy.
I’m going to do an easy-to-follow outline of this strategy in today’s issue of Money and Crisis. But if you want more of Robert’s income strategies, straight from the man himself, just CLICK HERE.
For a limited time only, Robert is giving readers access to 49 of his most coveted income secrets. All it takes is a couple of these secrets to generate $1,168, $2,551, and even $4,377 in safe and predictable cash flow week in, week out.
Pay Yourself First
If you tend to have little or no money left over at the end of the month this is the strategy for you.
Pay Yourself First is a proactive savings/investment strategy that puts your future and your wealth above all. Robert puts his own Rich Dad twist on the strategy, but we’ll go into more in a bit.
It should probably go without saying but Paying Yourself First doesn’t mean slipping a few $100 bills into your pocket on payday. Nobody ever got rich with a wad of cash in their pocket.
Think of it more like reverse budgeting, where you allocate money to your savings and investment goals BEFORE any other expenses.
For example, let’s say your household brings in $3,000 a month. And your savings goals are your retirement fund, an emergency fund, and your investments.
The first thing you do when you get paid every month is allocate $150 to your retirement fund, $150 to your emergency fund, and $200 to your investments.
Only then do you pay off other costs, such as rent, groceries, utility bills, and loan payments.
Now, I know what you’re thinking. This isn’t going to leave a lot of money for luxury spending. Well, Robert’s twist on the strategy creates a passive secondary income that can be used to buy whatever you want.
The “Rich Dad” Twist
The Rich Dad twist turns this simplestrategy into a monthly money spinner… and it has everything to do with the difference between capital gains and cash flow.
Capital gains are one-time profits you make on the sale of an investment.
For example, you buy five shares of a stock for a total of $100. Those shares go up in value to $150. You decide to sell your shares. The $50 profit you make from the sale of your shares is capital gains.
Cash flow, on the other hand, is an ongoing stream of income from an investment.
Let’s say you buy a stock that pays you a dividend every year. That dividend is cash flow. Or you loan money to a new start-up business. Each month the business pays you interest on your loan. Or you buy a house and rent it out. That monthly rent is cash flow.
The strategy behind capital gains is to buy and sell. But with cash flow, you want to buy and hold. Essentially, you own an asset, you keep it, and collect money off it at the same time.
“One of the beautiful things about the Rich Dad formula is that you do not need to acquire hundreds of thousands in savings,” says Robert. “Instead, you simply need to build up your monthly cash flow to be greater than your living expenses.
“For example, when my wife and I ‘retired’ in 1994, we did not have millions stashed aside. What we had was $10,000 in cash flow coming in every month from our investments, primarily real estate. The beauty was that our living expenses were only $3,000 per month. At that point we were free. The cash flow from our investments was more than paying for all of our living expenses.”
- Pay yourself first.
- Invest those funds in assets that increase your cash-flow.
- Reap the rewards.
Y’know, this is just one of the many income secrets Robert used to make his millions. For a limited time, he’s giving away 49 of his most coveted income secrets for retiring early and rich.
All the best,
Editor, Money & Crisis