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First of all, I have finished reading the book, Rich Dad Poor Dad by Robert Kiyosaki. Here are some points that i had reinforce my mind on and i particularly had deeper understanding as to the sentence:

"I always Pay Myself first!"

If you have not read any books on such financial teachings, you might find this sentence weird. So, I'll start by explaining what this sentence actually means. In life, we are used to paying bills, taxes, shopping expenses and etc. But what we didn't notice is that we have been paying into others people's pocket. One example used in the book was Robert's analogy that an average American work from January to May (5 months out of 12) just to pay his income tax to the government. This shows that government is taking away more than a quarter of an individual's income through taxes.

And most people, after paying for their taxes, had to spend money paying bills and mortgage which eventually leaves them with very little to spare for themselves. If you need an example, just ask yourself, how often have you heard people saying that 'i do not have enough money to spend?' or 'I have not travel overseas for a very long time.?'

My definition of middle income group is people whom are earning higher than what average people are earning and normally has more money to spare after all the taxes and bills due to their higher wages. But in the end, we still hear these people commenting that i have to save 3 months to buy a Gucci.

In the end, i would say that a average person might have his income divided into 3 major payment like this:
Income and service (GST) taxes: 30%
Bills and mortgages : 60%
Personal savings (for whatever expense you want): 10%

Coming back to topic, how does the sentence "I always pay myself first" links to the case here? I would say that among the '3 major expenses', what we pay least is to ourselves! We work so hard for government, for bills and house loans and etc, leaving us with always very little money to 'pay' us! True or true? TRUE!

So, how do we "Always pay ourselves first'? Of cause, we couldn't cut the weightage for the taxes but we can always manipulate the bills section. In fact, most people are accustomed to always pay off their bills first but let's take a step back and think, does it hurt you if you don't pay the bills on time? NO! It'll be the companies that are worrying and what i suggest is to let them be. They'll send you another notice once you missed your payment period and by then, I would say that only then, You pay them.

This is the same theory as an company wanting to delay paying their creditors as much as possible and hope to receive from their debtors as soon as possible so as to increase their cash flow in the running of daily operations.

As individuals, we can also adopt this practice and in our scenario, we should use the whatever money we have from delaying the payment to 'pay for yourself' or in other words, buy an asset, (e.g. stock) and earn some income so as to pay off the creditors and still have partial of your money initially set aside to pay your creditors.

It makes no sense if you're delaying payment to your creditors just so that you feel happy holding money for a addition of 10 days and then paying out the set aside amount again. What you should be doing is, to use this working capital to earn some more money before paying your bills. You never know how much usage this money can make within this period of 10 days.

People can make $1000 into $2000 within 7 days through investing but I'm not going into the investing details here. What I'm trying to bring the point across is that we should always maximize the 'payment'' to ourselves and minimize/ delay the payment to others.

I know that my writing may not bring the best out of what i meant to say since I'm not a professional writer but if you still have trouble understanding what I've written above, just simply ask yourself, Would you choose to

1) Pay your bills with your income directly or
2) Delay paying your bills, use the money you initially wanted to pay your bills and do a short investment, and return with more money than just paying off your bills.

Before i end this post, I shall hereby declared that my rich dad poor dad book is up for lending! SMS me if you're interested!

I shall share my insights as to what happened on Friday's US market as well as Singapore's market in my next post. I'll also end this post with the same declaration to the Universe as i had started this post:

"I always PAY myself first!"