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earn an additional $90,000. Let’s say you want to buy a car for $40,000. If you can’t put an extra
$40,000 into savings, you don’t buy the car. Either buy a cheaper car, make do with what you have
right now, or go out and make more money. The key is that you don’t raise your lifestyle until you’ve
earned the right to raise it by putting the same amount into savings. If you do raise your savings by
$40,000, you know you’ve earned the right to raise your lifestyle by that same amount.

The 50/50 Law will get you rich very quickly. It was the core of billionaire Sir John Marks
Templeton’s strategy for building wealth.

Don’t tell Me You Can’t Do It!

Most people wait to start saving until they have some extra money lying around—a comfortable
surplus. But it doesn’t work like that. You have to start saving and investing for the future now! And
the more you invest, the sooner you will reach financial independence. Sir John Marks Templeton
started out working for $150 a week as a stockbroker. He and his wife, Judith Folk, decided to invest
50% of their income in the stock market while still making tithing a priority. That left the two of
them only 40% of his income to live on. But today, John Templeton is a billionaire! He has kept the
practice up his whole life and now gives away $10 for every dollar he spends to individuals and
organizations that support spiritual growth.

Who Wants to Be a Millionaire?

According to government figures, in 1980 there were 1.5 million millionaires in the United States. By
2000 there were 7 million. The number is expected to grow to approximately 50 million by the year
2020. It has been estimated that someone in America becomes a millionaire every 4 minutes. With a
little planning, self-discipline, and effort, one of these millionaires can be you.

Millionaire Doesn’t Mean “Celebrity”

Although you might think—judging from Donald Trump, Britney Spears, and Oprah Winfrey—that
most millionaires are celebrities, the truth is more than 99% of millionaires are hardworking,
methodical savers and investors.

These folks typically make their fortune in one of three ways: From entrepreneurship, which
accounts for 75% of all the millionaires in the United States; as an executive at a major corporation,
about 10% of millionaires; or as a professional practitioner (doctor, lawyer, dentist, certified public
accountant, architect). Additionally, about 5% become millionaires through sales and sales
consulting.

Indeed, most of U.S. millionaires are regular folks who worked hard, lived within their budgets,
saved 10% to 20% of all their income, and invested it back into their businesses, real estate, and the
stock market. They are the people who own the dry cleaning business, the car dealership, the
restaurant chain, the bread company, the jewelry store, the cattle ranch, the trucking company, and the
plumbing supply store.

However, people from any walk of life can become millionaires if they learn the discipline of

saving and investing and start early enough. You no doubt read or heard about Oseola McCarty of
Hattiesburg, Mississippi, who had to drop out of school in the sixth grade to take care of her family,
and spent some 75 years of her life washing and ironing other people’s clothes. She lived a frugal life
and saved what she could from the little money she made. In 1995, she donated $150,000, the bulk of
her $250,000 life savings, to the University of Southern Mississippi to provide scholarships for
needy students. And here’s the interesting part: Had Oseola invested her savings, which is estimated
to have been about $50,000 in 1965, in an S&P 500 index fund, which earns on average 10.5% a
year, her money would have grown to not $250,000, but $999,628—virtually a million dollars, four
times as much.57

How to Become an “Automatic Millionaire”

The simplest way to implement the pay yourself first plan is to have a plan that is totally
“automatic”—that is, set up so a percentage of your paycheck is automatically deducted and invested
as you direct.

Financial planners will tell you, from their extensive experience with hundreds of clients, that very
few—if any—follow through with a plan to pay themselves first, if it is not automatic. If you’re an
employee, check with your company to see if they have self-directed retirement accounts such as
401(k) plans.

You can arrange for the company to automatically deduct your contribution to the plan from your
paycheck. If it’s deducted before you receive your check, you’ll never miss it. More important, you
won’t have to think about your investments—you won’t have to exercise self-discipline. It doesn’t
depend on your mood swings, household emergencies, or anything else. You make the commitment
once and it’s a done deal. Another advantage of these kinds of plans is that they are free of most taxes
until you withdraw the money. So instead of having 70 cents working for you, you have an entire
dollar working for you—compounding year after year.

Some companies will even match a portion of your contribution. If you work for such a company,
get on board now! Check with the employee benefits office of your company and find out how to sign
up. When you do, make sure to make the largest percentage contribution you are allowed by law, but
at least 10%. If you absolutely cannot bring yourself to do 10%, then do the largest percentage you
can. After a few months, reassess and then see if you can’t increase it. Get creative about where you
can cut costs and how you can increase your income through some other source.

If you don’t have a company retirement plan, you can open an individual retirement account (IRA)
at a bank or a brokerage firm. With an IRA, you make a financial contribution of up to $3,000 a year
($3,500 if you’re 50 or older). Ask the bank, the brokerage firm, or a financial advisor to help you
decide if you want a traditional IRA or a Roth IRA. The paperwork to start an IRA takes about the
same amount of time as opening a checking account. And to keep it automatic, you can arrange for an
automatic deduction from your checking account.

For a much more detailed explanation of how to benefit from an automatic investment program, I
strongly recommend that you read The Automatic Millionaire: A Powerful One-Step Plan to Live
and Finish Rich, by David Bach (New York: Broadway Books, 2004). David has done a superb job
of providing you with everything you need to know, as well as a host of resources for putting these
recommendations into action—even including phone numbers and Web sites so you can do all of this

from the comfort of your own home.

Build Assets Rather than Liabilities

Rule One. You must know the difference between an asset and a liability and buy assets. Poor and
middle class acquire liabilities, but they think they are assets. An asset is something that puts
money in my pocket.
A liability is something that takes money out of my pocket.

ROBERT T. KIYOSAKI

Coauthor of Rich Dad, Poor Dad
Far too many people run their financial lives by their expenditures and whims. For most people, their
“investment” model looks like this:

But take a look at how wealthy people approach their investments. They take the money they earn
and invest a large portion of it in income-producing assets—real estate, small businesses, stocks,
bonds, gold, and so on. If you want to become wealthy, follow their lead. Start approaching your
financial activities like this:

Once Your Nest Egg Starts to Grow

As your money begins to grow, you’ll want to educate yourself further about the best way to invest
your money. Eventually, you’ll probably want to find a good financial advisor. The way I found mine
was to ask successful friends who they used, then listen for the same name to come up more than once
or twice. That’s exactly what happened.

If you don’t have friends who are using a financial advisor or you don’t get anyone that several
people agree on, a good place to go for more information on how to pick a financial advisor is
www.finishrich.com. Click on the “Find a Financial Advisor” button under the “Resources Section”
on the Web site. There is a wealth of information there that can help you.

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