I had read the idea “Pay Yourself First” in several other places, but I didn’t really get the meaning until I read this book.

I used to think that “Pay Yourself First” meant that you should buy yourself something nice, so that you enjoy the fruits of your labor. The reality is that “Pay Yourself First” means that you should save a portion of your paycheck, so that it might eventually be invested and help you to produce more wealth.

Throughout ‘The Richest Man in Babylon’, it is said that “When I ceased to pay out more than nine-tenths of my earnings, I managed to get along just as well. I was not shorter than before. Also, ere long, did coins come to me more easily than before.” - That is to say, if you save 10% of your paycheck, you will only have 90% to spend but you will get along just as well as you did before. Soon enough, your cache of money will begin to build and you will soon have enough to invest.

As an example, you might take your 10% and invest it in silver. Silver will let your money begin to grow and it will also make it a bit more difficult to spend your savings on a whim, since you would need to go to the coin dealer and sell the silver before you could get your hands on the actual dollars.

Silver is Currently Undervalued
Traditionally, silver has held a 1/16 value to gold. Gold is currently trading for about $940/oz and Silver is only about $18/oz, which means silver is currently trading at about 1/52 the value of gold. Even if gold stays put, silver will eventually come up to at least $58/oz. Investing in silver at $20/oz, should bring you at least a 3x profit in the future - imagine if you had invested when silver was $4/oz.

Silver is in Demand
Silver is used in all sorts of electronics and jewelry, which means it is becoming more scarce. This will add to the eventual rise in the value of silver, because there will be more demand (more electronics being made) and less supply available.

Investing in Silver is Cheap
When I say “Silver is Cheap”, what I mean is that it is easy for the average person to walk into their local coin shop and purchase silver. Your main options are to buy silver coins, or silver bars. From my research, I think silver bars are a better investment. I just called my local coin shop and they have one 10oz silver bar in stock, which would currently cost me $193.10 (USD). That includes a $1.50 per ounce service fee.

Silver is the Real Money
Silver is the money of the world. Currently, the US Dollar is worth “something” only because you think it is worth “something”. This can be a difficult idea to wrap your head around. The US Dollar used to be backed by gold and silver. Since the 1970s, the dollar has not backed by gold or silver, and we see the inflation that has taken place. The government prints more and more money, and the “something” that the dollar is worth continues to go down. In contrast, there is a finite amount of silver in the world and the value of silver will only continue to rise.

It is important not to look at silver just as “how many dollars is it worth” but also “how much gold is it worth?”, “how much oil is it worth?”, “how many ounces of silver would it cost to by a 3 bedroom home?” - These tangible items, not the dollar amount, hold the real value. Sure, your silver might be worth $500,000 - but the real question is what else can you get for that $500,000 ? That changes over time. For more information on Investing in Silver check out SilverSeek.com or Kitco.com.

The ideas in this article are only my opinions. Please consult your financial adviser before making any large investments - though your financial adviser might not really know what’s best.

E: Employee
S: Self-Employed
B: Business Owner
I: Investor

Basically, I’ve come to realize that while I work for myself, make my own hours, find my own clients, and I don’t have a boss… I fall under the “Self-Employed” category, which is essentially a glorified Employee. I have nothing that is an actual “Business” which I could sell, or which makes me money without me working for it. I still have to work for every hour that I get paid.

This was a little kick in the pants. I’ve got several websites that might someday function as a Business System for me, but I thought the quicker solution might be to finally go ahead an hire some help. I put up a post on Craigslist, weeded out the weirdos, and met with two fresh-faced college kids. Each one has 10-15 hours a week to give to my projects.

I’ve got a few new things coming down the pipeline, and we’ll be starting work on the first project Monday. This client wasn’t able to afford my normal hourly rate, so it was the perfect opportunity for me to pass along some work to my ‘employees’. I will pay them an hourly rate, and keep the difference.

I realize that this is far from operating as a real Business System, but it is a first step.

That fact is that one candy bar wouldn’t suddenly make me fat - but I had shifted my thinking about food. I was at a point where I expected myself to eat healthy and to avoid all junk food, thus when I did eat junk food, I really thought about the effect that it would have on me and my health.

Today I eat healthier than I ever have, but the idea of guilt still pops up from time to time. I know that it is okay to indulge from time to time, but I try to keep it to Saturdays. When I am doing well with my running program, the same idea applies… I am working hard, sticking to my running program and making progress - and then suddenly I skip a day. I feel really bad about it. I feel that I have let myself down and I am throwing away everything that I have worked for. As a result, I do whatever I can to ensure that I follow through.

Make a commitment to yourself, and you’ll see the guilt start to arise. It’s a good thing. Embrace the guilt and see how it makes you feel. If you are truly committed to the task, you take the guilt as motivation to continue on your path to improvement.

The idea of passive income is great… unfortunately, its not as easy to come by as is implied by the book.

The reality is you have to have money to make money. When you are living paycheck to paycheck, “Rich Dad, Poor Dad” doesn’t do you much good.

I left a reply in the comments section of that post, but I started to ramble on a bit, so I thought I’d share a bit about different ways that you can start to build a stream of passive income.

Use The Money You Already Have
If someone is living paycheck-to-paycheck, how can they start making passive income? The first option is to find additional money that you already have. We’ve all heard it before: let’s say that you spend $3 each weekday at Starbucks and $50 each weekend for dinner and drinks and whatever. That adds up to about $250 per month.

While $250 per month is not a staggering amount of money, it is a great starting point. If you put that money into a jar everyday for a month - rather than handing it over to billion-dollar corporations - you could quickly save up enough money to start making some small investments - stocks, mutual funds, CDs, home based business, etc.

Create More Money
If you absolutely have no extra expenses that can be cut from your budget, then start considering ways that you can generate more money. Look at any hobbies or skills that you have, and start to brainstorm about how you can turn those skills into a home-based business. Even if it only brings in a few bucks a month, you can slowly build it into a steady stream of income, and then use that money to start investing in your passive income stream.

If you’re fresh out of ideas for your home-based business, consider using The Law of Attraction to see what kind of ideas an opportunities you can pull into your life. I guarantee that if you start brainstorming and don’t give up after your first bad idea, you will soon arrive at something great.

Set Priorities
It could be that you really are broke, and even if you saved the extra money you would end up using that money to buy food and pay bills - then so be it. Your first step should be to clean up the basics in your life. Once you can pay your bills and feed your kids, then you can start looking to the future.

You Have to Start Somewhere
You might start a home-based business or buy a few stocks, then you make $10 one week and wonder how that will ever turn into anything substantial. The fact is that getting started is the hardest part. If you’re going to build an empire from nothing, it will likely take you several years - or more - before you start to see any real changes in your life. You have to invest in your education (you can go to the library for free) and you have to really want it. Creating a stream of passive income is not easy, but once you get that ball rolling down the hill, it continues to build on itself.