You may have already figured out this absolute basic money habit.
If not, I urge you to seriously consider it.
It’ll set you free… in the not-so-distant future.
Isn’t freedom what we all want, after all?
I wish our school had taught us this one absolute basic money habit to develop. I certainly couldn’t learn from my parents. They didn’t know it either.
A simple instruction:
“Here is what to do with your very first paycheck when you enter the real world…”
Me being a model student (ha!), I’d have followed it to a T.
So if you didn’t have an opportunity to learn about money or didn’t have a role model growing up like me, below can provide you with a simple guideline about money.
I’ve learned them shortly before getting into my personal development journey.
I’m happy to spread good messages and help others create a financially independent life while pursuing my own.
How Much You Earn vs What to Do with It
This is probably one of the most important things to know in creating wealth.
When I was young, I thought I’d need lots of money to invest. You probably think the same.
Which is why the majority of people don’t start saving and investing as early as they should.
When it comes to building wealth, what we do with the money we earn is far more important than how much we earn.
I personally know a lady who’s married to a surgeon ended up filing bankruptcy.
They lived in a rich neighbourhood, drove an expensive car, dinned in fine restaurants, a couple of trips abroad a year to boot and so on.
Then there is a janitor who amassed $8 million.
See… not so much about how much you earn.
And it’s all down to this one absolute basic money habit.
Pay for Yourself First
Oh, don’t misunderstand “Pay for Yourself First” as a treat to a spa, a weekend trip or a Gucci bag.
Think about what you do with your paycheck.
We take care of the essentials first e.g rent, utilities, phone bill, groceries and so on.
We then spend the rest on our “wants” things like eating out, buying clothes or taking a trip.
If we’re lucky and have some spare cash left from that ultra-thin paycheck, we may save the rest.
Now paying for yourself first means we do this in reverse order.
You allocate a certain percentage of income to your saving and investing account FIRST.
And then you live on the rest.
I know from my firsthand experience when we’re cornered with limited resources, we learn to live with what we’ve got.
So I know you can absolutely do this.
Do you know why I didn’t develop this crucial habit in my early 20s?
(Oh, by the way, it’s never too late to start no matter how old you are!)
I didn’t know such a thing as Paying for Yourself First existed!
I can tell you ignorance is definitely not bliss here.
Do yourself a favour.
Don’t make the same mistake as I did and rob yourself of an opportunity to accumulate wealth from an early age.
So How to Pay for Yourself First?
If you haven’t looked into saving or investing yet, start with opening a separate bank account today.
You then set up an automatic transfer to this account from your next paycheck and start paying for yourself first.
If you haven’t already, do the same for all the essential bill payments plus rent but from your usual bank account, not your saving account.
This simplifies your finances and also avoids incurring late fees or penalty.
At the same time, start learning about money and commit to becoming a master of money.
Most of all, love and respect money!
A friend of mine just wants to find a rich man, marry him and live happily ever after. I don’t have the heart to tell her that her plan is kinda unreliable. Not impossible though, I guess.
Regardless, why don’t we learn to pay ourselves first anyway?
At least it won’t cheat on us, right?
How Much to Pay for Yourself?
Do you know there are some people who save 90% of their income?
I salute them.
But every one of us has a different financial obligation from the next person. It’s not necessary to follow others at all.
What’s important here is that your saving takes priority above all else.
How will This One Money Habit Change Your Life for Better
1. You know all about your money coming in and going…. like the back of your hand.
2. You become intentional about how you spend your money.
3. Become more knowledgeable with finances (savvy you!).
4. Take charge of your finances.
5. Find more pleasure from accumulating assets than consumption hence not falling into consumer debts.
6. You learn discipline and patience.
7. Build wonderful habits.
8. You become comfortable talking about money.
9. You grow to love and respect money and what it can do for your life and your loved ones e.g choice, freedom, security and joy
10. Have the best tool in your arsenal to contribute to the world.
It takes a little money to start investing and build wealth thanks to the magic of compound interest.
Compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t… pays it.
– Albert Einstein
Hey, the genius didn’t say those words for fun!
There’re only two types of people in his statement.
Choose to be the person who understands and “earns it”.
If you don’t, you automatically become the other who “pays it”, whether you like it or not.
Put this one habit on autopilot from your next paycheck, start taking control of your finances and create a financially independent life.
- For USA Readers: The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness by Dave Ramsey
- For UK Readers: How to Own the World: A Plain English Guide to Thinking Globally and Investing Wisely by Andrew Craig
- For everyone: The Richest Man in Babylon by George S. Clason
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