It’s the age old technique that always works – paying yourself first. This concept has been around for many years but not that many people know about it, that is the 90% of the world population.
You see, every time you get paid, you tend you spend money and save what’s left. However the rich think differently and they save money first and then spend what’s left. It’s a simple money saving hack but it’s so powerful.
Example of Paying Yourself First
Let’s explore this concept a little deeper.
Let’s say that you bring home the bacon and it’s $1,000 per month.
Your monthly expenses is $600 per month meaning you have $400 left over.
What people tend to do is that as soon as they get paid, they just blast their money on what they “need” and then they pay their bills.
So their expenses look like this.
Income = $1,000
Spending = $500
Bills = $300
Saving = $0
You may notice that the bills was only $300 when you should be paying $600. The reason why this happens is that we are all human and we would rather “YOLO” instead of keeping up to date with the bills. Therefore you’re behind $300 in bills carry forward to the next month.
Have I lost you yet?
Don’t worry, it gets better.
So with all your infinite wisdom, you decide to take my advice and “Pay yourself first” meaning this time, you’re going to save money before you start spending like Kim Kardashian.
Here’s what it now looks like.
Income = $1,000
Saving = $300
Bills = $600
Spending = $100
Notice the difference? Instead of saving nothing from your salary, now you’re saving $300 per month! Yay!
You may think $300 isn’t that much and it isn’t a big deal, well I have news for you. It’s not the amount that matters, it’s the habit of you paying yourself first. I’ve been doing this for many years and by paying myself first, I was able to rack up a big bank account and travel around the world. By paying myself first, I was able to save up for a home deposit pretty quickly and own my own home. By paying myself first, I was able to save up a nice emergency fund just incase something will go belly up.
How I Did It
I started saving with only $10 per week, it wasn’t much at all. However one thing I discovered when I started paying myself first was that the amounts just got bigger over time. As you get used to paying yourself first, you tend to earn more money, you save more money and you don’t spend as much too.
You notice that over time, your bank account just grows and all of a sudden you wake up with a nice big bank account, along with your boner.
So by training yourself how to pay yourself first, overtime you too will be able to create wealth just like the big boys.
Stay Strong and Be Relentless.