The Concept of Pay Yourself First

If you read a lot of investing books or blogs sometimes you may hear the concept of “Pay Yourself First.” I am not sure who coined the term, but as I read the book “The Richest Man in Babylon” I kept hearing the phrase “Pay yourself first.”

This concept was repeated several times throughout the book and it is a basis for smart finances.

Let’s make this a bit simpler. Every month we are often bombarded with bills, expenditures, wants, needs, and self-indulgences. At the end of the month, you check your balance sheet, and you find that you just do not have much money at all.

Every Month is the Same

Pay Yourself First

When It comes to paying yourself first, you need to set aside the amount of money you want to save then put it away and not touch it. This is quite easy to do.

Automate your Savings

In “The Automatic Millionaire,” David Bach, talks about how people can grow their wealth through automation. If you can set-up automations with your bank account you can then set it up to invest for you.

Increase those Savings

All of sudden you are saving 10-20% of your take home pay, and the future is looking quite bright. The average American saves between 7-8% of their paycheck. That is terrible. What they do not know is that they will have to work longer in life.

Stop waiting, Start Doing

If you wait until you are 40 and decide to start uber saving, it will be a much more difficult process. You can do it, but the time is not there for all of it to grow. Lifestyle changes need to be met.