- March 26, 2018
- Posted by: fortunatetrader
- Category: Finance 101
Pay Yourself First – Save Money Aside Each Pay Day
Would you like to receive 5-10-25-100-500$ a week?
That would be great, wouldn’t it?!!
And what about receiving this for doing nothing!
“Woahhhhh what’s the catch?”
The cool answer is that you have done it all your life but you have always stopped two meters before the finish line.
Let me explain.
It’s all about paying yourself FIRST.
You earn money.
But most of the time you spend before saving.
Paying yourself first is about taking some of the money that comes from the “Earned” or “Revenue” pipe and putting it in your pocket first and AFTER paying other people.
So to come back to the 5 to 500$ a week, it might depend on how much you can “afford” to keep. You might want to reduce or remove some of your monthly expenses.
Personally speaking, I have tried to do this for the last 10 years.
I was good at it; putting $100, $200 a week and after a couple of months, since I’m self-employed, I was “cheating” by going back in that account taking some money “just-for-a-week-or-two” because “I-need-it-right-now”. Pfffffff.
The cheating part was stronger than any repayments. I wasn’t disciplined enough to just put it back.
With some hindsight I believe that the amount that you are going to keep by saving every week is more important than the action itself.
I’m reading the sentence above again and I think that it makes sense but maybe just 50% of it.
I decided to keep it anyway and this is why:
The action of saving is stronger, period.
Because by doing so you are… doing so.
But for me saving “too much” was too hard.
I felt cocky and proud putting $100-200 a week aside in my saving account but as soon as I needed a little bit more money for an unexpected event I was back to square one taking out the savings.
So yes, the action of saving is the most important part but for me the “revelation” was to save a smaller amount so it was making no such a difference in my budget. I was always saving and I was banking in an emergency account at the same time.
So I reduced the amount of money to $25 a week.
It seems little right?
For me that made it. I was able to start with that and increased it after couple of weeks.
Because $25 became $35, $35 became $50, $75, $100 and so on.
How much money are you saving right now?
Some people would prefer to put in a big chunk of money once a year.
Ok! If that works for you.
What about adding this weekly strategy as well?
Could your budget take it?
Stick to your strategy of saving a chunk once a year but also add $10 to $20 dollars a week.
You can’t manage $20 a week? Start with $1. You’ll see how fast you get to $20.
If right now is not a good time, a year from now won’t be a good time either.
Do you believe that you can reduce your expenses by $20 a week and transfer that $20 into your savings?
I believe so.
I’m convinced that for me that’s how it worked out.
You can have a totally different strategy by using more money or doing it bi-monthly if it’s easier that way.
Let’s put that in numbers.
Let’s say we start with $25 a week, like I did.
Week 1: $25
Week 2: $25
After 16 weeks, close to 4 months, and we all know how 4 months goes so fast, you end up with 400$.
Well that’s $400 more that you saved for yourself instead of spending it on cocktails or stupid other things that you would not have really wanted anyway.
Pay yourself first!
That same $25 after a year totalizes $1 300.
$1 300 a year invested in Real Estates, Stock Market or Businesses can change your life!
As previously discussed, you won’t stay at $25 for a long time.
When you see the power of saving and how you can increase your return on investment by compounding, you will become crazyyyyy at saving.
Set an automated transfer from your checking account to a saving account.
Most of them are free to open and manage.
If not, start thinking about changing to another bank.
Tangerine offers free stuff for Canadian people.
You should have a look into it.
When you open a new account they give you $25 to $100 to you and me when you use this referral number: 43668511S1 ENROLL HERE
Now, post on the Facebook forum “I’M PAYING MYSELF FIRST” and share with us the amount that you are starting with.
– Make It Happen –