For years I read this in self-help books and it didn’t make sense to me. What on earth where they on about? I already re-routed money into a separate savings account at that stage and didn’t find that I was getting ahead!
Then the more I looked into it the more it made sense. The first thing I did wrong was that I put money into savings that I had left over after I spent money on things that I needed, like food, housing and the like. And since it felt like there was nothing left after all that – and my bad habits ensured that there wouldn’t be – the amount that went into my savings account was ad hoc and abysmal.
The second challenge I had is that due to struggling with money at the time, I often ended up eating into my savings account because I felt like I didn’t have any other ‘choice’. What a cop out!
It was obvious that things had to change! Firstly I needed to understand what pay myself first really meant. The idea to pay yourself first has been around for quite sometime, and many self-made millionnaires swear by it. It means that the first ‘bill’ you have to pay out of any pay cheque is an amount for yourself.
As a person having trouble doing things for myself back then, I had to force myself to look at this amount as a bill, otherwise it would have never shown up in my savings account!
The other things that I have done to help me commit to paying myself first were, getting it automated so the amount was transferred out of my pay before I could even get may hand on it. And once my savings account allowed, I invested my money into property, which meant that I had a mortgage to pay and an offset account to boost.
The obvious benefit of putting small regular contributions aside is that they can add up to very large nest egg or deposit as mentioned above! So financially it does you a world of good. Especially if you put the money you save to work. In my case not only did I boost my offset account over time, but the investments also go up in value, creating additional wealth by increasing my net worth.
Psychologically there is a great benefit in paying yourself first also because the action of continuous savings tell your subconscious that your future is important, that you are important. It builds perseverance and self-belief.
The sooner you start this habit, the better you will be in the long term. If you are finding that you are resisting the change be creative, what would force you to stick to a savings plan? Is it as simple as hiding that particular account from view and easy access? Is it that you rename the account in your view into say your children’s name? Or it may just be something as simple as rearranging what’s important in your life, shifting instant gratification out in favour of reaching financial freedom.
Are you ready to become Financially Free? Start reducing debt with a simple system I share in my Let’s Get Debt Free Masterclass!