“Pay yourself First,” Free Financial Literacy 101
In debt? Didn’t you listen to your parents when they said “Pay yourself first?” I didn’t. I couldn’t. My parents did not know to tell us anything but, “got-ta pay them bills.” Having financial knowledge did not exist in my household. What did exist is when the knock came on the door, and mother said with a loud-hushed shout, “shhhh! Nobody make a sound it’s them damn bill collectors.”
We all froze in our spots afraid to make a move. For us children that didn’t know better, we were afraid that if we made a sound the bill collector would hear it and break the door down or come in the window and hurts one of us. The only thing we knew is when our mother heard the knock she knew instantaneously who it was.
The look of fear on her face was enough to throw us all into a fit of terror, and we froze until she gave the signal. With that signal came a sigh of relief that made me think the terror, the bad guy, or the man to fear all our lives was no longer a threat at least not until the next knock on the door.
That’s how I grew up thinking of a bill. I was always in fear of bills even if they simply came in the mailbox which I never checked unless asked. My fear as an adult was not so much the bill collector is coming, but it is the same fear my mother had which was “ There’s not enough money to pay the bills.” So I pretended if I don’t get it out the box then the bill doesn’t exist. Does anyone out there think like this?
Enter my beautiful wife. She wears the big $ on her chest for super woman, and she takes all those fears away for me. Yes, my wife, Karen, has been a huge influence on my facing my fear of writing and giving a even greater understanding of finances and the need to get this information out especially to those who grew up like I have.
The first thing she taught me is what her first accountant told her when she started her first business. “Pay yourself first.” “Paying yourself first is an easy concept to understand but difficult to do if you’re not disciplined. It means putting a portion of a suggested amount of 10% of your earned income aside in savings first in a bank, and later, as it grows, into a type of investment. This is not money you are saving to pay bills. REMEMBER YOU ARE PAYING YOURSELF FIRST and budgeting the balance to pay bills. This is money that is going to work for you, instead of you working for the money. There will be future blogs on how to pay yourself and save taxes, which means you will be paying yourself even more, and even more money will be working for you.
Had I got this advice from my mother when I was young and earning quite a bit of money for my age, I’d be well off, no doubt into the millions of dollars in savings. A look back at my life and lifestyle shows me I blew through, some people would say, “threw away “what I can estimate close to approximately $800.000 that I could have “socked away” and let it work and grow for me into that millions of dollars with the magical rule of compound interest (which we will discuss in our future blogs).
In the end when I learned about paying yourself first, and I came to my $enses about personal money management I said, “Why didn’t anybody tell me that?” This is a Statement I’ve made all too many times in my life,` and each time I’ve said it, it’s been with regrets.
How do you PAY YOURSELF? Do it on the front end as soon as you get your check or the money you earned. If possible start a direct deposit from your paycheck if you can set this up with your employer. You don’t miss what you don’t see, just like when taxes are taken out of your paycheck before you get it. If you wait to save whatever monies are left over after paying all the bills, you’re more than likely going to spend (blow through and throw away like I did) the left over monies because it is so easy to do. The concept of paying yourself first coming from a person like myself can teach you to learn from my mistakes because I know it is all to easy to make those mistakes.
So do begin with your next paycheck take a portion, the generally recommend amount is 10%, and put into your savings account at a bank or credit union. Oh! Don’t have a bank account!? Now is a good time to open one. Make this your call to action…
When you take this move and begin to deposit your hard earned money into your savings account you are empowering yourself to begin learning other sound financial habits. After a while you will begin to feel a level of comfort that you’ve not experienced before. If an emergency comes up, you’re prepared for it. You can save for a purchase of a car or a house and also simply let your monies grow towards retirement.
This is another one of those things I said, “Why didn’t anybody tell me that.” My life would have been much better off.
Stop making excuse why you can’t begin saving and investing in yourself and take action to “just do it” like the Nike ad says. Don’t forget to mention to the bank manager you got the idea from this post and mention the website: freefinlit101.com. The readers and I can use the extra attention, and spreading the word is how we all help each other. Make a comment and let me know what you think.