First Thing First – Pay Yourself First!
Read Time: 2 minutes
Word Count: 497 words
Written by: Tab M0ney
On this segment of Tab M0ney Habits, I expressed the first step to financial freedom and introduce the first M0ney Habit, Pay Yourself First! It’s important to pay yourself first a minimum of 10% of all earnings.
If you are wondering, where I got saved a minimum of 10% of all earnings, please read The Richest Man in Babylon by George Samuel Clason. Mr. Clason gives a basic understanding of saving earnings over a significant period of time.
Many have asked me, “What does paying yourself first mean?” I usually start with “Paying yourself does NOT mean treating yourself shopping, vacations, splurging on vices… Paying yourself means saving at least 10% of your income in a safe place that you do not access i.e. savings account, retirement accounts, home safe, under the mattress, etc.”
If you do not have the discipline to withstand withdrawing funds from your savings, I advise you to ask someone to save your money for you, someone you can trust of course. Personally, I save my sister’s 10% of earnings in a savings account with my bank that she does not have access to. If she needs money from this account she has to call me and request that I transfer money from my account to hers. This saving strategy allows her to have accountability when it comes to savings. She is required to provide reasonable justification for the transfer and doing so, we are able to prioritize the need/risk for this withdrawal verse casually withdrawing money for minute circumstances.
Most millennials are not aware of Paying Yourself First because we were not taught financial literacy in school nor our homes. We are taught to splurge, pay bills, and debts first, then with whatever is left spend it on self or others. This is actually a poor man’s way of thinking. A wealthy state of mind is paying you FIRST before you pay anybody else! Before you pay your bills and spend money on leisure activities you must set aside $$$ for savings. What was helpful for me was automatically having 10% of my income deposit into a savings account before my paycheck was released into my checking account. This out of sight out mind saving strategy created an illusion that operating on 90% of my income was not as challenging as it appeared to be, honestly, I didn’t even realize the impact of living on 90% of my income. I was still able to budget my bills/responsibilities, savings, spending money, and vacations. At 26 years old, I have a significant amount saved in my savings account for an emergency, business venture, new home, traveling aboard, and or retirement adventures!
…Mind you I started saving 10% of all my earnings after a mentor suggested I read, The Richest Man in Babylon back in 2013 🙂
Tab M0ney Habit Cycle
New Routine: PAY YOURSELF FIRST – 10% OF EARNINGS
Reward: Building a foundation towards Financial Freedom
The trigger and reward do not change, only the routine changes! Changing Routines! Changing Habits!