Pay Yourself First

Pay yourself first.  This is a statement that we have all heard at least one time or another. In the book, The Automatic Millionaire, David Bach describes this as a requirement for anyone who would like to be financially successful.  He goes on to explain the why, the how, and even show you how to make it automatic.  He states, “People should take every opportunity they can to save money because it really adds up, and the best way I know to do that is to make your savings automatic.”

Paying yourself first allows the average person to save money, that they normally would not be able to save.  This money can be used to start a business, retirement, a vacation, for college, for a rainy day, or whatever your goals are.  Typically, a person allocates their money in this order.  Pay bills, have fun, and then save.  The problem with this order is that there is never any money left over to save.  People excuse this with “I don’t have enough money leftover”,  or “I don’t make enough.”  Bach quotes, “Change is a funny thing.  Although most people say they want to change — so they can have a better life, with more love, more dreams, and more fun — the fact is that many of us are afraid of change.”  Paying yourself first allows you to save money, without even knowing that you are missing it.  Per Bach, the easiest way is to make it automatic.  Automatic means have your employer deduct a percentage of your paycheck to go into a savings account before you even get a chance to see it.

Paying yourself first means to save, pay bills, and then have fun.  Paying yourself first means to take out a percentage of your check before you do anything else.  It means that you are making a personal commitment that saving is important to you and that you will save a percentage of your income no matter what.  How much should you save?  Bach answers the question this way. To be poor, don’t save anything. To be middle class, save at least 15% of your income, and to be rich, save at least 25%.  To visit David Bach’s website, click HERE.