How to start saving money effectively, Pay yourself first
Do you want more money? Yes of course. Me too! We all do. I want to help teach you how to start saving and get in control of your money. There is an easy way to save.
When people they say that they want a budget it usually means that they want money saved. They want to feel confident and get rid of the stress that is always around money. I want to show you how this works!
Paying yourself is the first step of getting in control of your money.
Most of the investing and money advice books I have encountered always seem to assume one thing that is never specifically mentioned. They assume that we have money to invest. They assume that we are already good at budgeting, managing, and saving our money.
I think that’s why most people make the conclusion that investing is only for the rich. We believe that investing is only for people with extra money to play around with. So what about us commoners who are living paycheck to paycheck?
If you are interested in learning to invest, I highly recommend Quit Like A Millionaire by Kristy Shen. It is the book that inspired me to believe that we can take control of our money situation and finish rich. Her advice is really simple and easy to understand. She makes money management and investing simlpe for noobs like me.
How do we start managing money?!
Saving can be easy if we make it automatic. Set up an automatic transfer to put a small part of your paycheck into your savings every month. If it is automatically saved, you don’t have to worry about it.
With direct deposits of paychecks and all the other payment services, you do have money coming regularly. In order to start saving, we need our money to go into savings regularly.
This is what you do. Take 10% of each paycheck and immediately put it into savings. If you feel that you can’t save 10% maybe try 5% or even just 1% a month. Take a percentage from every check and save it! The key is to save something.
The whole point is to have money saved when you need it. Even if you can only save $20 a month, that’s and extra $240 a year that you didn’t have before! Think of how much you could have in 10 years from now. Or 20!
When you are living paycheck to paycheck, there is always some stress about it. You feel like there is nothing in your account left over for yourself. You feel like all your money goes to everyone but yourself. You feel like you’ll never be in control of your money because you never have any money to control.
If you make the decision to pay yourself first, you will have some money to control. Being in control of $20 a month is way better than being in control of $0 a month! If you want to start controlling your money, pay yourself first.
Getting good at saving is the first step towards being in control of your money. Paying yourself first is the best way that I have found to start saving regularly.
a foolproof budget
This is what paying yourself first looks like. It goes into a savings account before you even get a chance to spend it. The money is automatically saved before you even miss it.
The money that you add to your savings is your money for you to keep. Do not spend this money. This is for savings only. This is about having money for yourself so you won’t ever be broke again.
Paying yourself first will create an automatic budget without you having to worry about it month by month or bill by bill. This takes away all the stress, worry and anxiety about trying to keep whatever few pennies you have left over at the end of the month. Budgeting simply means putting money where you want it to go. And savings is the first place you want it.
Paying yourself before you pay any bills or other expenses puts you in control of your own money. You’ll have the knowledge and assurance that you do actually have some money left over at the end of the month, because you saved it first. You don’t have to rely on searching for scraps in your own bank account after every one else is paid.
We pay ourselves first to ensure that we do have something for ourselves. We will then have the comfort in knowing that we have money left over even after we pay all of our bills.
If you want to loose the game of money, start by spending it all and don’t keep any for yourself. Being broke means always spending. Give all your money to others, waste all your money. Pay all your bills and expenses and since you want to stay broke, do not keep any for yourself. Spend what is left over on junk that you won’t use. Spend what little is left over on things that will start collecting dust in your basement. Most people let their money control them instead of taking control themselves.
Sounds kind of silly doesn't it. But that is how the majority of people operate. They spend everything they have and then wonder why they don’t have any money left.
Create a payment plan that pays yourself. The entire system was built on loans and payment plans for a reason. Paying for mortgages and your Netflix account over time is how the money system works. If we didn’t pay over time, there would be no money ever available for anyone.
Payment over time works for you too, not just the companies that send you bills every month. Payment over time works when you pay yourself.
Cash flow is necessary for survival in any society that operates with money. Payment plans and other structures are in place so we have control of our money. It allows everyone to tell our money where to go.
Your money should be saved automatically before you get a chance to spend it on an eating binge or your next visit to the comic book store.
if you don't save, you'll never have any money
If you want to start keeping your money, and saving effectively, you need to start paying yourself first. Pay yourself with your own money. Stop giving your money away.
You’ll be amazed at how much you can actually save up in just a few months by paying yourself first.
Automation is the key, and the entire point of David Bachs book, the Automatic Millionaire. I didn’t look at this book for a long time because the title threw me off, I thought “oh that’s only for millionaires.” The point of his book is the exactly the opposite. Start small. Make automatic payments to yourself and your investing, then it all grows automatically.
Make automatic savings a thing in your life. Then once you have enough money saved, you can start investing it and making it grow even more for you. Get this book if you are looking for more control over your finances.
When your savings plan and budget is automated, you don’t have to worry about keeping tabs on it. Make the transfer to your savings automated. This is vitally important.
Making your savings automatic is important because if it isn’t put away in a savings account, it will end up getting spent somewhere else. When you need an extra $20 for lunch, or your kids want a new toy, that money goes fast.
The trick is to be able to to both. Save money first, then buy that toy that they are screaming about. If that extra $20 a month is in savings, it won’t get spent the next time you want to drive through for some chicken nuggets.
Don't wait until you have "more money", start saving now
Your savings plan needs to be automated because we always believe that we can save more next month. We delude ourselves into thinking that there will be times in the future when things will be easier. You keep telling yourself that “Things will be better next month, I promise”
We think there will be times in the future when we will have more money to save. The real truth is that this future never comes!
Waiting for the future is thinking backwards. The only way you will ever have money in the future is if you are saving in the present.
A new emergency always pops up, every month. One month it’s for car repairs, next month, an unexpected doctors visit. But it’s okay. You’ll just save the month after that… Wrong! That month will inevitably bring you a new expense that you didn’t plan for. Every single month for the rest of your life. The cycle is endless.
The only way that you’ll break the cycle is if you save it this month. Save it now!
If people aren’t starting the saving process now, chances are that they’ll never end up saving anything at all. If you are making excuses about how you have to pay for everything else but yourself, you will never be able to keep anything. And yes, they are all excuses.
Money that is saved today is more money that you can enjoy tomorrow.
Automating your savings ensures that your money gets saved today, instead of a fictional future that will never come. Pay yourself first and automate it. This is the only way you will actually have money for yourself in the future.
Paying yourself should always be your most important expense
Your future self, your peace of mind, your control over your money, is the first bill you want to pay every single time.
Why let others decide where your money goes when you have the power to decide before anyone else can? It’s your money! Keep it for yourself first! Make this decision, for yourself. Save for yourself before your money goes to someone else who will gladly keep it for themselves.
Most people believe that they could be rich “Some day”. But we know that some day never comes unless we take action now. We will never see money some day unless we start planning and saving today.
Stop telling yourself that you’ll do better tomorrow because we know that a better tomorrow starts today.
If you want money in your future, you have to start keeping it now. A better future means planning for it in the present.
If action isn’t taken today, you’ll still be just as poor as you were yesterday.
You’ll never know how to manage money unless you start practicing and learning now. Just like learning anything else in this world, managing money take practice. If you can start practicing on just $20 a month, you’ll become a master money manager in no time.
If you aren’t starting now, you’ll be just as poor next year as you are today. You’ll be just as poor as you are now in ten years down the road. So start now.
The biggest difference between successful people and poor people is knowledge. Poor people act like they know everything and stopped learning in high school. This is why I think there are so many people that make poor adults.
If you want to be in control of your money and have any chance of finishing rich, it is imperative that you educate yourself and grow as a person.
High-level characters, people who can manage real life, are always learning everything that they can to create a better life for themselves. Test everything out and don't be afriad to try new things. Find out what works for you and your specific situation.
If you are interested in more books about controlling your money, take a look at some of my book recommendations on budgeting and investing.
I also talk about some books that help with the mindset and philosophy required to take more control of your finances.
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