How many of you pay your bills, household expenses and daily expenses first and save the rest? Or should you save first and use the rest of the money to pay your bills, etc? Most of us work 42 hours each week and that amounts to 168 hours each month. You have slogged so much and doesn’t it make sense to pay yourself first instead of others? Why pay your phone bills or car loan first when you should take care of yourself first?
One should always pay yourself first before paying anybody else. One should set aside at least 10% of the monthly income for savings. The more you set aside, the better it is. The savings can be used as an emergency fund or to invest. You should then pay your bills with the remaining money. No matter how tight it is, you should always pay yourself first and work around with the rest of the money.
To make sure you are following this technique stringently, you can set a standing instruction (or standing order) for your bank to transfer $x to another bank account on your pay-day. Also, it is paramount that you don’t have any debit card/ATM card attached to this savings account. In this way, you will be disciplined enough to save and not use the money unnecessarily.
I first learnt about paying yourself first in Robert Kiyosaki’s book “Rich Dad Poor Dad” back in 2007. I also came across this technique in the book “The Richest Man in Babylon” by George S Clason. This is a technique that I follow strictly till this day. I’m sure it would do wonders for you too if you try this one technique to master your finances.