Simple Steps to Pay Yourself First

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Many of our readers that completed our survey told us that they would love to read more on money issues. I am pleased to tell you that my friend Beau Henderson with whom I did The RichLife Fast Track 30 Day Coaching Program, as some of you will remember, was more than willing to be  our guest today at The Choice Driven Life.

I have learned a lot of things from him lately all around making the right choices for our financial life as well. One choice that we should make and that would give our fnances a boost, you will learn from him today.

I am so glad to introduce Beau to you our valuable readers. I am very blessed to know Beau and even more honored when he said yes when I asked him to be our guest on the blog today.

You will learn a principle that is definitely going to change your life, if you apply it.

Enjoy today’s article by Beau Henderson!!

 

 

moneyhand Simple Steps to Pay Yourself First

You are the most important asset that you have. Take care of yourself.

 

Simple Steps to Pay Yourself First

by Beau Henderson

 

Are you saving regularly?

Many people never save because they think it is too complicated, but the concept of saving is really quite simple.  Developing the discipline of saving is what takes a little work.

The three reasons I hear most for not being able to save are: I don’t make enough, I’ll save what’s left, and I have too much debt.
Do you relate to any of these reasons for not saving?

Let’s examine these excuses together, one at a time, and find out how you can start to pay yourself first.  The good news is that You can begin to save now, today, because paying yourself first is a mindset and a habit that has nothing to do with the size of your paycheck.

Reason #1: I don’t make enough money…

There are two kinds of people – those who save now and those who wait. The employee who makes $2,000 a month and gets in the habit of putting $50 of it away will have $600 saved by the end of the year. The same employee who waits until they can “save more” will have $0. And after 10 years, they still won’t have anything saved, and will still be waiting to have enough to save.
Are You Playing the “When I/Then I” Game?

It goes something like this… “When I can save $200 a month, then I will start to put away money for the future”.  The problem with this game is that it rarely, if ever works and our nature is to always create the next “When I/Then I” scenario instead of developing the habit needed to be successful with money.
Get into the habit of setting aside a portion of what you make now.

It doesn’t matter how little, it can be $5 or $5000. The important thing is to get in the habit. If you can bump up that amount annually by at least 3% or $25 a check as your pay increases, and in ten years, you’ll be saving at least $250 a paycheck. But it will never add up like that unless you get started.

Reason #2 I’ll save what’s left…

And typically what’s left is nothing. It happens to everyone. Saving won’t happen if you approach it this way. It is human nature to spend what is there, so don’t even give yourself the option. Take out the amount first, before you’ve even see it. Have it automatically deducted if you can, and put it into a separate account. Once you get in the habit of doing this, you won’t even miss it.
Put it on Auto Pilot For Success

To be successful at paying yourself first make savings automatic.  Your company’s 401k, 403b, SEP, or other retirement plan can deduct a percentage of your income pre-tax from your paycheck.  You can set up an automatic draft to fund after tax savings like ROTH IRAs, brokerage accounts, and savings accounts.  You have to plan for real life  and can set up automatic drafts to fill up separate buckets for emergency savings, car fund, house maintenance.
Reward Yourself to Stay on Track

All of this automatic saving is great, but if you want to stay on track you have to build in some rewards for all of your disciplined hard work.  Most successful clients build in buckets or automatic accounts to fill up for things like a road trip to see the grandkids, an annual trip to Vegas, or a deep sea fishing trip with the guys.

Remember, financial success is about living well.  These memorable experiences are priceless and need to be planned and saved for or else we are right back to playing the “When I/Then I” game in this area as well.

Reason #3 I have too much debt…

The truth is those that have the discipline to pay themselves first get out of debt faster.

Debt won’t go away unless you pay it off and nothing will get saved unless you start now. So split the difference. Come up with a formula that works for you.   People that have a succesful relationship with money create a formula using these 4 components:

Example:

1.      An amount you can live off – 70%

2.      An amount to save – 10%

3.      An amount to go towards debt – 10%

4.      An amount to give away – 10%

If you need every penny, the breakdown can be 97%, 1%, 1%, 1%.

What happens when the debt is gone?  You’ll be able to increase your savings without having to change your lifestyle or spend a penny more.

Paying yourself first puts the focus where it should be – on the person whom the money was meant to serve. In my experience, it is never the behavior of the investment that makes the difference so much as the behavior of the investor.

You are the most important asset that you have. Take care of yourself. It might be hard at first, but getting into the habit now will result in easier saving tomorrow. This is one of the core principals necessary to building a RichLife. It is my most sincere hope that you achieve yours.

What is your biggest obstacle when it comes to paying yourself first?

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Beau Henderson is a financial advisor, author, coach, radio personality, and CEO of RichLife Advisors. He has helped over 3,000 clients to not just improve their relationship with money, but to live the life of their dreams.  For more tips on how you can apply the principal of wise stewardship to your everyday life, get a copy of Beau’s newest book, The RichLife - 10 Investments for True Wealth.

 

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Comments

  1. Great article and very useful information!

  2. Thanks Olga for posting this article by Beau. It is exactly what I needed. I have gotten so wrapped up in handling all the bills and debts that I forgot to save. I am starting today!

  3. This is great info Olga. I attended T. Harv Eker’s Millionaire Mind Intensive about a year ago and he goes into this in great depth. I put it into practice right after that and it’s amazing the difference it has made. I hope your readers take this to heart. It makes for true freedom in your life. Thanks for sharing this with your readers!

  4. Thanks for having Beau be a guest blogger for you. I was glad for the reminders of sensible financial planning for the long term picture, and how a little bit saved regularly can really add up.

  5. Thank you Beau & Olga for providing information that I really needed to be reminded of…raising our grandchildren has been a financial challenge at times, especially as our family business is in construction! I am taking your advice to heart Beau and will be allotting a “savings” amount immediately! :))

  6. The 4 components are important to have financial success. Most of us don’t make enough to support the lifestyle..so we take care of 2 or 3 components and usually paying ourselves come last.

  7. Thank you Olga…Beau is right on target…we are really pushing ourselves to be completely self-sufficient… it feels better today than a year ago…thanks to these principles your guest Beau lays out so beautifully!!! thanks!!!

  8. A great reminder for all of us to save as much as we can early on and to be consistent with saving.

  9. Hi Olga, great article today. I love the line “financial success is about living well” We can decide for ourselves what that means.

  10. Olga, this is Terrific Info*** After Tithing, paying ‘yourself’ first is a great habit to live by* It is All about taking the Action and following these Simple Tips* Thank You for Sharing** Great Guest Blogger!

  11. Thanks Olga, for sharing these great tips by Beau. I love the idea of investing in my biggest asset first – ME :) I started doing this 6 months ago & money now flows to me so much more easily. Instead of ‘struggling’ to pay the bills, I find I am abundant in wealth as I value and acknowledge my greatest asset (me) and the wealth I am creating :)

  12. Timely advice for all of us.
    -AJ

  13. I loved the article and have a testimony to share. A few months back I had set up an automatic deduction from my checking account to a joint savings account for myself and my husband. The remarkable thing was that I COMPLETELY FORGOT about it. Every two weeks I noticed that a fixed sum of money was leaving my checking account and assumed that this was going to servicing some of my outstanding bills. Even though I was never quite certain which bill it was servicing I just let it keep going on… Well you can imagine my shock when two days ago as I was tidying up a stack of statements, i decided to glance at the credit union account. I almost sideways in shock. Then I remembered the mysterious transactions. It was the night before my birthday so I did a happy dance!!! Paying yourself works and sets into motion an ‘abundance mentality’. Thanks again. Great article!!

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