While you may have heard me talk about this in the past, I am constantly reminded of how often smart and educated people are not taking the most basic actions to create a better financial future for themselves.
Very often when I am the guest on a podcast, radio or TV show I will put the host on the spot with some questions.
The questions start with this one: “Have you heard of the expression, pay yourself first?”
In every case the answer is, “Yes.”
The next question is, “Can you explain what it means?”
And now the fun begins: 9 out of 10 times they stumble around and get close, but cannot clearly and easily explain what pay yourself first means.
And some hosts can’t even get close. They will say things like, “Before I pay salaries to anyone else in the company I pay myself first.” Or, “Before I pay my business expenses, I make sure I cut my paycheck first.”
Here is the simple explanation that comes from the book The Richest Man in Babylon that was published over 100 years ago:
Before you pay anyone else you set aside money (usually 10%) that you will keep for the rest of your life. You will only use this money to invest in things that will generate an income for you. Then you no longer have to work for money, but will have money working for you.
Warren Buffett says, “If you don’t learn how to make money while you sleep, you will work for the rest of your life.”
This is how you treat yourself like you deserve to own some of the money you earn: You pay yourself first a percentage of the money you receive that you will keep for the rest of your life.
You will invest that money, and it will provide an income to you so you can choose to work or choose not to work.
Do you deserve to own some of the money you earn? Let me know.
To Your Prosperity,