TGIF (Thank goodness its Friday.) Today is payday. So, what will you pay yourself?
This probably sounds absurd as you probably are not self-employed. Like most people, you work for a company that provides an income.
People think companies pay them, but in reality, companies provide an income. We decide how much we pay ourselves.
Paying ourselves involves actively caring for ourselves. It means seizing full control of our financial well-being and ensuring that we prioritize ourselves above all else. When the paycheck lands in our bank account, we should set aside a portion ($100, $250, $500, etc.) specifically for our own needs.
Think back to the budget concept in Sorry Abe It’s All About the Benjamins. Remember budgeting is about 4 things:
- Income
- Fixed Costs
- Variable Costs
- Free Money
What Should You Pay Yourself?
This depends on the 4 numbers above. Figure out how much free money is available every month. Now before you pay your grocery bills, that car payment or the rental payment, pay yourself first. Then go about covering your fixed and variable costs.
This is your hard earned money, so who deserves it more Meijer, Kroger, Apple or you? After all, financial health is all about prioritizing you and your value. This means saving for that unexpected emergency to build your safety net and avoid free fall. It means invest into your future and prepare for the golden years. To put it another way, it’s time to prioritize ourselves.
Where Do We Start?
- Establish Clear Money Goals
- Automate Savings – Set up automatic payments to be sent from your checking account into a savings and investment account.
- Start Small, Think Big: It is okay to start slow with a small percentage of your income. This amount can be increased as income increases over time. The most important part is just getting started.
- Trim Unnecessary Expenses: Review your fixed and variable costs and identify areas where you can cut back. Look back at the variable expenses, pull the lever and cut unnecessary costs.
In a world filled with constant financial pressures and distractions, paying yourself first is the light at the end of the tunnel. By prioritizing your own financial well-being, you take control of your wallet and lay the groundwork for a brighter future. Remember, wealth isn’t just about what you earn – it’s about what you keep and how you grow it. That small amount of money you put away today can turn into a fortune in your golden years, and allow you to live worry free. So, embrace the golden rule of wealth and start paying yourself first today. Your future self will thank you for it.