A few years ago I took on reading self help and financial development books. The first book I read was The Richest Man In Babylon which sparked a whole new curiosity.
Prior to reading this book, I THOUGHT I was good with money simply because I always had money left over at the end of the month and not the other way around.
My payments were made on time and there was always enough money for “fun activities”. If that was the case, then why pick up a book on personal finance?
Let me tell you a quick story:
When I was 9 years old, my father decided to go to school. After finishing school, he found himself an oilfield job paying him $200,000+/year after taxes.
Life was good.
In 2014 the price of Oil fell significantly which meant companies had to lay people off in order to stay in business. My father was laid off in 2016.
Although he was laid off, he was still able to provide food and spend money on “fun activities” without batting an eye. At this point I was well into adulthood and started to wonder how father was able to live comfortably despite being jobless.
Instead of asking like a normal person, I decided to go on amazon and look at the top finance books at the time. It was staring at me. The Richest Man In Babylon. (Affiliate Link)
I purchased the audio book and began listening to it on my commute to and from work. It was then that I learned my first major financial lesson.
PAY YOURSELF FIRST!!
I became religious with this, and til this day I always pay myself first. Too many people pay everyone else before paying themselves.
Money comes in and goes straight to bills, payments, rent, mortgage etc. The leftovers are then paid to you. This is wrong. Pay yourself first. I have set up a system in which money is paid to myself every payday so that I don’t have to think about it.
The importance of paying yourself first is that over time, you will see your money grow. I pay myself at least 10% of my Paycheck. When I can pay myself more, I ALWAYS do it.
For those that live paycheck to paycheck, paying yourself first is so foreign of a concept that explains it is sometimes a lost cause. I have friends living like this. They don’t listen and don’t want to.
However, if you’re living paycheck to paycheck and want to pay yourself first then you have 2 options:
1) make more money
The latter, in my opinion, is much easier than the former.
In conclusion, a money great money practice which has done well for me is to pay myself first and everyone else after. Practicing this will help ensure that you always have money when you need it most.