The Influence of Financial Books #5. Pay Yourself First

Before I even started reading books, I was already introduced to this concept by Ed. I was fascinated by this and ever since I've learned about it I became more dutiful in saving.

Pay yourself first is a concept wherein you simply have to allocate a portion of your money as payment for yourself, may it be for the work that you did or for the commission you received. Think of yourself as a resource that has to be paid. For most of us this is in the form of a treat, like a spa, or a movie. But we should not interchange this wonderful concept to indulgence. There is a huge difference. Bear in mind that in paying yourself first, you are making sure that you, your very own resource gets paid for the time you spent on working every single day and not the owner of that boutique you bought those pair of shoes.

Not clear enough yet?

Look at your paycheck. See the tax there? That's one way of seeing the beauty of paying yourself first. The government wants itself to get paid FIRST before anything else, your debt, your bills, and whatever expense you incur. Remember, you are not an infinite resource. You grow old and gray and by that time when no one wants to pay for your services anymore, there is no way for you to pay yourself anything at all. But isn't that what your salary is for? Well, nope it isn't. Your salary is what you use for everything else remember? For that lunch, that electric bill, that grocery. Everyone gets paid other than you. In rough terms you are merely a medium of sharing the money around and unless you do something about that, well, goodluck in generating money from air.

Now the question, how much is this must be? Back in our old post we have discussed how much emergency funds usually cost, this is no different. Ideally, it's 1 hour for every 8 hours you are paid for. You can increase it if you want but make sure that you make realistic allocations or you'd be only be stressed not being able to pay for all your needs (and wants if you may).

Paying yourself first may sound like a fancy "term" of saving but when you think that you are the one benefiting from this, it's really hard to contest. So what should keep you from paying YOURSELF first before your landlord or MERALCO or whoever? Don't you see yourself much more important?