Don’t just pay your bills, fund your future, that’s the idea behind what some call the golden rule of personal finance.
Instead of putting yourself last on your list of financial obligations—if you even make the list—how about automatically routing a set portion from your paycheck or other money received immediately to a savings account? Because you are investing in yourself before you begin paying others, this process is said to be “paying yourself first.”
If or when you are working, and likely getting “direct deposit” of your pay into a bank account, you can ask your employer to direct a percentage to checking, or a percentage to savings. Even if you are not working, if you identify some savings in your budget (Ed. Note: link to that section), you can always have your bank transfer a designated amount each month (via “direct debit”) to an investment account.
If you wait to be inspired to save, inertia, decision fatigue or simple temptation to spend the funds before you get to save them will likely win. That’s why a simple, automated savings/investment system is, many financial experts agree, the best way to build a nest egg.
Are you putting yourself last on your list of financial obligations?
- “The Automatic Millionaire” in e-book by David Bach, who also has podcasts on his site finishrich.com