Somebody once sent me a tiny little book with a strange title, “The Richest Man in Babylon.” I’ve always been a big reader (you know the kids who read the cereal box during breakfast? That’s me) so one day when I found myself without a book, I picked it up. The book outlines several steps to guarantee financial success. Yeah, right you say, just like every other midnight infomercial. But these steps are so simple, so basic that they really resonated with me. So without further ado, let me explain my favorite of the rules: paying yourself.
Pay myself? Isn’t that what j-o-b-s are for? Well yes, your paycheck is the main source of money most of us have coming into the piggy bank. But what do you do with that money? You pay your landlord/mortgage lender, you pay the electric company, the water company, the car loan bank, etc, etc. You even pay the people who supply you with happy times like the movie theater, the bookstore or the bartender (depending on how you roll). But if there’s nothing left at the end of a pay period than the person you forgot to pay was yourself.
Paying yourself means taking 10% of your income (paycheck, ebay sales, whatever) and putting it aside. You can put it in the bank, under the mattress or in the cookie jar, but an interest bearing bank account is probably best. Just put it away before you ever see it or hold it in your hand. Then live on the other 90% of your income, guilt free. I know that sounds reeeaaaallly hard, especially for those of us who are already living paycheck-to-paycheck. But no matter how little you’re making, there are always small adjustments you can make to allow you to put away that 10%. Don’t do it at the end when the lure of eating out or new shoes has already consumed your 10%. Take your 10% – even have it auto-deducted by your bank if you like – before you’ve ever realized that you had it. You’ll be amazed, but living on 90% isn’t as hard as you think. A few lunches brought from home instead of take-out or fast food saves a ton right away.
So now what you ask? My next post will be on making that 10% seed money work for you.
And I really really encourage you to get this book:
