Monday, June 4, 2007

A Good Feeling

Last week I performed an action that felt very rewarding. This was the first time I did said action and it's everything everyone says it is. What action is it, faithful readers? That of paying yourself first.

If you've noticed the growing list of financial advice books on the sidebar, you know that I have been acquiring knowledge at a reasonably brisk pace. The common theme throughout many of the books is the importance of paying yourself first. This is also known as The Golden Rule. In short, look at your gross income on your paycheck and take 10% of it and set it aside in a savings account or in some sort of investment. Doing it automatically would be an even better idea as it takes the thinking and sitting-down-to-do-it-ness out of it. The idea sounds simple (and it is) but rarely do people put it in action. It is a key step in setting yourself up for financial freedom/independence in the future.

What I have done prior to last week was pay all our (fiance and me) bills, not spend very much, and what was left at the end of the month was dumped into our PC 4% savings account. This did work out pretty well because our monthly expenses are rather low. We have no rent, no groceries, and no utilities because we are living with my parents. A fine system with which to save money. Many people have the mentality that they will save what ever is left over from paying the bills, but often time there is none left. Little things come up that eat away at your income and erode your potential savings.

So even though our savings were growing every month, I was still paying everyone else first, as if they are more important than us. They aren't. Pam and myself are the two most important people in our lives and as such, we should come first. Thus, last week I looked at our paystubs, figured out 10% of our gross income and transferred the amount into the savings account. No thought was given to car insurance. I couldn't care less about a cell phone bill. I was putting money away for the first time that would help ensure that we will be able to retire early. And it felt good. Try it yourself and I think you will agree.

5 comments:

Doug said...

Congrats on paying yourself first. This is actually something that I've never really done but I do think it's a great idea. With so many things competing for our dollar it's very easy for it to get sucked away before paying ourselves first.

The past two weeks have been a tad on the expensive side so it'll take me a few weeks to recover but by the end of May I'm going to be on the 10% train myself.

Cheeseburger said...

'Bout damn time you posted.

/I am irked with Neil's tagline for this site as being a "flavor of the month"

Doug said...

I'm hijacking John's blog for a minute

I'm interested in starting up a personal finance group in Charlottetown...would anyone be interested in that? Thinking of a group that meets once a month to talk about a variety of subjects pertaining to Personal Finance. Basically a free forum to exchange ideas. It would be open to anyone, but I'd like to start small (max. 5) and have it grow organically from there.

Let me know if you are: doug.keefe[at]gmail[dot]com

Cheeseburger said...

I am very interested in this Doug. Do you have people in mind to nominate?

/FireX

schaef said...

I gotta admit, that's a nice idea. One 10% train ticket, tanks.

/you can ride it, woo woo