You may be earning a good income but are you paying yourself first? Develop a good personal finance strategy and stick with it.
There is an old saying that I heard for the first time back when I began working for a major insurance company as an insurance agent and also as a Registered Representative (Series 6 license to sell variable annuities, variable life insurance and mutual funds).
That old saying goes like this, people don’t plan to fail, they fail to plan. Don’t be one of those people who fails to plan ahead for emergencies that will come up throughout your life.
Even if you are in your twenties, start planning now for your golden years. The sooner you start putting money away for your golden years the better off you will be when you reach that stage in your life.
You won’t have to work for the rest of your life and you will be able to retire comfortably by saving for retirement at a young age.
Why You Must Pay Yourself First In Order To Become Financially Independent
People like to spend money but they don’t like to save money
You pay for things such as food, clothing, a nice car, health care and rent/mortgage every month but how much money do you pay yourself each and every month? Probably zero, because the more you earn the more you spend. Am I correct?
Make it a priority to pay yourself first by treating yourself as a bill you must pay every payday
Become knowledgeable about personal finance by reading books on this subject and putting what you learned into practice. You can also find new and used books on business and investing, and many other subjects at Abe Books (affiliate link).
The younger you are when you start building your nest egg the better off you will be when you are ready to retire. The money will grow slowly at first but over time it will grow into a nice nest egg.
Learn good money management skills sooner rather than later
It is unfortunate that most Americans do not have a six to nine month emergency fund. Many of them don’t have enough money set aside in an emergency fund to handle a four hundred dollar emergency.
It is also concerning to know that they are not saving enough money for their retirement.
Starting to pay yourself first when you are 20 will be far more beneficial than if you wait until you are forty years old.
Time is not your friend when you turn forty.
No matter how much money you may have, one thing you can never get more of is time.
Learning about finances and developing good money management skills is something you need to learn as early as possible.
An unexpected illness or loss of a job can occur at any time.
It may not be easy to do, but get into the habit of paying yourself a minimum of ten percent of whatever you earn. If you can put aside fifteen percent every payday, that would be even better.
In addition to paying yourself first, cut down on your wants and put some of that money towards paying off debt.
Do you really need to buy a brand new car to go from point a to point b?
Can you cut down on the number of times you go out to eat each month?
Do you really need to go on a two week vacation to a foreign country rather than vacationing somewhere in the USA?
Never skip paying yourself first and instead use the money to splurge.
Continue building up your nest egg. Knowing that you have money set aside for emergencies that will pop up eventually can be comforting mentally.
Know the difference between a want and a need
Learn to live frugally while you are young so you can enjoy life in retirement.
Check out my blog post titled – Nine Ways To Save Five Dollars Or More Without Sacrificing Quality of Life.
Buy the home you can afford. In these uncertain times don’t buy a home simply to impress your family and friends.
If you have to sell your home because of a job loss and not enough money in your emergency fund you may take a loss on your home.
Food, clothing and shelter are basic needs of everyone. Buying another pair of shoes when you have five other pairs of shoes is not a need, it is a want.
Take advantage of buying used from thrift stores and save money. If you can save $15 on something you purchased from a thrift store rather than from a retail store you are shopping wisely.
You can put that fifteen dollar savings towards your emergency fund so if something comes up unexpectedly you won’t have to borrow the money.
If you live in an area that has many of the places you do business with walk instead of drive a mile to that business.
For example, if you live within four or five blocks of a convenience store walk instead of getting in your car and driving a quarter mile.
Although it may take you longer to get from point a to point b, you will save wear and tear on your car as well as on gas. Walking is also good exercise.
Occasionally I may take a bus when I am going somewhere, but usually I walk. Most of the places I walk to are within one mile from my home.
Usually when I take the bus it is because it is because of cold or rain. If I am carrying a lot of groceries I sometimes will also take the bus instead of walking a mile.
Education costs are getting way out of control
Think carefully about taking on a massive debt in the form of student loans in order to attend college. You will be paying for many years on your student loans.
Having a college education no longer means you will find a good paying job.
I lived a long time in the San Francisco Bay Area and people who work for technology companies have driven up the prices of housing to where it now costs a small fortune just to rent a one bedroom/one bath apartment.
In addition to the high cost of rent anywhere in the SF Bay Area you also have long commutes both too and from work.
I personally believe that home prices will be declining in California over the next two to three years. Very few people can afford to live in places like the SF Bay Area.
I moved out of California two decades ago and I am happy that I did. Otherwise I would not be able to afford to pay the extremely high housing costs.
It may be far less expensive in the long run to learn a trade and be able to find work.
Learn as much about personal finance as possible. Knowledge about personal finance is something that you will find useful throughout your life.
If you have children, teach them about money and money management while they are young.
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