Updated: Jan 17, 2020
The concept of paying yourself first is a Golden Standard in wealth management. This is the same old advice that we all have heard at some point in our lives. In fact, this advice is so simple that most people tend to downplay it, and or underestimate the true value behind this one simple, yet powerful concept.
Most of us are fooled into thinking that the only path to accumulating massive wealth must come through some type of complicated endeavor such as high priced 'hard-to-understand' hedge funds. Or we are fooled into thinking that we have to be born into abundant wealth. Or worse, many of us think we have to be one of the lucky ones, otherwise, it is just simply unattainable.
I don't believe in luck. This is why I don't gamble or give my money away to casinos. I know that if I go to a casino I will have to depend on luck in order to come out on top. Those who spend a lot of time in casinos rarely come out on top simply because the casino isn't set up for you to consistently win, otherwise, they would go out of business!
The only thing I depend on is preparation, and success occurs when preparation meets opportunity...not when one is depending on luck. Paying yourself first is the act of not only preparing yourself for financial freedom but it also the act of creating the opportunity to increase your net worth each and every time you get paid.
preparation + opportunity = massive success
But paying yourself first is hard. That money can be used elsewhere. Every payday you pay everyone else before you pay yourself, and before you know it that excess cash has disappeared. What does pay yourself first even mean?
The idea is simple to understand. Every time you get paid to put some money in your savings before you pay bills or even buy groceries, set aside an allocated amount of your income to save. There are many benefits to paying yourself first, and here are my top 3 reasons.
1. Establishing a huge savings balance - The act of making consistent contributions to your savings is an excellent way to build a nest egg, and having a well-furnished nest egg brings upon an incredible state of serenity/peace of mind. Knowing that you are well prepared for financial obstacles that come your way is priceless!
2. Psychological benefits - I speak from experience when I say that watching your savings account grow will literally change the way you think about achieving financial freedom! All of a sudden the attainment of abundant wealth will not seem so far-fetched after all. You will no longer think that you have to be one of the lucky ones to get there. You will be exemplifying to yourself and those around you that your future is more important than just living paycheck-to-paycheck with no end in sight!
3. More money to invest - The more your savings grow will mean more freedom to invest, which then means more growth over time. In other words, paying yourself first now rather than later will equate to more time for your wealth to grow in the long run.
"Save to invest to create wealth"
THERE IS NO MORE TIME TO WASTE. You need to know exactly where you are going. Wherever you are right now career-wise and so on, for the next two, five, to ten years and beyond your road-map needs to be laid out. Of course, things will not always go exactly as planned, such is life, but at least with a road-map, you will know where you are going!
It starts by "paying yourself first," in preparation for a more abundant and secure future. Who knows when the next recession will come? The time-frame is uncertain, but what is certain, as history tells it, is that the next recession will surely return at some point, and you need to be ready for it.
Take charge of your wealth!
If you valued this article please share via your Twitter, LinkedIn, Instagram and Facebook social media platforms.
Disclaimer: Hudson Wealth Management, LLC (HWM) is a FINRA registered investment adviser firm. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and HWM's fee schedule. The information provided herein is for illustrative purposes only and does not constitute personalized investment advice, recommendations or solicitations to hold, buy or sell any investment or security of any kind. All images and return figures shown are for illustrative purposes only and are not actual customer or model returns. Past performance does not guarantee future results.
- Financial Advisor
- Comprehensive Financial Planning
- Wealth Manager
- Retirement Planning
- Estate Planning
- Investment Portfolio Manager