'Pay Yourself first'

I believe everyone of us have goals we would like to achieve in this lifetime, they say that “Life is not a rehearsal” and we only live our life once. Therefore we should not take life for granted, try not wasting your lives by wasting too much time doing unproductive things. I believe that there are some who have not set their goals because they do not know what they want out of life or fear they could not achieve it. So how do we achieve these goals/financial goals that we set? I used to think that by saving I could accumulate my wealth but sometimes when it comes to the end of each month and find my self broke! Then I make a promise to my self that I would save up the next month, but it never happened. So some months I can save some money and some I can't. Then I find saving is very difficult for me. So I looked around for another method and I found this very method which helped me a lot and that is why I want to share it with you guys out there reading this! One of the most powerful and effective ways for accumulating our wealth is by “Paying yourself first”. Instead of saving whatever is left at the end of the month, I ‘pay myself first' at the beginning of the month.

The first thing when I received my monthly payment I always pay 100% of what I get monthly to myself. You could put the money wherever you want whether it’s a saving account, fixed deposit, brokerage, mutual fund and the list goes on. For me I put it in my protection account which is also known as an investment-linked account. I get 8-11% a month of interest (not guaranteed) of the amount I save and at the same time gain financial protection (close to RM450, 000) towards my health or any unfortunate events that may happen in the future. One of the reason I save in insurance because I am an agent from Prudential Assurance Malaysia Berhad, and the next reason would be if something unfortunate happens to me in the future all my life saving would be used up who knows if I have enough to pay for the event.

If you are starting late then I advise you to pay yourself faster. In other words, you need to commit to having a greater chunk of money automatically taken out of your paycheck. Paying yourself first is easy for me because I have no commitment in life yet(house loans, car loans, taxes, bills and so on) because I am still a student living under the same roof as my parents and I thank them for that and god to have a good parents like them, not everyone is as lucky as me. My parents asked me to move out when I graduate and that is by June 2008, they wanted me to be more independent and experience the outside world, I told them that my dream was to buy a house (300k-350k) at the age of 24. They are still considering if I could stay. If you are already working and decided to pay your self first, list down your expenses, if you do not have the amount to pay for your bills after deducting the amount you paid to yourself, try spending within your means by downgrading your lifestyle. While accumulating the money that you want try learning how to invest and make your money work for you. I’ve bought 5 books related to investments last Saturday and read loads of motivational books which motivated me to write this too!

Think it sounds too hard? If so, you must answer this question for yourself: is the pain of giving up your "perks" greater than the pain of being in financial bondage? If it is, you need to resign yourself to remaining in the same financial situation for the rest of your life. In fact, if you are prone to using debt as a means of upgrading your lifestyle, the problem will probably grow worse with time.

Taking control of your finances creates a sense of empowerment that will reach into every area of your life. The freedom that comes from knowing that you and your family will be provided for regardless of what may come up cannot be expressed in words. It is something you will experience for yourself when you make the decision that being financially independent and secure is more important than impressing your neighbors with material goods.

I knew about this because I was watching a show by Oprah Winfrey, the title of the show caught my eye which was “Automatic Millionaire: How to Become One”. She was interviewing David Bach, he wrote books such as "Start Late, Finish Rich" and "The Automatic Millionaire." I was amused by the word ‘Millionaire’, then I listened carefully and he said that the 1^st secret is to ‘Pay yourself first’. I took some reference from about.com

-Calvin Seak