November 19th 2007 04:29 pm
Pay yourself first
When pay or profits come in take 20% and put it away in some kind of investment account. This rule could also be called ‘Take a 20% pay cut’. If possible, put the money somewhere that isn’t real easy to get to. If you can go to an ATM machine and tap into your nest egg, it won’t last long. Even a mutual fund that takes a few days to get a check back to you will serve to make you think twice about spending that money.
By paying yourself first you make sure that you actually are making a profit in whatever you do, even if you spend all the rest of your income. We tend to raise the level of our spending to match our income. This technique ensures that you have something put away for a rainy day (or a sunny one in the Caribbean).
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