So many of us (yes, us) use credit card bills, mortgage payments, and grocery shopping as excuses for not putting money into some sort of savings account. Whether we say that the interest we pay or the needs of or family simply don’t allow for us to sock some cash away for a rainy day. With this attitude, no one will ever be able to save a dime.
David Bach, author of Start Late, Finish Rich and Smart Women Finish Rich just to name a few, has been telling American’s to throw out their monthly budget for this simple reason- it doesn’t work! If it did, we’d all be doing it and we’d all be rich.
Money is like water- it expands to fill the container that it’s in. So are bills. Like the most of us, you probably reach the end of the month and find yourself broke- unable to put any money into savings. You need to set financial goals in your life- ones that become an addiction and make you crave for more. One of the most powerful and effective strategies for this is to Pay Yourself First.
Here’s the scenario-
When you set yourself down to pay your bills each week, every other week, or at the end of the month, the first payment made should be to yourself. Decide beforehand on an amount that you can commit to for at least six months, and deposit it into an account, maybe one that you can’t access that easily if you like to spend, like an IRA.
The trick is to do this even when you think you can’t afford it. After this important bill is paid, pay your other bills as usual. If you find out that you don’t have enough cash to cover your monthly expenses, you’ll need to find some way to raise the extra funds. Maybe have a yard sale, work a few extra hours, cut back on your cable/satellite TV bill, etc. Whatever you need to do, do it-and do it each and every month.
If this sounds too hard, ask yourself if being in this same financial situation for the rest of your life sounds like a better alternative. No matter how much money you make, there will always be bills that need your attention, so you can’t wait until you get that big raise or promotion to start saving- you need to do it now.
If you miss a payment to yourself, the only one that you’ll be hurting is you.
Think of it like a diet- if you cheat, you’re hurting yourself and no one else. You can sit around and feel sorry for yourself, or you can get up and do something about it- it’s all up to you- but you have to make a commitment to yourself (and honor that commitment) before you can reap the benefits.
For more information on David Bach’s best-selling books, programs, radio show and weekly column, visit his website at www.davidbach.com or for direct access to his best-selling books, www.finishrich.com.
