How “paying themselves first” has resulted in the attainment of financial goals, personal fulfillment and accumulation of wealth.
During the 14 years that Mentor Capital has been in business, we have helped hundreds of people successfully save toward their financial goals. Whether it has been buying a new car or sending a child to college, the “paying yourself first” technique works like magic: Regardless of whether you think you can afford it, allocate a reasonable amount each month to your financial goal and watch as the goal comes closer, with little or no negative effect on your budget.
How can this be? A client once told me about working summers in a construction job and being amazed at how his fellow laborers’ work expanded magically to fill the time available to perform it. There was no sitting around – those found loafing were fired – but somehow, even when there wasn’t enough work, they kept busy.
It’s the same with your cash flow: Somehow, spending magically grows to fill the income available to support it.
As financial planners we frequently hear complaints from clients that even though their incomes are rising, they are not increasing their savings. They feel like they’re on a treadmill going nowhere.
By paying yourself first – either by electronic bank draft or religiously writing a check each month – you can sock away cash before you have a chance to spend it. In most cases your discretionary spending will adjust to make up for the additional expense.
Try it – it works!