Holy grail of getting rich
This is one of the “holy grail” of wealth and financial growth, that is to pay yourself first.
Of course, paying yourself first isn’t about taking out money to splurge and spend on frivolities, but it means to FIRST carve out a percentage of your income every month to be invested FIRST.
In an earlier example, I shared how I do this:
- 20% of income set aside for investing
- of this 20%, 80% goes into stable cash paying dividend stock including REITs and 20% balance into higher-risk-higher-return stuff
This is to be done REGARDLESS of how much I spend or spent that much, be it overspending or underspending (frankly speaking, readers on my blog will more likely be underspending rather than overspending).
So month-in-month-out, my investment portfolio will keep growing, and I will follow the rule to not overspend so I can invest consistently every month.
Why this is important
…is simply because most people are broke because they dont do this.
What they do is to pay everything else first THEN they try to save and invest the balance.
They pay the electricity bills, water bills, the mortgage or loan, etc etc…and at the end of the month, they’re already out of money and funds, and what do they do with that last $247? They’re too tired to think clearly, so they spend it on treating themselves to a nice meal or a purchase.
Poof, there goes that month’s investment opportunity.
Why paying yourself first is vital
Firstly, I know myself. I work better as systems and habits, so I’d rather set a budget and invest first from the get-go, and work around the balance; rather than the opposite of paying all the bills first then hope that I’ve enough money and willpower to invest at month end. I wont lie to myself, I…tend to fail that way.
That’s why I rather:
- exercise at the beginning of the day
- wake up as early as I can
- make all the hard decisions as early as possible
- do all the hard stuff as early as possible
Because I know that at the end of the day/week/month, my willpower is weak and I’ll do shit to help myself.
Therefore, the most logical conclusion for myself is to pay myself first and invest at the first of the month rather than at the last of the month, and it’s a
Converse to the vicious cycle of most people who pay everyone else first and try to save and invest the balance but fail at the end of the month and feel demotivated and stress, there’s a virtuous cycle of paying myself first and investing at the first of the month.
I feel like I’ve achieved more (which I have, by investing that 20%) that’s already working for me. That keeps me a little lean in my finances, and keeps me accountable to keep my money and funds in check…but I know that if I want to, I can spend the rest of the 80% because I’ve already invested.
So it’s guilt-free at this point.
This keeps me motivated and the momentum keeps me going =)
I’m the founder and writer here at NigelChua.com; as well as serial entrepreneur, therapy business entrepreneur, digital entrepreneur, investor and also happy husband, father and Christian.
Started and sold off a business for 7-figures; built another 7-figure one and growing it further, plus building/investing into other businesses and investments as well as advisory works.
Nowadays I share and teach entrepreneurship, financial independence, retiring early as well as building and living a life you love.