This week finds us smack dab in the middle of earnings season, with the major companies reporting daily. These announcements have the power to rock the market up down and sideways…not that we need another reason to increase volatility! Congressional hearings, compensation to bailed-out firms, compensation packages and the soon to be introduced Barney Frank to-big-to-be-allowed-to-fail package. The outrage of the public (I know I am not too happy) over the millions of dollars of pay that executives are taking can bring anyone’s blood to a boil. (c’mon…you know you’re starting to see red). What’s the mantra of these “high income earners?” Pay yourself first.
Now…before you blow a gasket, just think about it for a minute. I am not at all agreeing with their philosophy or practice, but one thing I teach my clients regularly is…that’s right…PAY YOURSELF FIRST.
Saving is a form of tithing. Those in certain circles set aside a fixed portion of their income to support a cause, like the local church. Regardless of their expenses or needs, the money dedicated to the tithe comes out first- similar to your 401(k) or savings plan- you do have a savings plan, don‘t you? That’s what pay yourself first is all about…before you spend it, set a fixed portion aside and no matter what, save it. Save it for a vacation. Save it for your kid’s college. Save it for the church or temple, or for cancer-care. Just save, save, save it. The best way to do this is to pay yourself first.
As I have written about before, take a look at your expenses on a monthly basis and balance it against your income. If you have a positive balance, use these figures to assist you in deciding how much you can save on a monthly basis. Then, just take it out, much like your 401 (k) payment before you spend it. That’s why it’s called “pay yourself first.” Got it? Good…now go and start saving!
