Pay Yourself First | Why and How

Pay Yourself First – What Is This Golden Rule?

What is meant by the old adage ‘Pay Yourself First’? Why does it truly separate the rich from the poor and middle classes? How you can apply this principle yourself in order to build your own wealth and gain financial independence earlier?

In this blog I will answer all of these questions and give you some simple actions that you can follow today to put you on the path to financial freedom!

chris bourne pay yourself firstIf we haven’t met before…

Hi! I’m Chris Bourne. I’ve been a financial planner here in the UK for over 16 years. My job is to help people achieve financial independence early. I currently look after many millions of pounds of client wealth and help clients with goal setting, investment strategy and tax planning.

This blog is a place for me to share some of this knowledge with you to help you reach your financial freedom. If you are interested, I also have video’s over on my YouTube channel and other blog posts that are full of further tips to manage your money wisely.

So… ‘Pay Yourself First’…?

Is your goal to be financially free by a young age so you can travel the world? Have complete choice over the type of work that you do and how frequently you do it?

Before you even think about where to invest money and how tax efficient it is, you need to know the basic rules and principles of wealth building. Golden rule number 1 is ‘Pay Yourself First’.

This little bit of advice has been around for many, many years.

It’s thought to have been introduced in a very famous personal finance book called ‘The Richest Man in Babylon’, originally published in 1926. The principles in that book are as true today as they were then.

Millions of people have become wealthier and financially smarter people just by reading this book and following its principles. Other international best-selling books like Rich Dad Poor Dad repeat this golden rule as a concrete principle.

The rule is simply this… Out of what you get paid every week or every month, take at least 10% off it and put it aside. That amount is yours and no one else’s.

It’s not the gas compay’s or the government’s – it’s yours.

Pay Yourself First – That’s it!

Pay yourself ate least 10% of what you earn every month. If you get paid 2000 a month, 200 of it is yours and yours alone. That is the money that is used to obtain financial freedom. Simple… right?

But if it’s that simple, why do people fail to do it?

Well, the problem is that people usually fall at the first hurdle. They’re conditioned to pay their bills first you see.

FThey pay their bills and pay for their food and living costs, and then they realise they haven’t got 10% left.

OR they do put the money aside with all good intentions but at some point in the month they reach the same realisation; they haven’t got enough left.

That is when they end up dipping into the 10% they’ve paid themselves.

But that’s breaking the rule!

Remember that money is yours and yours alone.

That’s not to say you shouldn’t pay your bills or eat! Of course you need to do that you’ll get into serious trouble if you don’t! But if your outgoings cut into that 10% of your pay, then your costs have expanded beyond your means.

You then have two simple choices…

You can either cut back on costs, or if you’re unwilling or unable to do that, you can EARN MORE MONEY.

So financial freedom is really just a mindset.

If your answer to the above is:

‘I’ve got a job and it doesn’t pay me enough as it is!’

You need to find a way of adding more value to get paid more, or get another job!

‘But there are barely any jobs out there, it’s a tough market at the moment.’

So, make your own job!  A job after all is just an acronym: it means ‘Just Over Broke’.

Most employers will only pay you as little as they can get away with, so take back the power!

‘Yeah, but everything’s saturated. It’s too late now all of the money’s been made’.

Well I’m afraid if you think like that my friend, you never try. If you never try, you’ll be proven right and you’ll be confined to the rat race forever.

If you need any tips on getting some side hustles to make more money, check out this video on my YouTube channel. I give you some simple tips on a couple of things you can do to bring some extra money in.

If on the other hand…

If you think differently, and you believe you can achieve that extra income, then you’ll take ACTION.

Action is how you’ll ensure you pay yourself first and get the lifestyle you deserve. You’ve got to work for it, it’s not just going to fall into your lap.

So paying yourself first is of course just the foundation to your success. You then need to know how to utilise that money to create wealth, it can’t just sit there in a bank account. But that is for other blog posts and videos to tackle!

So, there are four actions I want you to take right now in order to get you on the path to financial freedom:

  1. If you haven’t read them already, I want you to buy The Richest Man in Babylon and Rich Dad Poor Dad. These are two essential reads to understanding the mindset of building wealth. Click here for The Richest Man and Here for Rich Dad Poor Dad.
  2. Then, I want you to let me know that you’ve got your copies by leaving a comment below, or if you’re one of the many people who have read these books, leave a comment to back up what I’m saying here! Also, recommend what you think are the best follow up reads.
  3. I want you to identify from your own income if you have at least 10% available to put aside every month. If not, I want you to start getting into the MINDSET and thinking about how you can alter that. The mindset to change is where it all starts.
  4. Finally, as I’ve already mentioned I’d really appreciate it if you could go over to my YouTube Channel, subscribe and hit the notification bell to see regular content on wealth building and financial independence.

I’ll be putting the video to this blog in a playlist called Wealth Building for Beginners. This will be made up of short videos that will help you get the base knowledge for financial success, so make sure to check that out.

pay yourself first

I’m Chris Bourne, stay savvy, we’ll chat soon.

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