The Number One Secret to Becoming Financially Secure…
Getting Ahead of the Curve: Part 1
Pay Yourself FIRST!
To actually pay yourself first, it requires a few things, the first being a mental shift, a shift in consciousness or a shift in perspective. If this blog can help you to have a light bulb moment, a flick of the switch whereby you take action and start paying yourself first, my job would be part way complete.
A mentor once told me, “the reason you are still broke is because you are paying everyone else first, you are paying your bills, you are paying the local cafe, you are paying the supermarkets all first. You need to shift your mindset from paying everyone else first, to paying yourself first!”
When it comes to finances, you have to think of yourself, you and your partner, your family, as a corporation or business.
That is the another bit of advise I was given by my mentor a long time ago, which has helped me to truly get ahead and I hope will be able to help you to follow in my footsteps by truly taking the first step to becoming financially secure and potentially even wealthy!
That one bit of advise was what gave me my light bulb moment, because in business the number one rule to being an owner is to pay yourself first. However, it takes a lot of strong will and discipline to keep paying yourself first week in, week out.
I use the athlete analogy quite often, as I am a personal trainer, CrossFit Coach and love sport, but it is probably the best analogy to use as well, because athletes have such great discipline. Much more than the general population, like you or I.
Athletes need to be disciplined in their training schedules, their eating habits, the lifestyles they live, especially seeing as they are in the spotlight and looked up to as role models. The sacrifices they make, for the love of their sport, it is truly inspirational. That discipline is but an iota of what you and I need, because all you have to think about is sitting down every week, fortnight or month, depending on how you get paid, and transferring a small percentage of what you get paid into a savings account you do not touch. Which probably takes 15 minutes, whereas athletes commit to 40-100 hours a week, cooking, eating, training, sleeping and doing everything right.
But, just like an athlete, you can have speed bumps in the plan and process, where an athlete may get injured, you may have things happen that you were not expecting…
What happens when you get those unexpected speeding fines? Or you are seeing fuel prices soar?
Food is getting more expensive, inflation is going up and will only go higher, so how do you keep to paying yourself first, when you need more money to live and get the necessities?
You will need this discipline to stop yourself from reaching into the account you should be leaving alone, and the best thing to do here is to have a strong reason WHY you should not touch that account.
Having a goal for saving is just another tool in your arsenal to help you remain strong willed and disciplined.
Having a goal or reason to pay yourself first will be the only thing that will keep you going when times get tough. It could be as simple as saving for that holiday to Fiji or it could be more complex, such as achieving financial freedom and retiring when you are 45 years old.
Having that goal is great, but it needs to be anchored to strong emotions, that are linked to pain and pleasure. For an example, you may want to retire by 45 years old, but you need to have a really strong reason as to why you want to retire by that age. Is it because you truly dislike your job? Do you want to be able to spend more time with family? Do you want to give back to your community and you believe retiring early will give you the time and money to do so?
Your goal is of your own making, if you need help with regards to creating your own vision of your life, check out my first ever blog!
Other than strong will and discipline, you also need a sound plan, a process that you follow, week in, week out. Only a strong process will keep you from falling back into old habits.
Going back to treating yourself, your family, as a business, what do all good businesses have, all successful businesses anyhow? They have a strong process and systems to keep the business running.
Which is what you will need, and I am going to share with you the process I use every fortnight and month to be able to keep paying ourselves first (My wife and I, plus our dog too, he is apart of the family).
The hardest part is starting, and you need to figure out how much you would like to save/pay yourself first, as well as how much you need to live. That is why creating a budget to start is a great way to understand where you are at, to take the next step forward in your finances. You can follow my budget process right here, just click that link and follow it step by step.
Once you have complete your budget, you need to agree upon a number that you will save each week, fortnight or month that you can commit to for the whole year. (This number will vary on your circumstances, hence why it is necessary to complete a budget.)
You need to carve out 5-20 minutes each week or fortnight to commit to paying yourself first. Simply, once you get paid, take out the amount that you have agreed upon, with yourself, your partner or family, and transfer it to an account that you will not take from. Or you can invest it, but I will go through this later on.
It is best to also have another savings account, whereby you can commit a small proportion to big expenses that may come up out of nowhere. I call it an emergency savings account, where any fines or big expenses that pop up out of the blue get paid from this account.
Repeat the process and review your budget every year, as life gets more expensive, or your wage increases, the number you can pay yourself first will change!
If you can continue to complete these 5 steps, paying yourself first will be full proof, now of course, some of these steps may not suit your situation, or you may not like numbers. That is where having someone else look over your circumstances and budget might be a good idea.
The last step comes down to figuring out how to achieve your goal, which comes down to understanding the investment vehicles, and the complexities of risk.
Understanding the markets and understanding where your money should go to get the best outcome for you is truly a minefield, that is when having a great Financial Advisor by your side would help significantly. They know the ins and outs of the markets, they have been taught the complexities of financial products and have the processes to help you achieve your goals.
I will delve into how to look out for a great financial advisor in a new blog after this series, so look out for that.
However, I will also be going through the investments vehicles you can use to help you achieve your goals and dreams in part III of Getting Ahead of the Curve.
But next week, I will be taking you through what to expect of your tax this year and some truly simple ways in which you are entitled to minimise that tax bill or receive more of a refund from the tax you have paid in Part II.
Until next time,
Take Back Control
