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Pay Yourself First – The Automatic Millionaire

Comments Off on Pay Yourself First – The Automatic Millionaire 19 July 2011

Among the principles that David Bach emphasizes in his book, Automatic Millionaire, is Pay Yourself First. This concept is hardly new. You find this stressed in blogs and numerous business books. You hear it from various acclaimed finance experts. Even your very own parents admonish you with this! But what really is Pay Yourself First? Is this rule really that hard to follow?

It simply means that before paying your bills, buying essentials, before doing anything, set aside a percentage of your take home pay to savings. To some, this type of saving habit is simple enough to comprehend but very difficult to follow. There is a pile of bills to pay and there is not enough left to be saved! The real problem is the mindset that people have towards financial management. You must consider changing your psyche and how you perceive things in order to make a significant change in your life. What you are used to hearing are spending habits and saving what’s left. This makes an emphasis on spending thus making spending, rather than saving, your top priority. You must reverse your mindset to save first then spend what is left.

Despite what other people say, paying yourself first doesn’t need a great amount of will power and discipline. And it certainly will not entail an essential overhaul on your lifestyle. A tiny, unnoticeable dent in your way of living will have a big effect on your future. The best way to do that according to Bach is to make savings automatic. You can set up to get a number of your paycheck to become diverted to your savings or retirement plan. Allocating money for your emergency fund must also not be ignored. This minimizes risking potential dipping into the honey pot during unforeseen circumstances.

You probably have overcome the barrier of savings allocation, then you can certainly go to making everything automated. You may have your income directly credited to an account besides your savings and cover your bills to be automatically debited from that point. Set up your bills to be paid prior to the due date to prevent unnecessary interest payments. This procedure is more convenient and much less prolonged. It also will provide a plan how much you must start. You can then structure your financial budget from the amount which you have left and live within your means.

Assessing your assets and liabilities is also essential to financial control. List down every expenditure, taking into account even the smallest expense. This is one way of discovering your spending pattern. At the end of the month, take a look at your list and determine which items are unnecessary, in excess, and you can live without. Instead of spending your money on these wanton or excessive items, why not add it to your savings? It will make a long term difference on your finances. You do not have to live in an austere kind of life. You can still maintain a happy and healthy lifestyle while securing your future.

Starting early on in life will mean more financial freedom sometime soon. No matter how old you are, it’s not too late to get started on saving. The Automatic Millionaire discusses Pay Yourself First in a more in depth manner. The book includes techniques, guides, and strategies to regain charge of your finances and ultimately fulfilling your goal of financial security.

My name is Mike N. Alger. I enjoy playing golf, cooking, surfing the net, and reading blogs and articles. I’ve read about Automatic Millionaire and it’s a personal finance education program designed for one to grow wealth and finish rich on any income level. Included in this program are the techniques, guides, and strategies to take charge of your finances and attain a financial security.

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