If you read The Richest Man in Babylon, The Wealthy Barber, The Automatic Millionaire, or any other decent book on financial wisdom you will invariably find this advice:
"Pay yourself first."
In other words, put aside a percentage of your money for saving and investing before you pay for life's expenses and luxuries. This money becomes the seed for your future wealth. Combine it with that other great principle:
"Live within your means (spend less then you make)."
and you are setting yourself up for financial prosperity. As long as you save and invest that money wisely (most places say to pay yourself first at least 10%) you will be able to escape the trap of living paycheck to paycheck and grow your money substantially. Also, no matter how poor you are, almost anyone can afford to save 10% of their income. Trimming 10% is usually no problem - try it and I doubt you will not see your life impacted in any significant way.
When Jobina and I first got married we were lucky enough to hear the advice to save 10% of our income every month. Basically we were told to use it as an emergency fund - something to pay for extra surprise expenses. This worked well for us but the problem was that we never invested that money - instead it either saved us when we got into financial trouble (usually through overspending) or we got undisciplined and just spent it on something "nice for ourselves." Instead I wish we would have not only put money away for emergencies/luxuries but also had the knowledge and discipline to save and invest 10% of our income, paying ourselves first. This would have been a great strategy.
As the new year is coming up it will be time to reevaluate our finances and goals for the future . . . and it could be a great opportunity for you to do the same gentle reader! Pick up a copy of one of the previously mentioned books and let it both educate and inspire you to being wiser with your money. Don't use the excuse of your debts, life situation, or low income to not take action. Try this simple exercise:
1. How much money would you save if you saved 10% of your household income for the next 1, 2, or 5 years? Grab your calculator!
2. Ask yourself: "What would it take for me to to be able to save 10% of my current income?" You might need to cut back on some expenses, go without a few things, or consolidate some debt. Realize the truth: after some initial sacrifice it wouldn't be as hard as you thought.
3. Challenge yourself to a 6 month experiment - save 10% of your monthly income by paying yourself first and moving that money into a separate account from your main one.
If you aren't currently paying yourself first and would like to try this experiment (and your mate if applicable enthusiastically agrees), feel free to let me know. Also, pick up one of the books mentioned at the start of my post for inspiration and wisdom. If you try the experiment and it significantly impacts your life in a bad way, let me know and I'll take you out for dinner to try to make it up to you! But I'm not too worried - paying yourself first is one of the wisest ways to manage the financial resources that God has given you. Good luck!
*A few people have commented to me that my post could be interpreted as saying that paying yourself first is more important then even giving back to God - definitely not what I want to say! Giving generously should be your first financial priority, but out of your remaining money paying yourself first is just smart use of your money.
Church service at Holy Church near Rescue 1
2 days ago
6 comments:
Eric and I are going to give it a try. We will let you know how it goes!
That's awesome Lindsey - good for you guys! Jobina and I talked about it last night and we are going to start it in the new year. We already put 10% aside for "savings" (which end up being emergencies and luxury item buys) so instead we are going to do 5% for an emergency/luxuries fund and 10% for a true savings/investment fund. Very exciting. We were looking at how much we would have saved by now if we had done the Pay Yourself First rule since we were married - it would have been over o $40,000! Ah well, it's never too soon to start.
Mark, As a Christian man I use a biblical principle that says give God your "first fruits". In other words I believe that the world says pay yourself first, but God says give back to me first and trust me with the rest. I can say this with complete confidence because we have applied this to our life and have seen both spiritual rewards as well as financial. Over the last few years we have been recited for 17% of our gross income (around 24% of our net) at the end of the year and probably gave a additional 5%-7% that we couldn’t get recited for. None of this would make any of the top selling financial books, but yet we do very well with four kids on basically one income. How? By using many of the other principles that you have used in some of your previous entries, but above all I believe the Lord blesses those how follow his principles and those who are generous to others. Jesus also was very clear on what we should be investing in first when he had this to say in Matthew 6 19-21 –
Treasures in Heaven
"Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also.
We actually painted this verse over our front door so when we walk out into the world everyday we are reminded of what God sees as worthwhile investments, People! Giving is a way to connect to the Fathers heart, as he invented it! I know I basically preaching to the choir, but I just am passionate about giving God our first fruits!
You have a great Blog and I respect a lot of your wisdom, but I think you might want to test this wisdom to scripture (Maybe pay yourself second is better advise?). Anyways thanks for putting out a great blog. Joel
Hi Joel: Thanks for your comments! It sounds like you have had a great experience both in the spiritual and financial realms as you have faithfully given back to God.
I'm wondering if you are reading my lack of commentary on giving and my use of the term "pay yourself first" as me saying that I literally mean that one should pay oneself first above everything - including giving. In truth I do not. Perhaps I could have mentioned that giving generously back to God is always before any other kind of use of one's funds but I guess I had considered that so integral to a Christ follower's faith that I didn't think it was necessary. Maybe I was wrong!
The phrase Pay Yourself First is used my many Christian writers and experts in finance simply because that is how most people know this rule. But you are correct, giving generously to God would obviously precede it.
Perhaps some of the reason why I did not mention this was so that I didn't have to talk about it. To me, giving generously to God is a very personal matter (Mt 6:2-4) and I don't want to come across as either preachy or more "spiritual then thou." Jobina pointed out to me that I had written nothing about giving and wondered if people might take it as you have, so I will add a sentence to clarify that. Thanks again for the input Joel and keep on being passionate about giving!
Although I don’t know you, from reading your blog I was sure that you probably had the giving thing down, but there are a lot of people (even a lot of Christians) who are clueless about it simply because they never been taught or never had a good example of it in their lives. When I hear “pay yourself first” I think of those who would take that literally and do it first, thus maybe missing out on the blessings the Lord had in store for them.
But I do think we need to be more open about the joy and contentment of giving and what it does for ones spirit. Gods view of economy is vastly different than mans (even Christians!) The year of jubilee would outrage so many rich people in North America! And as you know Christ showed that even more by turning the religious leaders thinking upside down when he taught.
If I came across preachy and self righteous, please forgive me it wasn’t my intent. I just wanted to give God the glory for what He can do if you trust him with a that small part of your life. Believe me, nothing I have gained or learned has been on my own account. Thanks again Joel
Joel: No worries, you didn't come across preachy/self righteous, just passionate. I was talking about my own tendencies - and how I want to avoid those things! I can see how pay yourself "first" can literally land on people so I accepted your feedback and added something to my post so thanks for that.
I agree with you that sharing the joy of giving to God (and the blessings that come from it) is something we could all do more. The question I sometimes wrestle with is how to do this without either:
a. coming across arrogantly
b. putting pressure on others
c. guilting instead of inspiring
d. lecturing instead of educating
I have done all of these things (and had all of them done to me) and of course they don't work. Open question: How can we openly encourage and educate people on giving without falling into these traps?
Thanks for making me think Joel!
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