What "Pay Yourself First" Really Means

I know, you've already heard it. You already know it. But do you do it? Really? Are you sure? Do you even know what Pay Yourself First truly means?

When you're doing your budget, Pay Yourself First means you get to keep a portion of what you made!

What? You DO keep a portion of what you made? Really! Where is it? In your savings account? That's good. And what are you keeping it for? To buy a car?! Well, then you're really not keeping it, are you? You're actually saving it for someone else - the car dealer. It's not FOR you, and you're not KEEPING it. You're saving it to pay someone else.

Let's get something straight, here. Saving does not mean keeping. Keeping means you keep it. You hold onto it for as long as possible. You've worked hard for it, you've earned it, now you get to KEEP it.

Saving just means you're saving the money for somebody else. You're holding it for them. Mo matter what it's for, the money won't be yours for very long. Whether it's a new car, a house, a trip to Europe, that money is going to LEAVE YOUR POCKET at some point in the future. When it comes to your budget, that is the definition of saving, not keeping.

When you pay yourself first, you KEEP it! You get to keep some of your own money! This is why you budget, to remind yourself that you don't have to give it to your landlord, or the bank that holds your auto loan, or the grocery store, or the mall. It's YOURS! Isn't that fabulous!?

That's why the first step in creating a budget is to pay yourself first, which means keep the money! Hold onto it! It's YOURS for goodness' sake!

How much do you keep? Well, the prevailing thought is ten percent. 10% of your budget, of your total income, goes to paying yourself first. I, personally, prefer twenty percent. Why? Because it's my money! I worked hard for it! I want it to grow and grow and grow. Like the trees in my backyard, I want them to grow and produce fruit and grow some more and produce more trees to produce more fruit so I have fruit for the rest of my life without having to keep planting!

If you're just starting with a budget, would you rather plant a seed (10%) or a sapling (20%)? Which one do you think will grow faster? How quickly will each bare fruit?

Of course, most people are more comfortable with the ten percent. Why? Because they'd prefer their money go to the quality of life they are living right now, and that's fine! Any budget you try has to work for you so if you feel twenty percent is too much, let's go with ten.

Now, what do you do with this Pay-Yourself-First portion of your budget? Keep it safe, invest it carefully and make it make more money.

This is the part of your budget, and your income, that you never want to leave your side because to pay yourself first means to make this money make YOU money even when you're not working. Do you understand?

You also don't want to pay yourself first by keeping this money, then using the returns to pay someone else. Reinvest the proceeds so it has offspring that will be reinvested as well, creating a stream of income that keeps making more and more money so you can -

Pay Yourself First!

You're not saving this money for anyone else but you. Pay Yourself First means to budget monies that continue to pay you. Ultimately, this portion of your budget should become a stream of income that pays you, and you alone.

When your budget advises you on saving money, you're saving money to pay somebody else. You're saving to pay a school, a travel agent or jewelry designer. Saving is not a way to pay yourself first. To pay yourself first, you keep the money and make it AND its proceeds pay you forever!

Now you understand true meaning of Pay Yourself First.