Pay Yourself First

A very important concept to building wealth is the idea that you should pay yourself first.  Financial advisors and wealth building experts rarely agree on many things, but there is one thing that most definitely agree on:  you should pay yourself first. That’s what I’ve tried to do.  And I realize that I’m expensive.  Honestly, that’s a good thing.  But, to help drive home this concept, let’s take a look at what I used to do versus what I do now.  Hopefully, if you haven’t been paying yourself first, you will start to see the value in it.

Before Pay Yourself First

Life was a mess.  I was in massive credit card debt and I was getting calls from creditors left and right.  I couldn’t take it anymore.  Needless to say, my credit score was shot.  That’s mostly because I ignored those calls for a while, and didn’t care. My debt kept rising and rising because of the lack of payment and the interest rate.  But, the important thing to note is that during this time, I wasn’t paying myself first.  Here’s what I used to do.

As soon as I got my paycheck I would pay all my creditors first.  Sometimes, I was behind from the previous month and so I would make a payment just so I would not be further in default.  By the time I got done paying my creditors, I would have very little left over.  And, I still had to eat and try to have some measure of fun or entertainment for the month.

I’m not sure what changed or why, but I realized that the path I was on wasn’t working.  I needed to change.  I know the concept of pay yourself first has been prevalent in such literature as the Richest Man in Babylon.  But, it wasn’t until I read the Automatic Millionaire by David Bach that the concept stood out to me.  It took some time and it wasn’t overnight, but I started practicing what I was reading.

After Pay Yourself First

Now, things have turned around.  Much of me paying myself first comes automatically.  The way I look at it, every time I make a contribution to my retirement account, I am paying myself first.  When I make a contribution to my dividend portfolio.  I am paying myself first.  These are mandatory expenses that must be paid no matter what.  I treat those expenses almost equally as important as my rent, mortgage, and car payments.  Indeed, even when it looks like I have a more expensive month than usual, I still maintain these minimum contribution levels.

It’s a matter of mindset.  It’s too easy to rob from your future self by meeting today’s needs.  But, try not to do that.  Try to have a mindset that you will not steal from future dollars.  You won’t be able to get back the time that you’ve lost, but there’s no time like the present.  If you haven’t been paying yourself first, you should start today.  If you have been, then ask yourself, are you paying yourself enough?

One of the things that I did this year was to increase the contribution level to my dividend portfolio.  At the time of this writing, my portfolio is valued at about $36,000.  You’ll notice the tagline on the portfolio page that says that the portfolio was started from scratch, zero, zilch, nada.  That is true.  That’s also the benefit and product of the concept of pay yourself first.  I have a long way to go, but so far, it seems I am headed in the right direction.

Conclusion

There are certainly more than one ways to build wealth.  But, I share the opinion of those experts who recommend that you should pay yourself first.  It worked for me.  It might just work for you.  But, whatever strategy you choose.  I wish you the best of luck.

I realize that I haven’t posted since October 3, 2018.  I’ve been incredibly busy and expect that to be the case for the next couple of years.  Don’t worry, I’m not going anywhere!  But, that might result in me posting less.  I will always provide a monthly Dividend Income Report.  However, the number and frequency of the remaining posts will be dependent on how busy I am.  In some months, there will be several posts in the month, and in other months, there will be less.  But, regardless of how often I post, I hope you find value in the content.  You can also expect that I will try to do my part to support the DGI Community.

Now, go forth and pay yourself first!