Reason for this Goal and how to pay yourself first: The single best personal investing financial habit you could develop and apply is paying yourself first. This single habit will change your financial destiny.
Take 10% of each pay cheque and invest it into appreciating assets. Just like you would pay all your expenses (car, insurance, utilities, mortgage, etc.), consider the “Pay Yourself 10%” as a mandatory expense that you pay.
The "how to pay yourself first" is as simple as putting this money into a separate savings or investing account as your first payment, after you pay for your absolute necessities (i.e. rent or mortgage). If you are in a poor financial situation, start with 1% and work you way up in 1% increments until you are paying yourself a minimum of 10%. Don't delay. Start NOW. Consider this payment as important as paying making your car payment or paying your hydro bill.
The key is that you need to create the HABIT now. DON'T WAIT UNTIL YOU THINK YOU ARE MORE READY. START NOW, even if it is $ 10/month. The habit needs to start now, not in 10 years, or you will miss out one one of the wonders of the world . . . compound interest.
Spending below your means is important. Don't overspend on lifestyle.
If you want to be really wealthy, double the 10% to 20%. You will be happy you start this key financial habit, as this single habit will (should) allow you to become a millionaire before the time you retire. Much sooner if you adopt 20%.
If you use on-line banking, setup a special SAVINGS (INVESTING) account. Setup an AUTOMATIC transfer of your amount (ideally 10% but start with a smaller amount if necessary), on the day after you get paid.
With personal investing and as follow-up once you understand how to pay yourself first, there are many appreciating asset classes to invest in to develop your net worth. In general, you want to buy things that go up in value (appreciate) versus things that go down in value (depreciate).
Assets generally depreciate due to wear and tear through the passage of time and other key factors such as obsolescence. Most people are interested in purchasing new products and that is one of the main reasons assets depreciate due to the law of supply and demand.
To understand how to invest in the stock market, read about the investing strategies of the # 1 investor of all time: billionaire, Mr. Warren Buffet.
To understand the benefits of real estate investing, check out my page on Real Estate Investing Goals. We own four homes on our street known as Gables On The Park and this was one of the foundational keys to our success.
With the application of this goal, and the benefits of learning about compound interest (discussed in Goal # 41 - Learn Personal Finance 101), you benefit the most by starting to invest in appreciating assets as soon as you start earning income, to have the maximum benefit of time for the compounding to work for you.
Now that you've learned how to pay yourself first, don't delay and START today.
Purchase this book on Amazon here. You will go directly to Amazon's book ordering site.
Take time to develop your personal investing strategy and to understand how to pay yourself first. Ensure that paying yourself 10-20% first becomes a key component of your strategy.
Suggested Goal(s): Put 10% of each pay into an appreciating asset account.
Your Outrageous Goal: Own > $X in appreciating assets by retirement.
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Last updated: January 25, 2020