One of the biggest challenges to the average consumer in the United States is building wealth, especially with so many people living “paycheck to paycheck”. The problem is that very few consumers today have specific financial goals and objectives and many, by the time the end of the month rolls around, find themselves broke yet again.
If you identify with those statements, and you’re looking for a solution, one of the first rules that you must follow in order to build wealth is to always pay yourself first.
Many people are confused by this term so it’s easier to simply take a look at a few examples. First, if you are the type of person that sits down once a month to pay your bills, the first check that you write out should simply be to yourself.
It’s simply a matter of determining how much money you can afford to set aside and then commit to take that money and deposit it into either a brokerage account, an SEP IRA, a 401(k) or some type of mutual fund. Even if you don’t think you can “afford it”, still take that money and pay yourself first by putting it into one of the aforementioned accounts.
If you find that you can’t cover other expenses, make a note of how much money you lack and make an effort to raise it somehow, either by working a part-time job, cutting back on other expenses and so forth.
If that means that you have to stop buying your Starbucks latte every day, cut back on going to the spa once a month, purchase off brand food products or cancel your premium television subscription, suck it up and just do it.
Many people go into debt to upgrade their lifestyle, purchasing cars that they can afford, clothing that they don’t need and luxurious vacations that only last for a few days. If that’s you, your financial problems are only going to get worse over time, unfortunately.
A lot of people reading this blog right now are probably cringing from the thought of having to cut back on some of their luxuries and, if that’s you, ask yourself this question; would you rather give up some luxuries now in order to have financial freedom later?
If you said no you can stop reading right now but, if you said “hell yes!”, you’re on the right track.
The fact is that if you decide to take control of your financial situation, the sense of empowerment that you will receive will affect every part of your life. Making the decision to become financially independent is a big step, no doubt, and if you can get past having to impress your neighbors with material goods we guarantee that it will change your life for the better.
One last word is simply this; once you decide to pay yourself first, stick to your guns and keep it up. If you want to be successful financially, and not be a slave to debt for your entire life, paying yourself first is the best way to do it.