Making financial decisions on your own can be tough. Truth be told, I wasn’t always a personal finance expert. There was a time when I was pretty clueless when it came to money. (The lack of financial literacy in our education system sure didn’t help.) Then one day I came across a book and it changed my life. I’m of course talking about the Wealthy Barber by David Chilton.
The Wealthy Barber taught me a lot of valuable lessons about money, but perhaps the most valuable lesson of all is the benefit of “paying yourself first.” You’ve probably heard of this term, but do you truly understand what it means? Nobody is forcing us to save money, so a lot of us treat savings as our lowest priority when it comes to our budget. We save whatever money is left over at the end of the month. (And surprise, surprise, oftentimes it’s nothing.)
The fact of the matter is that it’s more important than ever to save. With home prices rising in most big cities and Canadians living longer than ever before, there’s never been a more important time to save money than right now.
When you pay yourself first, you treat savings as your first priority instead of your last priority. The easiest way to do this is to automatically having a set amount of money from your paycheque go into your savings account. That way it’s out of sight, out of mind and you won’t be tempted to spend it. And by sticking to the rest of your budget, you won’t have to dip into those savings.
How much do you need to save? It all depends on what you’re saving towards. If you’re not in the habit of saving money, start small. Start by saving $25 a week or whatever you can afford. Then gradually work your way up.
By paying myself first I was able to buy a house at age 27, burn my mortgage by age 30 and now I’m able to enjoy financial freedom by travelling all around the world. You, too, can enjoy financial freedom if you’re able to stick to this simple advice.
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Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians, available now on Amazon and at Chapters, Indigo and major bookstores, and as an Audiobook on Amazon, Audible and iTunes.