You’re probably like, what does that even mean?
First of all, what does it mean to pay yourself? Let’s explain what it means to pay yourself. This is a very important perspective culled from the book ‘The Richest Man in Babylon’.
A lot of times, we tend to see saving as a sort of obligation or punishment, something that’s really hard to do, but it is not. Saving is simply paying yourself, and here’s how. When you get paid your salary for the month, you begin to pile up a list of things you are going to do with it, like pay rent, go shopping, feeding etc and before you know it, somehow by the end of the month you’re broke once again no matter how much salary you earn, how?!
Here’s how, by purchasing or doing all these things, you are inadvertently paying all these people, you’re paying your landlord with the rent, you’re paying Shoprite with grocery money, you’re paying the Suya man with that your #1000 suya you are buying every week, I see you.
But do you know why you’re broke, after paying all these people? Because you haven’t paid the most important person, YOU. When you earn that salary, before you begin to think about the endless list of people and businesses you’re going to pay with your hard earned money, why not pay yourself first. Whether it’s 10% or as much as 40%, that’s up to you, as long as you are consistently paying yourself you won’t go broke.
Now that you know why you should save, do you know how to save?
How to Save : Practical Steps to take
- Make the basic savings decisions:
First, you need to make up your mind to save. Understand that this is something you are ready to commit to and decide that you’re ready.
After doing that, you need to agree on how much you are willing to save, what percentage of your salary or pocket money, how frequently you will save, will you save from unexpected cash inflow, like a birthday gift of cash, and all that.
- Decide on the Savings Platform:
Do you want to save in a bank account you’re not using, open a savings bank account or invest in TCL 4:24 scheme and relax while receiving your monthly returns
Choose the platform you are most comfortable with, as some people are not comfortable with online banks or savings accounts and will prefer bank accounts, so choose whichever fits your ideals.
- Cut down your expenses
In order to save, and not end up clearing out your savings to meet your expenses, you need to learn to live on less than you earn. So assume you only earn what is left after you save, so if you’re earning 200k and you save 20k , as far as you are concerned your salary is 180k.
So plan your expenses according to that number. Cut down in little ways like using less data, not leaving all the lights on in your house when you go to bed to save electricity, buying #1000 suya every Friday instead of #2000, saying no to that event that you don’t really want to go to that you know will finish your money. These little spending cuts may even leave you with some change at the end of the month that can roll over into your savings.
- Hold yourself Accountable
It’s easy to be tempted to withdraw from your savings for that birthday party, that Asoebi, that thrift store sale. You’ll return the money later right? My darling, don’t do it, that’s how it starts. We know we’ve all been guilty of it.
So make sure you hold yourself accountable, be disciplined, don’t take from your savings unless it is an emergency or a calculated investment opportunity. Emphasis on calculated not pyramid schemes.
Respect your savings and invest it.
In Summary, in this life, if you don’t pay yourself first by saving, you will just be going broke monthly and be wondering where all your money went. So Pay yourself, or go broke.