The unsung hero of wealth creation: Pay yourself first.
One of the most powerful strategies for building wealth is to pay yourself first. What this means is taking your pay cheque and setting aside money for your future BEFORE you pay any bills. Of course, this can be difficult if you’re living from pay cheque to pay cheque. But the reality is, if you want to build financial security, you have to start investing for tomorrow—even if it means taking a part-time job, starting a home business, reducing expenses or clipping coupons.
Here are some helpful tips:
- Start small. Start with an amount you’ll hardly notice, like 5-10% of your income, then work toward 20%.
- Make a budget. Only by knowing where your money goes can you see where savings can be made.
- Automate your saving. Transfer it automatically from your chequing account into a separate account. Or buy a Canada Savings Bond and make monthly payments.
- Lock it into a RRSP. Take away temptation by putting the money into an account that charges a penalty for early withdrawals.
- Increase your mortgage payments. By dedicating it to your mortgage, you’ll enjoy huge savings over the long run.
- Invest in a revenue property. Once you’ve saved enough for a down payment, buy an investment property and use the rental income – and if need be, a portion of your “pay yourself first” funds – to cover your mortgage payments. After a few years, you’ll have the financial security you’ve always dreamed of!
Make a commitment today to you and your financial future, start paying yourself first!
