Financial Planning Tip #1: Pay Yourself First – Save 10% Of Your Monthly Income
Singaporean’s Retirement Age has just raised from 62 to 65 with effect from 1 July 2008.
This, with in sync with better science, health, medication advances, males are expected to live till 80 whereas females are expected to live till 88, an average rise of 8 years.
To many of those who did not plan well for the future and depend much on current income for daily expenses, you are given 3 more years to earn your worth. Better work hard on it then!
One of the best financial planning book that I have ever read is this: The Richest Man in Babylon: Now Revised and Updated for the 21st Century.
And the above tip that I am sharing here is derived from the book, and I’m still following this advice (I can say, I am happy with the results, especially from past savings of less than $500 to currently more than $5,000, I am proud to be using this finacial tip!)
Do you think your life will be worse off if you do not keep this 10% as part of your daily expenses? The truth, as it’s physically tried and tested, is a big NO!
The mentality of most people is that, they do not plan for their daily expenses, any amount that’s inside the bank account is always usable. If you did manage to use over what your monthly income is, and tap into your actual savings, guess what? By then, the month is up, and your new pay is in! All ready for new expenses!
As such, paying yourself first, when you get your paycheck, and setting aside 10% or even 20% of it, will not really hurt you and it’s all the more for the better!
Some of you may say: “I am not like everybody and cannot save this 10% at all!” Fine, start small then, if you are able to save just $0.10 per day and slowly increases it to $1 then to $100 per month – every bit simply counts! Every drop makes an ocean. The principle is simply – “Start Today (big or small amount), Pay Yourself First and You’ll Be More Prepared For Your Future!”
And also, if you like to know, when you have some money already stacked aside, constantly looking at this amount (growing) with a positive mindset, you will help to “attract” even more money into your life.
If you totally agree with me and this “Pay Yourself First” principle, this is what you can do with actions:
- Set aside your preferred amount (10%, 20%, more or less, your choice) from your monthly income sources.
- Set up another Bank Account, preferably with no access to any ATM or debit card.
- Start transferring your money every month!
Once you are comfortable with the savings portion, the next step is to use part of these savings for life insurance planning (preferably limited premium whole life protection plan coupled/term plan and coupled with either an endowment plan or investment-linked plan to help preserve your savings and grow them!)
Are you ready for a better future?