I’d like to tell you about somebody I know. Let’s call him Sameer.

When Sameer received his first salary, at the age of 21, he spent it on a multitude of things. Things he’d already had in mind even before getting his paycheck! He spent on dining at his favourite restaurant, went on a shopping spree, booked tickets for a weekend getaway, gifted his mom a saree and his dad a new phone. He told himself that he’d start saving from next month.

Fast forward to today. It’s 6 years later and he still hasn’t started saving. He’s 27. He’ll be getting married next year. And he’s thinking of taking a home loan. And he barely has any investments to his name.

Sameer’s story might resonate with you.

We all know that saving is important. Yet somehow, we tend to ignore it or simply procrastinate. Instant gratification takes over and quite quickly becomes a habit.
It’s very common to spend on stuff we want and postpone saving and investing.
If we have some excess at the end of the month, we might lock it away in a fixed deposit. But that’s about it.
What this leads to is inconsistent and insufficient income growth. So to put it bluntly, you’re being insensitive with yourself.

Paying yourself first means that you’re not only looking out for your current self, but you’re also looking out for your future self.
Oftentimes, it takes years to realize that paying yourself first is an absolute must. And then, unfortunately, it’s too late.

So start today. Set aside a small part of your income every month, preferably 5 days after you get your salary.
Invest this amount. Then sit back and watch how your income slowly and steadily becomes wealth.

Here are 4 major benefits of paying yourself first

1. Planning for life goals

Investing in yourself before anything or anyone else, enables you to effectively plan your goals. Be it buying a car or a house, backpacking across Europe or getting a masters degree a few years into your career. Goals become so much more attainable when you set aside small amounts towards them every month.

2. Taking care of retirement

It is important to save for your goals. But it is even more important to consider retirement as one of your main goals. Imagine this, at the age of 60, you’ve built up a retirement fund that can sustain the lifestyle you’ve created over the last few decades. You’re also able to travel or start a business with the excess! The possibilities are endless.

3. Guilt-free spending

Once you’ve saved and invested at the beginning of the month, you don’t have to worry about your spending for the rest of the month. You won’t feel guilty if you end up partying too much at that reunion that your college friends have planned, or if you buy yourself a pair of fancy new shoes.

4. The magic of compounding

The beauty of starting early shows only ten years down the line. When compounding works wonders and makes your money grow at rates you cannot even imagine. Something like wine, it gets better with time.

Paying yourself first is super simple. Just automate your investments!

  • Start a SIP (systematic investment plan) in a mutual fund
  • Set aside anything between 10-30% of your income every month; this is a great start
  • Pick a date that’s between the 1st and the 10th of the month; then let it lie, and grow on it’s own

Follow this habit every month to create a platform of financial stability.
You owe it to yourself to be financially independent.
One decision followed by a small action. That’s all it takes.

Look at it this way, you’d be rewarding yourself for all the hard work you do by paying yourself first.

The most important thing you could do with the money you earn is to invest in yourself and your growth.

Rushina Thacker

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