Pay yourself first

Save and invest 10% of your income throughout your working life. Take 10% of your income off the top of your paycheck each time you receive it and put it away into a special account for financial accumulation. If you just saved 100 dollars per month throughout your working lifetime and you invested that money in an average mutual fund that grew at 10% per annum, you would accumulate a fortune of more than one million dollars by the time you retire. What this means is that anyone, even a minimum wage earner, if they start early enough and save long enough, can become a millionaire in the course of time.

It was once said that if you cannot save money, then the seeds of greatness are not in you. Developing the lifelong habit of saving and investing your money is not easy. It requires tremendous determination and willpower. You have to set it as a goal. Write it down. Make a plan. Work on it all the time. But once it locks in and becomes automatic, your financial success is virtually guaranteed.

Practice frugality, frugality, frugality in all things. Be very careful with every penny. Question every expenditure. Delay or defer every important buying decision for at least a week, if not a month. The longer you put off making a buying decision, the better will be your decision, and the better a price you will get at that time.

The major reason that people retire poor is because of impluse purchases. They see something and they buy it, with very little thought. They become victims of what is called Parkinson's law. This law says that expenses rise to meet income. No matter how much you earn, you spend that much and a little bit more besides. You never get ahead and you never get out of debt if you fall prey to Parkinson's law.

But this is not for you. If you cannot save 10% of your income, start today by saving 1% of your income in the special savings and investment account. Put it away at the beginning of each month, even before you begin paying your debts. Learn to live on the other 99% of your income. As you become comfortable living on 99% of your income, raise your savings level to 2% of your income, then 3% and 4% and so on. Within one year, you'll find yourself saving 10% and maybe even 15% or 20% of your income and living comfortably on the balance. At the same time, your savings and investment account will start to grow. You'll start to become more careful about your expenditures and you'll start paying off your debts. Within a year or two, your entire financial life will be under your control and you'll be on your way to becoming a self-made millionaire. This process has worked for everyone who has ever tried it and it will work for you.

by Brian Tracy