Pay Yourself First

Others call this saving activity as “Paying yourself first”.

It only means that you set aside a part of your income for yourself, before you even pay the rest of your expenses.

It’s an embodiment of the modification of the equation from

INCOME – EXPENSES = SAVING

which is the paradigm of many, into

INCOME – SAVINGS = EXPENSES

which is the operating system of a wiser man.

With the second equation, you adjust your lifestyle to what’s left after deducting your own fair share of your income, unlike with the first set-up that practically leaves a diligently working man nothing to save because of his uncontrolled expenses.

When I had nothing to save

During college, I practically had nothing to save.

In fact, I am very thankful for my scholarship that enabled me to finish my studies.

It may not be an exaggeration if I would say that I might have not finished my college education if not for the scholarship I received.

My tuition every semester was fully paid.

My expenses, I got from my monthly stipends, which oftentimes came late.

There were times when I was short of budget, thanks to friends in the rescue.

I recall the memories when I would sometimes walk a distance during break time, to go to a carinderia that offers lunch at a much cheaper price. (Now I miss those times)

My life was very simple then.
Or I should say my life was made simple then.

The Shift

Until I finally graduated, and shortly landed on a job.

I started working last year, and since the time I have learned the value of financial literacy, I have never failed to save.

Every payday, I would immediately set aside a part of my salary to pay myself for a month-long of work and add it to my investing fund.

I did it religiously, until it became a habit, the stage at which that task becomes effortlessly automatic.

When I also receive money aside from my paycheck, I equally set aside a portion of it and infuse it to my investing account.

Any amount that I don’t need I throw in my investing account.

Interestingly, the bible also says something like that:

“In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.” (Proverbs 21:20, NIV)

 

Autocatalytic Effect

In my undergrad studies, we have this type of chemical reaction we call ‘autocatalytic’.
That may sound nerdy, but it only means speeding up the process/reaction by the produced product itself.

As a consequence, more and more are produced as the reaction progresses.

Similarly, I realized saving also has some autocatalytic nature.

In my experience, saving may appear boring at first, seeing very small impact if not none at all.

But once you see your savings growing month after month, you’ll get more excited to save and add more. The result that you see adds to the drive why you should continue the habit of saving.

Focus on the habit

One common hindrance wall on saving is not to have something to save at all.

They would argue the difficulty of saving reasoning that their income is even not enough for their daily needs.

Here comes the useful advice of T Harv Eker in his book Secrets of the Millionaire Mind.

He suggests to practice the act of saving, even if it entails a very small amount, whether 100 pesos, or 50, or 10. Or even a centavo.

The point is the solidification of the habit, continuously training your mind and character.

As one author says, we are all creature of habits, which are a thousand more powerful than our thoughts.

So focus on the habit and just increase the amount you save once your income increases. Blessings will then rain on anyone prepared!

Retirement??!

Back to saving, I originally planned my savings to be my retirement fund, (just like what’s advised by Bro Bo Sanchez). An officemate actually laughed at me when I shared to her that plan of mine.

Well, that’s understandable.

And I realized that doing this preparation at this early point in time, it’s very probable that it can serve for more than my retirement needs.

Maybe, once I have acquired enough capital and knowledge in trading, I would probably source out some of my expenses from any profits I would get from the stock market.

[When you retire, you can look forward to many things, but one thing you may not look forward to is debt. Being unable to afford your monthly bills or other retirement expenses may make you ponder taking out a mortgage on your home. If so, consider a reverse mortgage service that pays you, instead. When you apply you’ll need to calculate the amount of your reverse loan in order to determine how much home equity you can borrow against. Then you can select how you receive the money. A common option is to get monthly payments from your lender, but you can also choose a line of credit or a single large payment. Regardless, you will not have to pay any of the money back immediately. In fact, as long as you live in your home, the agreement will stay active and the balance will not be owed. When you leave you must pay it fully or allow the sale of the property.]

 

The Dream

But while I am still in the early part of the journey towards that, I have to consistently remind myself of my playful dreams to push myself in action.

I am too excited to have my own farm.
I really picture myself living in the middle of a vast wide field.

In fact, if God would allow me to choose my way of death, that would be a sudden death while I am lying in a cradle tied between two trees.

At least I’ll be sure that I’ll be taking in fresh air as my last breath. HAHA

I have also decided to not only think of myself and the people in my life. Many are in more dire need of assistance, pushing me to earn more so I can help and bless even more.