It’s the beginning of 2009, the beginning of a new year.  2008 had passed and we are into a world filled with uncertaintly. Hence It is also the best time when you start to make resolutions or goals for a brand new year to overcome all uncertainty. As i believe one can only be successful if you have a vision.  Right now, can i urge you to pen down exactly what do you want to be different in 2009 especially in areas of wealth so that you can be financially successful at the end of the year.

One of the easiest and powerful way to accumulate wealth is to follow the famous “Pay Yourself First” rule, This is something that i strongly adovcate all my clients to do when they are starting a career.

What does “Paying Yourself First” mean and how you can follow it?

Basically, it means you simply set aside a certain amount of money each month that you will not touch (pay yourself), even before you pay your bills and expenses (pay others)!

Here’s a step by step guide which you can follow:

1.  From the amount of money you make each month, you decide how many percent of your monthly salary or income you want to set aside.  When you get your paycheck, the very first thing you do is to put this amount aside, hence the “pay yourself first”. The percent to set aside differs from individual to individual depending on each comfortable level and wealth target. Most people recommend 10% to 15% of the monthly income to set aside, but I suspect that you might need to go up to 20% or even 30% if you want to reach your financial success.

2.  Decide what you want to do with this amount which has been set aside.  Many will simply put the amount into their saving accounts.  However, the idea of paying yourself first is to use it for your wealth building.  You should be looking into investing them instead of just saving them.  Saving alone will not help you to reach your financial success.  Let the money earn you more money by investing it.  Consult with your financial planner or advisor to decide the kind of investment portfolio that suits you.

I would recommend that you setup what is known as an automatic withdraw from your bank account to your investment institution for your investments.  This is when money is automatically taken out of your savings or checking account each month and put into your investment.  Generally, you have to select a certain day each month for when the transaction will occur, and it will happen every month on that day, just like paying your bills.  In this way, it does not rely on your ability to set aside a certain amount each month. It relies on the computers who automatically invest your money for you. It is also easy once you realize how you don’t miss the money.

3.  Next, you pay off your bills.

4. Live on whatever is left over from your paycheck.  It does not however imply that you need to use up every single cents of what is left.  If you have surplus, then good for you.  If you have a substantial surplus, then go back and re-adjust your investment amount.  Increase you monthly set-aside amount for investment, and let it generate more money for you. Engaged in a regular investment saving plan for long term is a very good strategy because it takes advantage of dollor cost averaging.

5.  And finally, NO CREDIT CARD DEBT!  Don’t spend on credit.  As credit card are easily issued recently, the more you should be careful. A simple card can be a knife or a sword to you depending on how you use it. Also be very careful with home equity loans and car loans. It’s easy to get into trouble with both.

If you are disciplined, you can pay yourself first without running into a credit rut.

First, keep your personal expense low.  Don’t go out and spend your money on “ego” toys like a new car, a new outfit or a long vacation.  Not until the habit of paying yourself first has built up enough assests for you to afford them. Buy second hand car especially if you are a first timer!

Second, when you come up short, don’t dip into your investment to pay off your creditors.  Robert Kiyosaki believes that if you are under pressure from creditors, the pressure will actually inspire you to come up with new ways of making money.  Look for other ways to tide over.

As you start to build assets, you will see that the income from your assets will allow you to pay for your personal expenses and expanded your means for you to live the livestyle you want. 

Paying Yourself First is a simple yet powerful concept.  It is so powerful that it could be apply to other area besides money.  You can apply these same principle to time.  Pay Yourself First if you are a busy working mother.  You need time to take care of yourself so that you can take care of your family!

All the best to you in 2009! Wishing everyone a happy new year and be more prosperous in this brand new year! Cheers =)

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