KLE 27: Pay Yourself Twice

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It is commonly taught that in order to build wealth, you first need to save; and, the best way to save – so common financial wisdom says – is to pay yourself first.

Investopedia (the online investment dictionary) explains Pay Yourself First:

This simple system is touted by many personal finance professionals and retirement planners as a very effective way of ensuring that individuals continue to make their chosen savings contributions month after month. It removes the temptation to skip a given month’s contribution and the risk that funds will be spent before the contribution has been made.

Regular, consistent savings contributions go a long way toward building a long-term nest egg, and some financial professionals even go so far as to call “pay yourself first” the golden rule of personal finance.

Nice, but paying yourself first doesn’t go far enough: as we have seen, $7 Million 7 Year Wealth System members have extraordinary reasons to save … reasons far and and away above and beyond those of ‘mere mortals’ i.e. those without a Life’s Purpose that requires them to reach a Large Number (e.g. $7 Million) by a Soon Date (e.g. 7 Years).

And, if you have two reasons to save money (1. to pay down debt, and 2. to build your investment war chest), then it stands to reason that you should pay yourself twice!

Steve, FL
I save whenever I have funds enough after paying bills first.Sometimes, this can amount to 10%  or more, but at times, when I haven’t earned enough, it can be nothing.

But, most people pay themselves second, if at all. From now on, I want you to concentrate on paying yourself twicebefore you spend money on anything else (other than taxes and social security); here’s how:

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Name and State (eg John, FL)
How much do you pay yourself once? (%)
How much do you pay yourself twice? (%)
How do you plan to bridge the gap (combined target = 15%; minimum 10% in ordinary savings)?

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Reader Comments

Hi Adrian,

Would a split here of 10% into savings and 10% into a pension be okay?

If it’s OK with you, it’s OK with me 🙂