Pay yourself First

Hello fantastic YoImageuths, today let us talk about financial management a lesson very many tend to learn through trial and error. Why learn the hard way when we can borrow a leaf from what successful business leaders have already done. Like they say “A fool and his money are soon parted.” So below are some of the principles they have used to get where they are:

  • Pay yourself first; this refers to a new kind of saving. The mistake we always make is to spend first and then save the leftovers which of course does not work. The “Pay yourself first’ principle encourages us to first deduct a reasonable percentage (say 10%) from your daily/weekly/monthly income before you start spending. This money can be left to accumulate as you do this regularly. Later you can channel the accumulated sum to a given purpose say an investment or asset acquisition.
  • Shopping list; this refers to a list of items you need to buy arranged in order of importance with their respective prices which should be predetermined by window shopping first. This saves you from spontaneous spending on unimportant items at that particular time. We all know that money is always negotiating with the pocket on how to get out.
  • Apply the “Funnel of spending“; this encourages us to spend with in our means  since our continent is known for outrageous spending habits. The mistake we make is that we use the inverted funnel and end up in massive debt. This is mostly true for civil servants. Let us learn from our brothers the Indians keep away from habits that will keep as broke.
  • Discount; Always ask for a discount when shopping. It could be easier when you shop in bulk. You can also target promotional sales events when prices have been cut and even then ask for a discount.
  • Self Discipline; This is very important as it is up to you to see your new developed spending habits through. Ensure that you stick to them. Of course you will make mistakes along the way but remember to get back on track. “What differentiates a rich man from a poor one is their spending habits not their income.”

That will be all for now, until next time.

Hassan

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