Remember that first paycheck? You were handed an envelope that represented hours of hard work. Do you remember that feeling of pride...knowing that the sweat of your brow was represented in the enclosed check? Do you remember the sense on anticipation when you tore back the seal on that envelope and then.... Who the heck is FICA?
The government has no qualms about dipping into your income and taking their portion before you ever see it. When it comes to "the pay yourself first concept," you should feel no different.
Yesterday, we posted on our Facebook page about Pay Yourself First. We presented the ideal scenario as 15% of your salary tucked away to mature and grow in smart investments. We also presented the alternative - just tuck away something, even if it's only $10.
What does that look like in real numbers? Say you're a recent college graduate, working 40 hours a week at a $12.50 per hour job. Let's do the math...
40 hours x $12.50 = $500 per week
$500 per week x 52 weeks per year = $26,000
If you file taxes as single, without any dependents, unable to be claimed as someone else's dependent - you would qualify in the 15% tax bracket.
With that estimate in mind, your net income per paycheck would be roughly $425 or $1700 per month. That will make for a tight budget, but what if you deducted money for your future before you ever saw it?
Many companies offer a direct deposit option for their employees. If you had even 5% of your net salary ($21.25 per paycheck / $85 per month) moved to a savings account - what would that look like in a few years with a smart investment plan?
Don't rely on yourself to do this... Determine what you can realistically afford to do and have it automatically moved before you see it. Otherwise, the temptation to spend it may be too strong.
Generation Millionaire has a myriad of ideas around the Pay Yourself First concept. To learn more, contact Stephenie Rulli to schedule a consultation... generationmillionaire@gmail.com.
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Why isn't this concept being taught nationwide in our public schools, colleges, and universities? Could it be because those in charge don't know this simple, yet profound principle? In light of today’s economic climate, managing one’s finances and saving for one’s retirement should be a top priority for every American. This article does an excellent job outlining several steps toward financial security. Especially useful is the concept of saving 10% of one’s income. I just read about an interesting concept called the 10/90 principle…paying yourself first by investing in your financial future at http://www.christianretirement.com While it may seem selfish to some, I feel that if I do not take care of my own financial needs no one else will. I have been following the 10/90 principle (paying oneself first) for years, and it works wonders for your finances. Great article!
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