pay yourself first

PAY YOURSELF FIRST:
What does it mean to Pay Yourself First? Why is it important to pay yourself first? how to pay yourself first? And finally, how much to pay yourself first?
When people start to have a steady income, they immediately increase their expenses. Soon they get entrapped in the Rat Race of “Get up, go for job and pay bills” regardless of the amount of money they earn every month.
:- MR. smart
Firstly, they work to materialize the dreams of their employer. Secondly, they work for the government by paying taxes. Thirdly, they work for the bank which owns their mortgages and credit card loans. They work for everyone else. Then they put a little, if any, money in the asset column. That is precisely the reason they remain a struggling middle class. But, Mr Smart expects you to break these shackles and seek financial freedom. So, you should rather be paying yourself first by putting a sizeable part of your earning in asset column and spend what is left. The Pay Yourself First concept is of fundamental importance in your way to getting rich.

 

Mr Smart divides the concept of paying yourself first into two parts. Firstly, set aside a sizeable portion of your monthly income and spend only what is left. Secondly, buy assets that generate money without your personal presence and efforts. Stocks, bonds and housing units which generate rental income are examples of such assets which make passive income for you. That is the Pay Yourself First definition.

If your income is bare enough to meet your living expense, then take a leap further by seeking a second job. Mr Smart admits that it is easy said than done. But, you don’t have any choice if your target is financial freedom. So, get the second job and save all the additional income to buy passive income-producing assets. Repeat this cycle over and over again. In a few years, you will not only free yourself from the Rat Race but also seek financial freedom. Here comes the point when your guide Mr Smart wants you to stop working for money. Yes, you have listened rightly STOP WORKING FOR MONEY. Now, you should rather make money work for you. You may keep or leave your day time job. But, you must not essentially work for money.

steps you need to follow:

1. You can keep your savings in a separate bank account till you have saved money enough to buy an income-producing asset.
2. Don’t be afraid of risk. Rather manage risk creatively. 
3. Invest your time, money and energy in your financial training and learning. 
4. Increase your portfolio of income-generating assets gradually. 
5. If your income is bare enough to meet your living expense, get a second job and save all the additional income to buy passive income-producing assets.