Who the Rich Pay First

You have probably heard the old adage "pay yourself first." It is well known because it works! People who want to save money always do so by paying themselves first. This means they have money taken out of their paycheck and sent directly to a 401(k) plan. Or they have money debited out of their checking account on a specific day every month. They decide in advance that's what they are going to save, then they automate the process.

What does it take to become rich? A good rule of thumb is saving 10% of your gross income for about 30 years. If you are older and want to retire in less than 30 years, then you need to save 15% or 20% or 25%. If you are younger and want to be financially independent while you're still very young, the same goes for you. My 24-year-old son saves the first 30% of his gross income. The first 10% is his retirement savings, money that he never intends to touch until he no longer wants to work. The second 10% is for future purchases of major ticket items such as cars, fabulous vacations, and eventually appliances and necessities for his first house. The third 10% is also for financial independence, so that he can reach this goal in far less than 30 years.

If you want to become a millionaire, a good strategy is to imitate millionaires. All the clients I work with pay themselves first. They know that getting rich is never an accident, and it is certainly never an afterthought. Decide what you are going to save first, then figure out how to live on what ever is left over.

Article Source: http://www.rightarticle.com

Jan Dahlin Geiger, CFP®, MBA, is the author of Get Your Assets in Gear! Smart Money Strategies. Jan is also a frequent speaker on financial planning topics to a variety of audiences, which include civic groups, PTAs, churches, schools, investment clubs, universities, and prisons. Jan holds money management and investment seminars in her office as well. For more financial management advice and strategies, go to www.getyourassetsingear.com or get Jan Geiger's book Get Your Assets in Gear! Smart Money Strategies.

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