pay Yourself First
Lets look at an example now of someone who was trying to reach a retirement goal. Alright because you all are 33 and obviously saving money and accumulating money would be important right? Now are you saving some money currently on a monthly basis? Are you using what’s available through work maybe a 401k or something like that?
Okay so lets just use a hypothetical scenario of a 27 year old.
We say “the first step to financial success is pay yourself first”.
Okay… and when you don't, there's a very high cost of waiting. Now that's what I want to show you how much it cost to wait.
Now what does paying yourself first mean? That means that if you have money come out of your account on a pre-authorized checking to save, or it comes out of your paycheck, then that’s what we will call forced savings.
And you are paying yourself at the beginning of the month.
Let's take a look at this 27 year old who is saving 100 dollars a month at 9% for 40 years, what do you think that would grow to?
Ok ready here it is 471 grand, alright pretty interesting right? Alright and that would help at retirement right that is like 25 bucks a week or 5 dollars a day.
Now here's the question, if this person waited one year til they were 28 years old, they did not save the 1200 dollars what did it cost them?
Now here is the answers, It cost them 41 thousand dollars to wait just one year. So they waited one year there is the cost.
Now here is where it gets really dramatic, wait 5 years, when do people usually start saving about your age right?
Wait 5 years, I'll just put it off...Ill do it later, no biggie
Now it cost 175 thousand dollars to wait 5 years...that is the cost so do you see how important it is to get started right away?
Now when do most people start saving?
So if you waited til you were 42 to start - which is 18 thousand dollars -that would cost you 358 grand to wait.
Can you retire on 112 thousand?
Most people aren't going to be able to do that, right.
So what is a 42 year old going to have to do...
They are going to have to save 500 a month, 700 a month, 1000 dollars a month when you are 42 years old, kids going to college ...can most people do that?
Who are people hurting when they wait?
How important is this for people to learn when they are young?
That is a concept that we call pay yourself first, alright and the cost of waiting is expensive, can you see that?
Okay so lets just use a hypothetical scenario of a 27 year old.
We say “the first step to financial success is pay yourself first”.
Okay… and when you don't, there's a very high cost of waiting. Now that's what I want to show you how much it cost to wait.
Now what does paying yourself first mean? That means that if you have money come out of your account on a pre-authorized checking to save, or it comes out of your paycheck, then that’s what we will call forced savings.
And you are paying yourself at the beginning of the month.
Let's take a look at this 27 year old who is saving 100 dollars a month at 9% for 40 years, what do you think that would grow to?
Ok ready here it is 471 grand, alright pretty interesting right? Alright and that would help at retirement right that is like 25 bucks a week or 5 dollars a day.
Now here's the question, if this person waited one year til they were 28 years old, they did not save the 1200 dollars what did it cost them?
Now here is the answers, It cost them 41 thousand dollars to wait just one year. So they waited one year there is the cost.
Now here is where it gets really dramatic, wait 5 years, when do people usually start saving about your age right?
Wait 5 years, I'll just put it off...Ill do it later, no biggie
Now it cost 175 thousand dollars to wait 5 years...that is the cost so do you see how important it is to get started right away?
Now when do most people start saving?
So if you waited til you were 42 to start - which is 18 thousand dollars -that would cost you 358 grand to wait.
Can you retire on 112 thousand?
Most people aren't going to be able to do that, right.
So what is a 42 year old going to have to do...
They are going to have to save 500 a month, 700 a month, 1000 dollars a month when you are 42 years old, kids going to college ...can most people do that?
Who are people hurting when they wait?
How important is this for people to learn when they are young?
That is a concept that we call pay yourself first, alright and the cost of waiting is expensive, can you see that?