This is one of the foundational principles of great money management. When you get paid, what is the very first place the money goes? If you guessed taxes, you’d be right! Uncle Sam takes his share of your dough before you ever even see the green. We’ve mentioned this topic a few times and it is absolutely crucial when keeping a healthy financial life.
Think about this: if you make $1,000, how much of that do you actually keep? Let’s say taxes net you $850 out of that grand. Then, you have a cell phone bill, giving you $800. Then there’s gas for the week, another $50, and food, $100. Now you have $650. There are plenty of other things that can chip away at that paycheck, internet bill ($50), electric bill ($50), dinner out ($50), shopping, textbooks, medical bills, on and on. Not to mention these are only the expenses you know about. What about that flat tire or vet bill out of nowhere? These numbers are variable but you get the idea. Soon you have $300 left and think “where the hell did my money go!?”
This can happen all the time and it can still get people down even if they’ve been aware of this for years. Here’s how to win: pay yourself first before you ever pay anything else. It doesn’t have to be a huge amount, start with $50 and see how it goes. Think you can do $100? $200? Great, try that. You will slowly build a healthy balance in your bank account that you can feel confident about and that is robust enough to handle those unsuspecting life challenges.
Uncle Sam pays himself out of your paycheck first…you should too.