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Learning ‘the first rule of money’ can change everything that happens in your bank account

Derek Olsen is a monthly money columnist for Ink. For more resources on getting out of debt faster, building a better budget, and growing your net worth visit howdoimoney.com
Derek Olsen is a monthly money columnist for Ink. For more resources on getting out of debt faster, building a better budget, and growing your net worth visit howdoimoney.com

You spend the majority of your waking hours at work. You pay your bills, pay the minimum on your student loans (that still haven’t budged), go out to eat, go shopping, order a million toys from Amazon, buy three of those insanely priced Yeti coolers and go on another vacation.

This was my story. It made me wonder why I even bothered going to work. It was a lot of effort just to get back to the place I started.

What happened?

Everyone else got paid and I skipped myself … again. My paycheck might as well have been auto-deposited into everyone else’s bank account. My account was just the middleman.

It’s like I had two jobs: One job makes the money and a second part-time job spends it all. I wasn’t really working for myself, I was working for everyone else.

But something changed for me, and here’s how it can change for you: You need to pay yourself first.

When you put yourself last, you’ll never get paid. The money will always run out before it gets to you. When you pay yourself first, you’ll always get paid. Let the money run out before it gets to the eighth happy hour of the month. They’ll be OK without you.

Paying yourself first is the first rule of money. Everything else is built on this rule. If you don’t have anything left over at the end of the month you can’t save. You can’t buy a car with cash. You can’t invest. You can’t make progress.

Make it automatic

Even the most financially savvy investors know that they shouldn’t trust themselves with their own money.

The best way to make sure you get paid first is to make it automatic. Take that money out of your own hands so you won’t be tempted to buy another Yeti.

Set up an auto-deposit into a separate savings account or an investment account if you are ready for that. When the money is out of sight you won’t even feel it.

I’m giving you permission to keep some of your money. A radical idea, I know. We’ve been trained to spend, spend, spend. Retraining yourself to save, save, save can feel uncomfortable at first. But once you see the money starting to grow in your bank account it will feel awesome!

When you work your budget this month, pay yourself first, then pay everyone else. It’s your money, you earned it, keep some of it!

Derek Olsen is a monthly money columnist for Ink. For more resources on getting out of debt faster, building a better budget, and growing your net worth visit howdoimoney.com

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