Every now and again, I hear a piece of good advice and it just sticks.

In my line of work, I come across a lot of financially successful people, and I wanted to share with you some common themes of their advice. If it works for the wealthy, why not for us as well?

Pay yourself first
Sounds good right? Basically, this means as soon as you get paid, put aside your budgeted savings amount (ideally into a separate account) before you pay anything else. Think of it as being the most important bill you have to pay. This will establish a pattern of behaviour that means you save first, spend later. Most people try to pay all their bills first, then spend a little and finally save what is left over. The problem with this strategy is that there is often no money left to save!
Get a budget baseline
Last month I wrote about the importance of setting up a budget correctly. If you missed it, you can read the full blog here: Setting a Budget: Step by Step. Essentially, every successful budget starts by knowing exactly what you spend your money on, down to the last cent. Once you have your baseline you can decide what expenses are unavoidable, and what other ‘expenses’ you can do without - which could be the savings you are looking for.
Invest your savings
It’s not about how much you earn, it’s about how much you save that’s important because what you save is what you can invest. About 10 years ago, a close friend of mine said, “If only I earned an extra $100 per week, then I could start saving”. He now earns double what he earned back then but still can’t save anything because his ‘expenses’ have increased as well.

If Bob clears $150,000 a year but has $140,000 worth of expenses he is only able to invest $10,000. If Jeff clears $70,000 a year but is able to invest $15,000 per year. Who is likely to be better off if they both lose their job after ten years? Jeff has my backing all the way.

So there you have it, three pieces of financial wisdom - have I missed anything? What piece of financial wisdom best works for you?

All the Best,
Michael De George