Saving Wisely With Our Paychecks

I know a lot of us are employees working for a company and struggling hard to survive on our paychecks. I belong to that category. When that paycheck comes, a lot of us spend it from paying our bills to treating ourselves like buying gadgets and other entertainment wants.

If we want to achieve our financial goals, then we must start to save as early as possible. And that is NOW! The earlier we started our savings attitude, the more possible we can achieve our financial goals.

We are used with this equation, INCOME - EXPENSE = SAVINGS. This is the scenario given above. As long as we received our paychecks, we spend it on a lot of ways. Whatever left from our expenses is our savings. I always believe in the concept of ‘delayed gratification’. That is, we delay our satisfaction in order to prepare for a future goal.

And this is where we need to save wisely. We need to arrange our equation. Instead of the equation written above, why not use INCOME - SAVINGS = EXPENSE. In this scenario, we pay ourselves first more than anything else. Each time we received our paychecks, we set aside a portion of it to our savings. We treat SAVINGS as an EXPENSE.

Savings is the most important of all expenses because it buys the most important thing - YOUR FUTURE.

If we view ourselves as a corporation, then a corporation must have a plan and budget for expenses. What is the first priority expense of a corporation? Yes, it is the payroll of employees. If you agree with this, your first priority should be “paying yourself first” because you are the sole employee of your own company. Paying yourself, in this instance, means compensating yourself for the use of an income-generating asset which is yourself. This compensation is your savings. Thus your income must first be reduced by your savings. What is left after will then be available for your living expenses.

I was lucky, I’m still living with my parents with less bills to be paid. And so I’m saving my paychecks regularly from a minimum of 20% to a maximum of 50% every pay day. And I started doing this at the age of 21.

I hope you will also do the same and start building your savings by saving wisely with your paychecks to prepare for your future financial goals.