Money Management Corner: Always Pay Yourself First.

I live by these words; “Pay Yourself First”. They are the foundation of wealth accumulation. The logic is quite easy to understand. If you pay everyone else before you pay yourself the most probable outcome will be the absence of any money left to pay yourself.

After getting up close and personal with the finances of hundreds of different business owners—all with definite money habits and philosophies—I can safely say that there are 5 different money personalities.  We all know people that fall into these categories and, as a professional who helps people to keep more money in their pockets, I can tell you that identifying your own personality and your relationship with money is critical to building wealth in ways that feel “safe.”  Let’s take a look at the 5 different money personalities to see if you can spot yourself.

The Saver is great at putting money away, but not great at enjoying life along the way. They find it difficult to spend money and focus on reduction—cutting back and sacrificing—as a method for building wealth. They also focus more on worry and scarcity than abundance and production, and this leads to stunted business growth.

A good way for the saver to overcome self-sabotage is to allocate a percentage of their income—maybe 3 percent – to spend guilt-free.  This a lesson I needed to learn. More important when you have a family who is impacted with this philosophy.

The Spender gets into debt very easily. They are focused on enjoying life, not just at any cost, but at all costs. I can always tell when I’m working with a spender because they typically have 5-10 credit cards with 12 other loans and little savings. They tend to fund their consumptive expenses with credit cards, which is a recipe for going into debt.

If you are a spender, I recommend reading The Richest Man in Babylon. Pay special attention to paying yourself first. Set 10-15 percent of your income aside before you pay your bills, and then don’t touch it for consumptive expenses. You can spend every penny of the rest of your paycheck but putting that first 10-15 percent away every month will lead you to wealth.

The Avoider doesn’t want to pay attention to money. Money is a source of frustration for them, so they avoid looking at it.

The best thing an avoider can do is to find someone to keep themselves accountable. That might be a business partner, a supportive spouse with a different personality, or fostering a great relationship with their CPA.

The Giver enjoys helping others and being charitable. Many times this comes from a belief system that if they have too much money, then others don’t have enough, which economists refer to as the Fixed-Pie Fallacy.

Being generous and charitable can be a strength, but it can work against the giver and impact their finances. It’s a good idea for Givers to focus on getting their finances set before they start giving – and once their finances are stable automatically transfer a set percentage of money into a designated account each month. This money can then be given away without undermining the Giver’s own finances.

My Company focuses on resolving tax controversery for companies and individuals. We are here if you recieve a letter or notice from the IRS or state revenue dept saying you owe back taxes. Tax liabilities can be expensive because the IRS makes it extremely expensive to owe them. I can help by getting the IRS off your back giving us time to work out a proper settlement.

Call New Life Tax Resolution at 407-287-6638 and ask for Parick LeClaire. My exerience is here to benefit you, your business and your family.