New Year’s Resolution: pay yourself first

  • Published
  • By Chief Master Sgt. Richard Jette
  • 51st Fighter Wing command chief Master Sergeant
Are you searching for a New Year's resolution? Many Americans make resolutions this time of year that focus on getting their finances in order so they can start investing for the future. Budgets are created with the goal of sticking to them no matter what and usually by February, people realize that sticking to a budget is too tough and they end up reverting back to poor financial practices.

If your focus for 2007 is to take control of your finances so you can start putting some money away, I would like to share some simple tips that helped my wife and me achieve financial success over the years. First off, forget about a budget.

That's right! Don't even attempt to stick to a budget you created in a desperate attempt for self-improvement. Think about the budgets you developed in the past. Did they work?
Be honest with yourself. What most folks do when they earn a dollar is to use it to pay off everyone else first. They pay their bills, then attempt to put aside some money for themselves.

In most cases there is nothing left to put aside. If every dollar you make is used to pay off things you already have or no longer have then you will never be able to save for your future, and you will continue to live paycheck to paycheck with no hope of financial freedom.

For financial success, this strategy is backwards. There is another strategy that is proven and has worked wonders for those who have adopted and stuck to it. The strategy is to learn how to "pay yourself first."

If you pay yourself first, you are forced to save. You need to treat yourself -- you -- your future -- as a bill and it needs to be the first payment sent out each payday. Right now, what is more important than your and your family's future? Think about it. If none of your cash flow works toward this, then you need to change. Why consider your future as a bill? Because you are already disciplined to pay your bills. Would you ever consider not making your rent payment? Car payment, et cetera? Of course not! Put your future in the same category.

For this strategy to be successful you need to implement a few simple practices. First, start today. There is no better time than today to take charge. Make a commitment to yourself and take action. Second, make an appointment with the financial management counselors at the Airmen and Family Readiness Center. The AFRC team offer classes and one on one support on how to invest your money and make it work for you.

Here is something to ponder. If you invest 10 dollars a day (that's only $300 a month) in a tax-deferred account (many available) that earns 10 percent (which is what the stock market has averaged for 50 years) in 35 years you will have $1,163,796.

Lastly, make your payment automatic. Set up an allotment that comes directly out of your pay to fund your new investment(s). This way, you won't miss it. Without looking at your LES, how much do you pay in taxes and social security?

I bet you don't know.

The reason? It comes out of your pay automatically and you never see it. Use the same concept on the allotment you set up.

Your financial future is your responsibility and you are in complete control. Consider your future a must pay bill, make a commitment today for change, get smart on where to put your funds, and make it automatic.

Sound simple? It is.