What is the Secret Formula?

We often hear people say, "I'm just not good at financial matters," or "I never learned about this stuff," or "I've never been a math person." Many underestimate their understanding of basic financial matters, leading to a lack of confidence and possibly anxiety.

However, the truth is, those who voice these concerns are often smart, intelligent, and more financially literate than they realize. I would love for more people to give themselves a pat on the back rather than chastise themselves over their lack of knowledge. 

In reality there is really just one simple “secret formula” that people who are financially successful do—they Pay Themselves First.  What does that mean? It means they:

• Start Saving Early—as soon as you begin working (even as a teen!)

• Start Small—as your income increases, increase the savings too

• Save Systematically– make it an automatic savings to an investment or savings account

• Prioritize Saving– savings should be a fixed amount in the budget

Just setting aside a small amount of every paycheck will start to make a big difference in the long-term. It doesn't matter where you put this savings as long as you do it consistently.  

This seemingly small act of "paying yourself first" is crucial for setting yourself on the path to financial independence. It can provide a financial cushion for emergencies and build up an account for large purchases and long-term goals like retirement. Moreover, saving teaches you to spend less than you earn each month. Once systematic savings habits are established, you can move into more complex areas like investing and tax management.

So for those who believe they are not doing a good job and worry about the financial concepts that seem too complicated—congratulate yourself for doing the most important part– putting yourself first!  By setting up a systematic savings plan and sticking to it, you've taken a major step towards financial success. Starting small and setting realistic goals, while remaining consistent, is the key to building financial confidence.

We can all stand to learn more –especially on financial matters.  But our hope is that for those of you who believe that “finance is not your strength” will start to recognize the great job you've done already through delayed gratification and spending less than you earn.  Success is not just about investment returns!  It's about adhering to sound financial habits and letting time work its magic.  Enjoy the rest of your Summer!