What Comes First? Saving or Spending?
It sounds like the simplest question. The kind of question that everyone would know the answer to, without hesitation.
(It’s saving, by the way)
Saving must always come first, because if it doesn’t come first, it doesn’t happen. If you spend all the money you want to spend first, and then see if you have any left over to save, there are only two possible outcomes: 1 – you won’t; and 2 – you will very occasionally, accidentally have a little bit left, but it won’t be enough, and you will spend it next month by accident!
It sounds so obvious that you might it could be the kind of thing people would do without thinking about it, like brushing their teeth, or covering their mouth when they cough.
It isn’t though. Those things were taught to everyone: taught at home and reinforced at school, or taught in school and reinforced at home.
Saving first and spending second isn’t taught in either of those places. It isn’t taught by most parents because they don’t do it, and it isn’t taught by most schools because they don’t do it either.
In fact, it’s even worse than that. Some people get it even more wrong. If save first and spend later seems obvious, what about this:
Which should you do first: earning or spending money?
That’s even more obvious, isn’t it, because you can’t spend money that you haven’t earned… but you can. If you borrow money, you can spend it before you earn it, so then when you get paid, you have to repay what you borrowed (plus interest), but then you won’t have any money, so you will need to borrow again.
This is one of the ways people get trapped in a debt spiral.
If you only spend after you earn, you can’t get into a debt spiral, and if you save before you spend, you can build up investments that can make you worth a million dollars: a positive spiral.
Every DAY, if you are paid daily, you can save $7 before you do anything else. Put it away.
Every WEEK, if you are paid weekly, you can find $49 in your money, put it to one side and make sure it doesn’t get spent.
Every MONTH save $210 before you do anything else with your monthly salary. It’s the only way you will save.
Start now! Sign up to the Seven Dollar Millionaire Chat bot here
If you don’t save, you haven’t paid yourself. You’ve just paid everyone else – your landlord, the government, the supermarket – but not you. If you want to pay yourself, you have to save. Read this…
