Always pay yourself first

Did you know that the key to wealth is to pay yourself first?

Did you know that the key to wealth is to pay yourself first?

Most consumers worry about acquiring credit when they could shift the focus and begin to amass wealth.

Keith McIvor of Absa said it is possible for the ordinary person to build wealth and attain financial success, but it requires discipline and commitment.

Becoming financially successful is simple - there is no hidden secret known only to the rich, said McIvor.

Financial success can be summed up as: "Spend what you have left after saving, rather than saving what you have left after spending," said McIvor.

"It's as simple as that."

He said we live in a world where we expect and demand instant gratification.

McIvor said the concept of saving a portion of our income each month sounds old-fashioned, especially when credit is so easily available to buy whatever we want without waiting until we have saved enough money to spend.

"In reality, saving is the foundation to building and establishing wealth," he said.

"It is the way to accumulate a cash lump sum that will open opportunities for investments that are not available without a nest egg."

This proves the argument that you "need money to make money" to be true.

The accumulation of wealth through saving opens up opportunities. For example:

l You will be able to access high-yielding investments that require large lump-sum deposits, or you can build up your money to invest in property where a lump-sum deposit is advised.

l The more money you have in any investment or savings account, the higher the interest you will earn, which means that your money will grow faster.

l The same can be said for children's education. If money is not put aside each month, then dreams of a bright future for your children will remain dreams.

l Ask your bank about products designed for educational savings.

Absa pays savers an extra 3,5percent interest on the value of each deposit they make towards their child's education. In other words, you get a bonus reward for the more you save.

l Regular, committed saving is not easy. You need to enter into a contract with yourself.

l Having a monthly debit order directly from your salary account to your savings account is one way to ensure that you put yourself on the road to financial independence.

l For most people, the journey to prosperity is not a short one.

It requires taking one step, then following that with another and then another.

But that first step has to be taken. There are no short cuts. Adopt the maxim: "A part of all I earn is mine to keep."

Pay yourself first.