You and Money

Buying Time

Start Buying Time Now

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Quickly calculate your net worth. After calculating your net worth, divide your net worth by your average spend per year. The resulting number of years is what you have bought back. If you decide to quit your job today, this is how long you could potentially go without working if all else stays constant. Now knowing this, how many years have you bought back? Buying time is akin to financial independence. At a certain point, you will have bought back so much time that you will no longer need to work. This is the aim.

Know Your Net Worth

On a basic level, your net worth is equal to your assets minus your liabilities. Unsurprisingly, the younger you are, the more likely that your net worth will be zero or below. But this does not mean that you should keep the full picture of your financial situation in the background. Knowledge is power! 

By knowing your net worth, you are able to gauge where you are as an individual. By knowing your net worth, you can individually gauge your progress towards your financial goals. Having a home or a specific car may be a goal, but your ultimate financial goals are inextricably link to your net worth, not a salary, home or a car. It is important to know your net worth because with this information, you can knowledgeably plot your financial path forward. If you do not know what your current financial situation is, how can you plan your financial future? How can you determine how and where to allocate funds? The fact is, you cannot plan your financial future without knowing your net worth. Know your net worth, use money as the tool it is  and buy time.

Money Is A Tool

Money is truly nothing but a tool. As such, you should aim to use your money to accomplish tasks. This should be done the same way that you use other tools. For example, if you have a hammer, it does not just sit around and do nothing. The hammer is always kept in working condition ready to bang in nails. In the same manner, money does no good just sitting around. Money should be in working condition and ready to be applied to accomplish tasks. For you who are financial minded, the game of money is about buying time. Each dollar you spending is time you are losing and each dollar you earn is time you are gaining. The time you gain is related to time that you need not work.

View Your Money As Buying Time

Each dollar you spend, consider how long you will need to work to get that money back. I guarantee that you will not buy certain items if this analysis is done before each purchase you make. If you are making $10 an hour, that $200 shoe is equal to 20 hours of your time. With taxes and other deductions from your paycheck, it is actually a bit more of your time. Now, when looked at in these terms, is that $200 shoe really worth it? Is it really worth more than 20 hours of your time? This same calculation work if you are making $50 an hour or $100 an hour. Is that item worth your time? Buy an item or buy time? The answer is simple, buy time.

Buying Time Gives You Freedom

Knowing that you have bought back 2, 3, 4 years gives you confidence. If there is a recession, you have time to do what is necessary with no need to panic. Because you have bought time, you will not lose your home or other possessions. Buying time provides a security blanket, you are able to pay your bills and if needed, you have enough for any emergency that arises. You have the money, you have the time. This is the difference between those who live pay check to pay check and those with money in the bank. One group is critically worried about keeping their jobs, while the other group have their head up and looking for better opportunities. It is much more difficult to seek opportunities and take advantage of them when they arise if you are in a place of financial survival. 

The more time you have bought back, the easier it is to pursue your dreams and take advantage of opportunities as they arise.

Conclusion

Calculate your net worth. After calculating your net worth, divide your net worth by your average spend per year. The resulting number of years is what you have bought back. If you decide to quit your job today, this is how long you could potentially go without working if all else stays constant. Now knowing this, how many years have you bought back? Buying time is akin to financial independence. At a certain point, you will have bought back so much time that you will no longer need to work. This is the aim. Journey to financial independence.

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Financial Experts

Be Wary Of So-Called Financial Experts

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There is a reason why Warren Buffet said to be “fearful when others are greedy, and greedy when others are fearful.” The reason is simple, so-called financial experts do not necessarily know what they are talking about most of the time. In effect, it has been shown that a monkey can pick stocks better than a financial expert. Yes, a monkey is a better stock picker than an institution paid a percentage of your portfolio. If financial experts were foolproof, they would beat the market every year, but this is simply not the case. This is also the reason why index funds are the safest bet to have consistent growth over time. So-called financial experts of the stock market are typically no better than you and I at gaging what will happen next.

Stop & Think

In life, whenever a large group is running to the left, stop and ask why. Do your due diligence and investigate whether or not these individuals are going that way in view of reason or an irrational drive to follow the heard. In most circumstances, the answer is herd mentality. Someone with name recognition will make a statement, others will be too lazy to do their due diligence and instead parrot the earlier person’s statement. This then occurs over and over again and soon you have a group of individuals moving in the same direction without a concrete reason to do so. This is particularly problematic when the individuals that are irrationally moving are also in positions of power. You end up with irrational acts leading to longterm detrimental effects.

Economic Movements

Just think back. How many financial experts called the great recession? How many financial experts predicted the sustained bull market following covid lock downs? The answer is not too many individuals. If you go back and take a look, most so-called experts where shouting from the roof tops about a sustained bull market back in 2007. When covid-19 hit, many financial experts were calling for a massive recession as a result of the lock downs. In both cases, the opposite actually occurred. 

If experts are calling for a specific economic activity to occur, the more fervor they have, the more likely it seems that the event will not occur. When the majority is looking for a recession, there may be a dip, but just wait for the bull market. When the majority is calling for a bull market, it is only a matter of time before the market falls. The point is, it is your money that you are playing with, do your own due diligence. Make informed money decisions by doing your own investigation into the matters at hand. 

Do not be a lemming. Do not turn over your life savings to an expert and sit back in the hopes that they will do what is right for you. It is your money. No matter who you choose to manage your money, you should also play an active roll in the actions taken with your money and how it is allocated. If you do not take an active roll in your financial security, do no be surprise to find that your money is not being managed in the way that you would want or like.

Financial Experts

This is not to say that experts should be ignored. If qualified, they are experts for a reason. They have the requisite knowledge and qualifications. This is to say that while experts may know more than you do about a subject, you should still take an active role in your money management. Trust but verify. In the end, it is your money.

Conclusion

Warren Buffet said to be “fearful when others are greedy, and greedy when others are fearful.” The reason for this statement is simple, do not follow the herd. A blindfolded monkey beats humans with stock picks. As such, keep in mind that some financial experts do not necessarily know what they are talking about most of the time. Be an active participant in the management of your money. Trust but verify. Educate yourself and do your due diligence. Do not be a lemming when it comes to how your money is managed. Actively participate in the management of your money and your journey to financial independence.

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Video Summary

I Bonds

I Bonds Are Offering A 9.6% Return

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As interest rates increase and the stock market falls, more and more pundits are pushing I Bonds. So let us dig into I Bonds and why it may be an option for those looking for a return on investment as the stock market falls.

What are I Bonds?

I Bonds are savings bonds that earns interest based on combining a fixed rate and a variable inflation rate. To simplify, bonds are debt instrument issued by governments, corporations, and other entities to raise money. For the most part, bonds are issued and have a set period to mature. Over that time, interest is typically calculated based on the purchase value. In the case of I Bonds, the time to maturation is 30 years, unless you cash them first. As I Bonds are back by the US government, they are essentially risk free.

In view of the effects of inflation on interest rates and the low risk, I Bonds are very attractive in high inflation periods. For I Bonds, the interest payment increases or decreases based on the official inflation rate.

Interest Rates

I Bonds feature a combination of a fixed rate that stays the same for the life of the bond and a variable inflation rate that is set twice a year. The variable inflation rate is based on changes in the non-seasonally adjusted Consumer Price Index for all Urban Consumers. As far as timing, the U.S. Treasury changes the inflation rate component of I Bonds every May and November. 

If you purchase a new I Bond in April or October you will get the “old” rate for the first six months of ownership, and then in the second six months of ownership, you will get the rate that was announced a month after the I Bond was purchased.

Once the interest rates are determined, interest is earned on the bond every month. The interest is compounded semiannually (twice a year:  the interest the bond earned in the previous six months is added to the bond’s principal value, thereafter, the interest for the next six months is calculated using this adjusted principal.) The total interest and principal are paid out when you cash the bond.

Today, June 2022, I bonds currently have a fixed rate of 0%, but a variable inflation rate of 9.62%. I Bonds are becoming popular because where else will you get such a return currently? So how do you purchase I Bonds?

Purchasing I Bonds

Two of the easiest ways to purchase I Bonds are via the US TreasuryDirect website or via mail when you file your federal tax return. Electronically, the minimum that can be purchase is $25 via the US TreasuryDirect website and  $50 via the paper route. On the other hand, the maximum that can be purchase via the US TreasuryDirect website is $10,000 total each calendar year and $5,000 total each calendar year via the paper route.

When Can You Redeem I Bonds

I Bonds earn interest for 30 years unless you cash them first. An important aspect of I Bonds is that I Bonds cannot be redeemed within a year after purchase. If you will need your funds in the next year, I Bonds may not be the best vehicle for you. Note that you can cash I Bonds after one year, however, there is a penalty. If you cash your I Bonds before five years, you lose the previous three months of interest. As an example, if you cash an I Bond after 20 months, you will only get the first 17 months of interest.

Conclusion

During this inflationary period where the stock market is correcting, it is difficult to find a financial winner. To protect your portfolio against inflation, I Bonds may be a winner, at least in the short term. I Bonds are backed by the US government, as such, there is very little risk. Further, the value of I Bonds do not go down. More importantly, I Bonds are currently offering a 9.6% return. Based on your financial position and strategy, I Bonds may be right for you.

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Video Summary

praying for student loan forgiveness

Is Student Loan Forgiveness Fair?

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It does not matter how much is forgiven and it really does not matter the reason. Forgiving student loans is a divisive issue. There is one main group that will directly benefit from student loan forgiveness. This group includes those for whom student loans are forgiven. On the other hand, there will aways be a number of groups that will be aggrieved. This group of the aggrieved includes at least those who have paid off their student loans, those who never took out student loans and those who did not have the opportunity to take out student loans because they did not attend college.

Student Loan Forgiveness

There is a student loan problem. Some students were victims of predatory lending from opportunist institutions. In some cases, students were given loans and then obtained worthless degrees. In some cases, the institutions were not up to par academically. For some, the college was closed down and students were stuck with student loans but no degree. For others, student loan terms were not clearly explained and students now owe more than they borrowed. In all cases, for those affected, it is likely that they are stuck with a mountain of student loans and no true path to ever pay off the borrowed amount plus the accruing interest.

On balance, should these students have done their due diligence? Should these students have read the fine print and better understood what they were signing up for? Also, should there have been more government oversight to prevent institutions from selling these subprime student loans to vulnerable students? Something to think about.

Students Who Paid Back Their Student Loans

There are some students and adults who have now paid back their student loans. Essentially, they made it a priority to not take out more than they needed during their school years. Many of these individuals did not attend their dream school because of the cost. Instead, they settled for a less expensive option. They may have also worked extra jobs. Some did not take fancy spring break trips while in college. Others have forgone buying nicer homes or cars. Instead of spending, these students were cost conscious. They buckled down and payed back their student loans.

How would you feel if you were one of these students when you hear of others getting student loan forgiveness? You will likely feel robbed. You have made the sacrifices and paid back what you owed. Now, you are being penalized for your diligence, being proactive and responsible. Would you view this a being fair?

Students Who Did Not Take Out Student Loans

Let’s face it, we live in an unequal society. There are a group of students who attended college and did not have the need to take out student loans. This could have been a result of their parents saving over time and allocating funds specifically for college. For others, their parents were in the position to pay their tuition as they went through college. Still, there are many who simply worked during college and were able to make enough to pay their costs or obtained scholarships.

For those who prepaid for college, those who worked multiple jobs to pay their tuition, and those who studied and obtained scholarships, how is student loan forgiveness viewed? Will they view student loan forgiveness as a penalty? Why work hard during college and forgo all the parties, why prepay for college, why work hard and obtain scholarships when the student loans will be forgiven anyway? 

Those Who Did Not Attend College

Of the groups that will likely view student loan forgiveness in a bad light, those who did not attend college will likely be the most upset. They are the most likely to be upset because as tax payers, they may view student loan forgiveness as paying for something they did not have the opportunity to part take in. These individuals are essentially paying for someone else’s college education or mistake. They may also see student loan forgiveness being applied to college educated citizens as causing a further divide between the have and the have nots. Some who will be helped by student loan forgiveness, where they attended reputable colleges, may end up earning more than those who did not attend college. So in effect, as a tax payer, those who did not attend college would be further subsidizing these individual’s lifestyle. For many, this will be viewed as being unfair. 

The Greater Good

No matter your stance on student loan forgiveness, one thing to consider in this student loan forgiveness debate is the greater good. Will forgiving a portion of student loans help the overall society in general terms. If citizens are not buried by student loan payments, will this translate into increase economic activity as more funds will be available to spend. If this works perfectly, all of society will benefit. However, will this affect personal responsibility and the motivation to live within ones means if there is a possibility that your debt will be forgiven?

Whatever the decision with regard to student loan forgiveness, one thing is for sure, the debate will continue.

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Video Summary

Crypto Crash

Crypto Crash 2022

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I typically do not talk much about crypto, but you cannot ignore the growth of crypto over the last few years. It is also difficult to ignore the volatility of the crypto market lately.  The volatility is so much so, that the dramatic downturn in crypto valuation are rising concerns of a total crypto crash. 

What Is Crypto

If you do not know what crypto is, here is a simplified definition. Crypto currencies are digital currencies that are not reliant on any central authority. Crypto essentially is a digital currency that is not backed by a government or bank. While crypto is designed to be outside of the traditional financial system, it can be affected by the system.

Crypto Crash

Over the last few months, the crypto crash has wiped out  an estimated $1.6 trillion. Coinbase has tanked in value. Bitcoin and Ether has also lost value. For the most part, much of the value gained over the last two years have disappeared. For example, Bitcoin has dipped below $28,000 after hitting a high of over $68,000. But one of the largest crash is that of TerraUSD.

TerraUSD

2022 has not been a great year for the stock market. The stock market has fallen, with some individual stocks dropping more than 70%. On the crypto side, one of the biggest losers in 2022 has been TerraUSD, one of the largest stablecoins. As a background, TerraUSD was intended to be pegged to the U.S dollar.  TerraUSD was backed by credible venture capital firms, but not backed by cash, treasuries or other traditional assets. The supposed stability of TerraUSD was derived from algorithms that linked its value to the cryptocurrency called Luna. 

The aim was to use algorithms to peg TerraUSD to the U.S dollar. Essentially, minting $1 of TerraUSD requires burning $1 worth of Luna and vice versa. So, as TerraUSD demand increase and its value goes above $1, to bring the value down, Luna would be exchanged for TerraUSD to increase TerraUSD’s supply to bringing the value down. The reverse would be used to increase TerraUSD’s value where low demand lowers its value. However, TerraUSD had a known issue, the possibility of a death spiral.

With large dumping of Luna on the market, Luna began to lose value as supply became inflated. This resulted in more Luna being minted for each TerraUSD burned. This in effect caused a death spiral effect on TerraUSD. As Luna’s value fell, investors panicked and sold off their tokens. This action further fueled the death spiral, until Luna went to $0 from a value of $116. It is estimated that this crash wiped out about $40 billion.

The Real World & Crypto

Just as the stock market is affected by the traditional financial system, so is the crypto market. The current crypto crash is part of a broader pullback from risky assets.  This pullback has been driven by rising interest rates and regulatory policies to tighten the monetary supply, inflation and economic uncertainty caused by Russia’s invasion of Ukraine. With interest rates rising, savings accounts are becoming more attractive to many. Many investors are taking profits and pulling money from the stock market and putting it where they can get predictable returns.

Additionally, as the stock market falls, some investors are liquidating crypto investments to meet other obligations. This all comes together to drive crypto prices lower which causes further panic in the crypto ecosystem. Another factor that is affecting the crypto ecosystem is the increase scrutiny being placed on crypto by governments around the world. There is more and more calls for increase regulation. 

Long Term View

As the crypto crash continues, it is expected that a lot of different crypto currencies will fail, while others will succeed. This is not the first time that crypto has fallen. Do not forget that in May 2021 to July 2021, crypto  also had extreme volatility where Bitcoin fell more than 45%. For those investing in crypto for the long term, massive price swings are expected.

Conclusion

As crypto continues to grow, it cannot be ignored. Whether you make crypto apart of your portfolio is a decision that you should not take lightly. As the crypto crash of 2022 rolls on, no matter the instrument, do not invest in things you do not understand, and invest only what you can afford to lose.

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I quit, quit your job

Quit Your Job And Get Another One

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As the great resignation has shown, it is ok to quit your job. Unsurprisingly, while some has stayed out of the labor market, many are quitting their jobs to get a new one. Some are moving laterally in the same position while others are getting higher positions. Some are getting better benefits or a better working culture. The move to another job is not really all that surprising because guess what,  people have bills to pay. If you are planning on quitting your job, do ensure that you are looking ahead and planning out what the future holds. For example, how will you support yourself?

Quit Your Job

In the United States, it is very easy to quit your job. Simply, say that you quit and do not return. That it is. It is customary to give a few weeks notice when you are quitting. But legally, you are really not requited to do so. This curtesy is such that you can wrap up your work or transfer your work to another colleague. Giving notice also provides your employer with some time to replace you. This is critical if you are an important member of the team. The curtesy also for the most part allows you to maintain certain relationships with work colleagues. Remember, do not burn bridges as you do not know where you will be in the future.

This works the other way as well. Most employment agreements in the United States are at will. As such, your employer can fire you anytime and the employee can quit anytime.

In other places such as Europe, quitting your job is really a few months in the working.  With strong worker protection laws, it may take a company 6 months or more to fire you, and maybe just as long for you to quit. 

When quitting your job, even if you have the most horrible boss, try your best not to completely nuke your bridges. Meaning, you may not like your boss, but there may be others at the company that you may want to maintain relationships with. Act accordingly.

Before You Quit

It may sound like a great idea to quit your job. Yes, you will finally stick it to your boss and leave. With a replacement not being able to fill your role, your hope is that they will recognize how under appreciated you were. But before you make that final decision, ensure that you have thought about what the future holds. It would be great if we could all quit our jobs and not work another day in our lives (financial independence). However, this is not usually possible. Typically, once you quit your job, you will need to find another one. The high of finally saying I quit can be easily overtaken by the fear and trauma of not being able to pay your bills and support your current standard of living.

It is advisable to find a job before you quit your job. It is much easier to find a job when you have a job. Further, because you do not need a job you can effectively ask for exactly what you want. Because you are not completely dependent on getting that new job. Essentially, you have options. So begin your job hunt early and ask for the salary and benefits that you want. The worst that a prospective employer can say is no.

Once you have lined up that new job, go ahead and quit, if this still is the correct decision. Of course, it is important to ensure that the new job is better that the old job. It is very difficult to make this assessment as you will likely be in the dark with regard to certain information about the new job. Is your new manager better than your old/current manager? Is the company’s culture better? What is your progression and development opportunities? There are a lot of unknowns and you must do as much research as possible. Information is the key here.

The Grass Is Not Always Greener

In your job hunt, if you happen to obtain an interview or is reached by a head hunter, do understand some very simple facts. It is in the head hunter’s best interest to get the role filled. As such, not all, but some head hunters will misrepresent the job. This is because once you begin to invest the time in the interview process and begin to picture yourself leaving your current role, it is a lot easier for you to move on.

Therefore, no matter what the situation, do not be afraid to ask the hard questions with regard to salary, benefits, environment, culture, promotion and what the future of the company is. Do your due diligence on the company. Do your due diligence on the role. If you are applying for a role that have high turnover, you may want to ask about this. Try to find who the last person that had the role and ask why did they leave. They will give you answers. Check and see if you know people who work at the company and ask them about the company. They typically do not lie. Get information and make an informed decision.

Know Why You Are Quitting

As the grass is not always greener, know why you are leaving your current job. Know what you and your family need to be happy. If it is culture, ensure that your new job has a better culture. If it is all about the money, ask for a higher salary. But ensure that you know why you are leaving and what your ultimate goals are.

Conclusion

As the great resignation has shown, it is ok to quit your job. While some has stayed out of the labor market, many are quitting their jobs to get a new one. The move to another job is not really all that surprising because guess what,  people have bills to pay. If you are planning on quitting your job, do ensure that you are looking ahead and planning out what the future holds. For example, how will you support yourself?

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Financial literacy

Financial Literacy Is Important

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Without a basic understanding of simple financial concepts, good luck. It will be almost impossible to achieve your financial objectives. Everyday we make decisions about banking, budgeting, saving, credit, debt, and investing. Financial literacy enables you to make informed financial decisions that will propel you toward financial stability and achieving your financial goals.

Financial Literacy

There is currently no one definition for financial literacy. However, generally, financial literacy is the ability to understand and use personal financial management, budgeting, and investing to your financial advantage.  Simply put, financial literacy is having the knowledge to know what to do in a financial sense. This does not necessarily mean that every financial decision will result in success. But over time, it is likely that you will improve your financial situation.

Why Is Financial Literacy Important

Financial literacy is important because it results in budgeting, being prepared for emergencies, and limiting debt. These are the financial forces that we deal with on a daily basis. But more importunely, the financial decisions we make today compounds. The decisions we make today are more important than ever because of the limited safety net available for retirement. 

Most pension plans have been replaced by 401Ks. Unlike pension plans, 401K plans leave the bulk of the decision making and planning to the employee. Without proper financial knowledge, many will be saddled with debt and be ill-prepared for retirement. 

Lack Of Financial Literacy Is Expensive

Not being financially literate is expensive. Some consequences of lacking financial literacy appears in everyday life. These consequences show themselves in increase costs that can be locked in for decades. For example, higher transaction fees, banking charges, higher interest rates on debt, and loses in the stock market. Financial ignorance also compounds as you will not understanding the concept of  compounding. Compounding in view of debt and also in view of income/interest. In a recent survey, it is estimated that financial illiteracy costed Americans about $353 Billion in 2021 alone. That is a crazy amount of money. That is a nontrivial amount of funds.

The Solution

The solution to lack of financial literacy is simple, educate yourself. It is to you and your family’s benefit to be financially literate. Financial decisions not only affect you, but also those around you. 

Financial education resources are available. Best of all, a lot of the information is free. You have this blog as an example and hundreds of others that you can subscribe to or follow. If you want to learn the thoughts of the biggest financial titans in the world today, just search for it. Financial literacy comes down to how important it is to you. Believe me, it should be at the top of your to do list.

For the same reasons why a coach is likely not the best player on a team, financial literacy alone will not be enough to win the financial game of life. Knowledge alone is not enough.

Financial Literacy Alone Is Not Enough

While financial literacy is important, it is not enough. To achieve your financial goals, you need a climate that facilitates wealth generation. This means that the country/jurisdiction that you are in has to facilitate wealth generation. You have to have access to tools and resources to build wealth.  For example, in starting a business,  you need to have/have access to capital, general money management, supply chain and transportation infrastructure. Financial literacy alone will not overcome infrastructure deficiencies.

Financial education is important, but you must also tackle your beliefs and attitude toward money. Having the financial knowledge alone will not change your attitude.

Additionally, having knowledge does not mean taking action. You, yes you have to take action. You have to put your plans in motion. Start today. Take action. Use money  as a tool and other resources around you to move toward your financial goals.

Conclusion

Everyday we make decisions about banking, budgeting, saving, credit, debt, and investing. Financial literacy enables you to make informed financial decisions that will propel you toward financial stability and achieving your financial goals.

Below, is the reproduced S&P Global FinLit Survey. Take the test. Answers are given below. Are you financially literate?

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Financial Literacy Test (S&P Global FinLit Survey)

RISK DIVERSIFICATION

  • 1. Suppose you have some money. Is it safer to put your money into one business or investment, or to put your money into multiple businesses or investments? 
    1. one business or investment; 
    2. multiple businesses or investments; 
    3. don’t know

INFLATION

  • 2. Suppose over the next 10 years the prices of the things you buy double. If your income also doubles, will you be able to buy less than you can buy today, the same as you can buy today, or more than you can buy today? 
    1. less; 
    2. the same; 
    3. more; 
    4. don’t know

NUMERACY (INTEREST)

  • 3. Suppose you need to borrow 100 US dollars. Which is the lower amount to pay back: 105 US dollars or 100 US dollars plus three percent? 
    1. 105 US dollars; 
    2. 100 US dollars plus three percent; 
    3. don’t know

COMPOUND INTEREST

  • 4. Suppose you put money in the bank for two years and the bank agrees to add 15 percent per year to your account. Will the bank add more money to your account the second year than it did the first year, or will it add the same amount of money both years? 
    1. more; 
    2. the same; 
    3. don’t know
  • 5. Suppose you had 100 US dollars in a savings account and the bank adds 10 percent per year to the account. How much money would you have in the account after five years if you did not remove any money from the account? 
    1. more than 150 dollars; 
    2. exactly 150 dollars; 
    3. less than 150 dollars; 
    4. don’t know.

A person is typically defined as financially literate when he or she correctly answers at least three out of the four financial concepts described above. What was your result?

Answers: 1(2), 2(2), 3(2), 4(1), 5(1).

Video Summary

Tithe Yourself

Tithe Yourself Now

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Let us start by saying that this posting has nothing to do with religion. This posting focuses on tithing yourself. More specifically, from every paycheck, pay yourself first. Tithe yourself. Ensure that you are taking at least 10% from your paycheck and directing that portion to a personal account. If you do not tithe yourself, someone else will have a claim to your money. You work hard for your paycheck, why have others take a share before you do?

Tithe Yourself

The word tithe in Hebrew literally means tenth. By tithing yourself, we mean automatically taking at least 10% of your paycheck off the top and directing this amount to a personal account. Some folks religiously tithe to a church but often forget about tithing to themselves. It is important for your financial future that you tithe yourself.

When beginning on a journey to save or to establish an emergency fund, you may not be able to tithe 10% to yourself. Start small and build from there. The first step is to start. Once you start and begin to build a habit of tithing yourself, move on from just tithing yourself to tithing as much as you can to yourself. Aim to increase your tithing percentage up to 10% and once you hit the 10% mark, aim for 15% and beyond.

Tithe Yourself – Pay Yourself First

Tithe yourself is to encourage you to pay yourself first. You should pay yourself first because if you do not, you run the risk of not paying yourself at all. For example, after paying your bills and spending discretionarily, how much of your paycheck do you have remaining? If you have money left over, it does not take much for all that money to disappear due to frivolous spending? 

Many times, living above your means and going into debt can result when you do not pay yourself first. If you do not pay yourself first, it is likely that you will not budget and over spend, or you will simply spend what you have because you have not assigned a task to that money.

By paying yourself first, you will force yourself to live below your means and budget accordingly. By paying yourself first, you are assigning a task to every dollar that you make. Imagine upfront knowing that 10% of your paycheck is off limits. By reframing your paycheck this way, you know that you are limited to 90% of your paycheck. This means that all of your bills must be paid by this amount. Can you pay rent/mortgage, phone, cable, internet, subscriptions, power, and whatever other bills you may have from this amount? If the answer is yes, increase the amount of your paycheck that you are paying yourself. If the answer is no, you will be forced to cut back. You will be forced to make hard decisions. But trust me, it is worth it. Saving for your financial future is worth it. Tithing yourself is worth it.

Money in hand. Tithe yourself. Pay yourself first

You Are Not Being Selfish

It may sound selfish when it is said to pay yourself first or to tithe yourself. However, if you do not pay yourself first, you are always putting yourself behind someone else. You are putting your bills ahead of your financial future. You are also putting the temptation of instant gratification ahead of the delay gratification that will benefit your future. Instead of having others having a claim to your money, claim it as your own. You worked hard for it, so keep it and grow it to the betterment of you and your family.

If you still think that tithing yourself is selfish, then sometimes in life, you need to look out for yourself and your financial future. Because the simple fact is, if you fall on hard times, it is unlikely that there will be many people lining up to pay your bills or to house your family.

Conclusion

This posting focuses on tithing yourself. More specifically, from every paycheck, pay yourself first. Tithe yourself. Ensure that you are taking at least 10% from your paycheck and directing that portion to a personal account. For example, a personal investment account or a personal savings account. If you do not tithe yourself, someone else will have a claim to your money. You work hard for your paycheck, why have others take a share before you do? Reward yourself for your hard work by saving for your financial future.

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