10% law or pay yourself. How does he work?
Greetings, dear reader!
Please do not take this article as a call to action. Please think about what you read and make your own decision!
If you are not ready to make an effort to improve your financial situation, the article most likely will not help you in any way.
This financial law (or rule) was first formulated by the American Napoleon Hill in 1937 in his book Think and Grow Rich. Approximately the same is said in their books by Bodo Schaefer and Robert Kiyosaki. It aims to bring your financial independence closer.
How the 10% law works
The rule says that before spending the money received (for example, salary), you need to pay yourself – set aside 10% for your future. It is in the first place, before all, including mandatory payments. It is necessary to perceive this rule as a law!
By setting aside 10% monthly, you can create your own financial airbag. It will support you in difficult times and will give you the opportunity to increase your capital.
The lower the income, the more important it is to follow the 10% rule
This is difficult for many to accept, because most people in our country already have low incomes. People are forced to literally survive paycheck to paycheck. But this only suggests that the situation needs to be changed as quickly as possible.
Your brain will resist. All your necessary expenses will be on his side. He will say that you do not have a penny of extra money. But your task is to find the strength in yourself and set aside 10%. If you don’t do it now, you probably never will.
To make it easier for you to decide, imagine that you have been saving 1% of all your income every month all your life. How would you use that money now!
Believe me, expenses always tend to exceed income, no matter how big they (income) are. Recall situations when you had unplanned money. How quickly did they run out? But if it were not for them, you would certainly have coped with your payments.
If you don’t start managing your finances, your finances will control you. More precisely, you will miss them all the time.
What to do with the money set aside?
Money should not lie idle. They need to be made to grow. I would suggest investing in stocks of companies. Most likely, you are not yet ready to start doing this. But it is worth thinking about it and starting to study. Do not be afraid of difficulties, everything is not as scary as it seems.
In the meantime, you can put money in the bank on a deposit with a monthly capitalization. On such a deposit, interest will be accrued monthly, which will increase profitability. After a while, you will begin to enjoy the realization that your money is growing. Then, most likely, you will think about more serious investments.