Paying yourself first

You often hear in the press how saving in South Africa is at such low levels and how many people fund their lives through loans. This had me thinking about the concept of “paying yourself first”.

This last weekend I went to visit my dad and had the pleasure of some family visiting that I have not seen for a couple of months. We were talking and reminiscing and at some stage a little anecdote about my late grandfather came up, that proved the inspiration for this post.

They were joking about how my grandfather, just after he received his pension would disappear for about an hour and how my grandmother used to shout at him for leaving when he returned. At the time he was receiving a small pension from “Mutual” for working there as a security guard. My grandfather was remarkable in that he set up “boekie” or savings account for each of his children and grandchildren and every pension check, the first thing he would do was to go to the Savings Society and put a couple of rand into each savings account, quite something, since he has 4 children and 8 grandchildren.

I was thinking about how savings, for most of us, is an afterthought, something to be taken care of after all the bills are paid with money that is left over. The reality is that, often, there is no money left over at the end of the month and we end up having no savings, having to borrow money if the car breaks or we have to go to the doctor.

I heard somewhere that savings needs to happen at the beginning of the month, not at the end. This embodies the concept of “pay yourself first”, for me. Save and then live of the rest.

People often complain that there is not enough money to last the month. To me, this means that they are spending more than they are earning and need to cut back on some expenses. It is almost a natural law that expenses expand with your income – the more money you get the more you spend. Do yourself a favor and take some money off the table at the beginning of the month and pat yourself on the back when you see your savings grow. I love the peace of mind of knowing that I have some money if something unforseen does happen.

I have no idea how much money is in the “boekie” and for me, it is not about the money. I appreciate that my grandfather, with what little he had, had the discipline to think of me 30 or 40 years down the line. I will have a big smile and think warmly about him when I close it one day.

KevinMzansi