How many of you read the title of this month’s newsletter
and said “Oh no! Not that again!”?
If you have ever attended any kind of financial seminar or
read any books on finances, you have been told that you
should consistently be putting a set amount of your income
into savings. We all know that we are supposed to be putting
away money every single month. Still, the reality is that an
extremely small percentage of us actually do it.
So let’s just be extremely clear – no more beating around the
bush . . . If you are not willing to make the commitment to
automatically pay yourself first – every, single month without
exception – you will NEVER build any kind of financial
security, let alone wealth.
Take a moment and think about all of the people that you pay
automatically each month. Most of us who work in any type
of job pay taxes to the government. These funds are
automatically removed from our paychecks. Many of us have
also set up a variety of our household bills to be paid
automatically out of our checking accounts each month. Why
do you think the IRS has arranged to have your taxes taken
out of your earnings before you even see the money? The
answer is simply that they recognize this is the only way to
ENSURE that they receive what they are owed. You set up
your bills to be paid automatically also to ensure that the
respective companies receive what they are owed. This
eliminates the possibility that you will forget or get too busy
to make the necessary payment. We need to change our
psychology that has us putting the government and the phone
company and our cable provider ahead of ourselves and our
financial security.
I am sure that every person reading this article has thought
to themselves, “I’ll start putting some money away as soon
as I start earning more.” We as actors are especially guilty
of this mindset. I also repeatedly hear from students and
coaching clients that, because their earnings are so sporadic
they can’t figure out how much they can put away each
month. It is time to realize that these are just excuses, and
as long as we continue to make excuses we will never
change our financial picture.
The first step is to open what we call your Wealth Account.
The purpose of this account is to build up funds that will
ultimately be used to purchase assets. Assets are not stuff –
bigger homes, nicer cars or fancy stereo systems - assets
are things that you own that increase in value and/or create
passive income: investment properties, businesses, stocks,
bonds, etc. You must also recognize that your Wealth
Account is not an “emergency fund”. You are not taking
money from this account for any reason other than to
purchase an asset that will make you more money.
Once your account has been opened, decide how much you
are going to put in it each month and immediately arrange to
have that amount automatically transferred into your Wealth
Account from your checking account. How do you decide
what amount? I recommend that you look at your deposits
for the last three months and determine what your average
monthly earnings have been. Once you have that amount,
take 10% and make that the dollar figure you will deposit
into your Wealth Account each month. For instance, if you
earn an average of $2,000 each month, $200 would be a
reasonable monthly Wealth Account deposit. If you are in a
panic because that number feels too high, start with 5% or
$100 Just promise yourself that you will re-evaluate that
figure after 3 to 6 months and see if you are comfortable
increasing it.
This month make a commitment to yourself to do the
following:
Create a written statement of commitment regarding your
decision to pay yourself first from this point forward. The
wording could read: “I am committed to building the
foundation for my wealth. I will therefore open a wealth
account with ______________ (Financial Institution) by
____________(Date). I will structure this account to
automatically debit $________ from my checking account
every single month.” Sign and date this statement and place
it somewhere you will see it every day. We recommend
keeping a copy wherever it is that you pay your bills. Even
when it feels like all of your money is going to other people,
this will serve as the constant reminder that you have chosen
to be financially proactive and that your wealth account is
growing.
If you don’t already know where you want to have your
wealth account, we recommend The Orange Savings Account
with ING Direct (http://www.ingdirect.com). Right now, this
account is paying a 3.80% Annual Percentage Yield. You
have the same access to your money as with a typical bank
savings account, but are earning significantly higher interest.
As an added incentive to open your account quickly, ING is
paying 4.75% APY on new deposits until April 15, 2006.
There is no minimum amount required to start.
Here is an absolute promise: Once you have gotten this set
up to happen automatically, you absolutely will not miss the
money. Over and over again clients tell us that they have no
idea what they were doing with the one, two or three
hundred dollars a month that they obviously used to be
spending but that is now going straight into their Wealth
Account. As this account builds, you will notice yourself
starting to gain interest in learning about possible
investments for your money. You will find that you always
have an ear out listening for potential financial opportunities.
Your excitement and your commitment to building your
wealth will grow as you start to realize that you will soon be
able to afford that first investment property or purchase
shares in a company or business.
We love to hear your success stories! Please e-mail us and
let us know that you have opened your account and what
amount you are committed to depositing each month. Putting
your promise out there to someone other than yourself will
absolutely help you to stick to it. If you need assistance
starting this process of building your Wealth Account, please
give us a call. We have coaching programs that can help you
get an extremely clear idea of your spending patterns and
“find” the money that you will easily be able to start putting
away.
