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Investing Basics: Paying Yourself First

Jun 11, 2008
Investing is one of the most important aspects of anyone's financial life. As it is often said in the world of investing, "nobody ever got rich just by collecting his paycheck". And while we can all think of exceptions to that rule of thumb, the fact remains that even huge sums of money quickly seem to vanish out of the hands or bank accounts of people who don't know what to do with money when they have it. Therefore it is vital for any investment strategy that you first build up discipline in your money spending behaviour and set clear goals of how you can place yourself into a position where you can start investing free capital.

The first thing to understand about investing basics is simply this: money is a tool; and, like all tools, it can be used for good or for bad. If money is used in the right way, it will bring great joy and unlock many, many doors for you that would be closed without money. But if money is used in the wrong way, it will not only be wasted, but possibly destructive to you, as you spend your time and energy chasing more money when it's pointless for you to have much money.

Investing your money is one of the most powerful ways of using the tool of money in the right way. When you invest your money, you "pay yourself first", and that is always one of the proper things to do with this tool called money. When investors talk about "paying yourself first", what they mean is this: they always make sure that they set aside some amount of their latest earnings to be invested or, as the case may be, re-invested, so that the money goes back to work for them and multiplies. They pay themselves out of their earnings before they pay their home loan lender, their car loan lender, their local supermarket, the electric company, the gas station attendant, and so on and so forth.

So, the most basic thing of all to understand about investing your money is, very simply, that it's the true key to unlocking the door to real, lasting wealth, and investing is something that you should see as necessary - not a game, not a once in a while thing, but a need and a discipline that you must follow in order to live your dreams.
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