Wednesday, July 25, 2007

Pay yourself first -- no, really

Buy low, sell high. Diversify your assets. Invest globally.

Of all the investing maxims, the one that's always made a lot of sense to me was "pay yourself first" and this month has been an excellent example of why it works.

What with moving, paying for a vacation and the prevalence of those all-too-appealing pints on a patio with friends this time of year, my expenses have been out of whack of late.

In general, I suppose that's OK to do from time to time. I mean, what's the point of having a rainy-day fund, if you won't open it up when it starts to drizzle? But it's not a habit you want to get into.

As it stands, about a quarter of my paycheque gets automatically diverted into my emergency savings fund on payday. It does what its supposed to do in that its automatic -- I literally forget I'm doing it. I was reminded of why that's important today when I was wondering how exactly I was going to manage to pay all my bills AND put some aside this month. I was trying to find the money to put into savings when it occurred to me that it's already been done for me.

Granted, I still don't have very much breathing space in the ol' budget this month. But when you put money aside for yourself before you even consider how to divvy up the rest, it's amazing how fast those contributions can add up.

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