He says when you pay yourself first
Planning to build financial security for life? Millionaire and author David Bach, in his blog, has shared a simple formula that can help you become rich. He says that if you pay yourself first and save one hour of your earned wages each day, you can become wealthy.
The New York Times bestselling author and self-made millionaire said that one should set aside at least 14 per cent of their income. "You're going to work 90,000 hours (around 35 years) over your lifetime you should keep at least an hour a day of your income," he wrote in his blog.
He listed three rules for becoming an automatic millionaire. He outlined the three-step process on YouTube:
- Pay yourself first.
- Pay yourself the first one hour a day of your income.
- Make it automatic.
He says when you pay yourself first, the first person who gets paid when you earn a dollar is you.
Mr Bach breaks down the definition of the 'One Hour' savings rule. He explains that a person's income goes to taxes, rent or a mortgage, healthcare, food, credit card, and transportation. After all that expense, most people don't have enough money left for savings.
Mr Bach says, "I want you to keep the first hour of the day of your income. So from 9:00 a.m. to 10:00 a.m., that hour goes to you."
He explains, "You're going to work 90,000 hours (around 35 years) over your lifetime. Most Americans get to the age of 60 and they have nothing to show for it. What you're going to have is at least a million dollars in your retirement account if you pay yourself first, one hour a day of your income."