If I Could Only Teach One Financial Lesson

There’s quite a bit of financial advice out there that would be wise to follow, such as the importance of creating an emergency fund, budgeting within your means, and assessing your risk tolerance. But if I had to choose only one piece of financial advice to impart, it would be this: Pay yourself first.

Paying yourself first simply means setting aside a portion of your income and putting it into a savings or investment account each month before you spend money on living expenses, entertainment, or anything else. This doesn’t have to be a huge amount; even smaller, regular deposits can make a big difference in your financial future. It's a simple concept that can pay dividends over the course of your financial life. 

Proactively establishing a regular savings plan and viewing it as an expense to be paid can build a strong financial foundation while creating lasting wealth. Not sure if it’s the right choice for you? Let’s take a closer look at the reasons why it’s so important to pay yourself first and how it can benefit you in the long run.

1. Builds Discipline

Prioritizing yourself first allows you to develop the habit of financial discipline, which can then create a positive mentality. Seeing your balance increase as you set aside a predetermined amount of money for a savings or retirement account can reinforce a sense of financial confidence. As your financial wealth grows, you may be inspired to explore ways to minimize expenses, maximize income, and increase savings. Sticking with this routine of saving every payday helps create structure and a sense of discipline, prepares you for potential adversity, and sets you up for a successful future.

2. Sets Proper Priorities With Ease

What’s more important than funding your future? When you make the decision to pay yourself first, you’re taking an important step toward prioritizing your future needs. It’s important to remember that wealth is not created through luck, but through intentional, consistent, and disciplined decision-making. Developing a long-term financial plan and investing in yourself is an essential component of your wealth-building plan.

Paying yourself first can be simple. Automatically paying yourself through payroll deductions is an easy and effective way to invest in your future because the money goes directly to your 401(k), IRA, savings account, or other investment vehicle. This “set it and forget it” approach means you don’t have to constantly remind yourself to save, and you can trust that the money will be there when you need it. This is an easy but important way to steadily move toward your long-term financial goals.

3. Utilizes the Power of Dollar-Cost Averaging

By paying yourself first, you not only can strengthen your financial and mental muscles, but you can also reap the rewards of dollar-cost averaging.

Dollar-cost averaging is a method of investing in which an investor will buy a set amount of a particular stock or investment, regardless of the share price. This investment strategy is carried out at regular intervals, which means that when the value of the stock is lower, more shares are purchased; and when it is higher, fewer shares are bought. Utilizing this method helps reduce the risk of investing a large lump sum of money into the market at a peak price, which can result in a lower return on investment.

4. Promotes a Healthy Work-Reward Cycle

Is the monotony of “work, spend, repeat” getting you down? There is a way to break away from this never-ending cycle and increase your wealth. The simple strategy of paying yourself first can create an entirely new cycle that allows your hard work to steadily increase your net worth. Because this approach allows for more financial wealth, you could have the freedom to work less, increasing your ability to devote more time to what you enjoy.

Let Us Help You Prioritize Yourself 

As you consider the benefits of paying yourself first, it may be helpful to remember the wise words of Warren Buffet: “Do not save what is left after spending; instead spend what is left after saving.” Rather than ignoring your need for a financially stable future, think about the impact of prioritizing yourself now to build up your long-term wealth. 

At Stratos Wealth Partners, our team is dedicated to supporting, educating, and providing informed direction to every client. If you partner with us, we use our knowledge and experience to help you experience confidence, knowing someone is watching out for you and your family. If you’d like to team up with a financial planner who understands your unique needs and inspires you to be more empowered in your financial decisions, schedule a complimentary introductory call by reaching out to us at 330-576-3912 or lguiney@stratoswp.com.

About Liam

Liam Guiney is partner, financial advisor, and client portfolio manager at Stratos Wealth Partners, an independent investment advisory firm providing personalized financial plans to help clients pursue their goals. With over 20 years of experience, Liam is dedicated to walking his clients through their financial opportunities and challenges, simplifying the complex so they can focus on what’s most important to them. Liam is known for building long-lasting relationships and focusing on individual needs to develop strategies that will help his clients prepare for their ideal retirements. 

Liam graduated from the University of North Carolina Greensboro with a bachelor’s degree and earned a Master of Science at Wake Forest University. He is also a CERTIFIED FINANCIAL PLANNER™ professional. When he’s not working, Liam spends his free time with his wife, Alice, and their son, Nicholas. You can often find him exercising, golfing, or supporting his favorite community organizations through fundraising and volunteering, such as Catholic Charities, the Make-A-Wish Foundation, and cancer research organizations. To learn more about Liam, connect with him on LinkedIn. Or watch his latest webinar: 5 Questions You Should Answer Before You Retire. 

This material was prepared for Liam Guiney’s use. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.