Pay Yourself First

I watched one short video clip by Ken Chee talking about this concept called, “Pay Yourself First”. Video is here: https://www.facebook.com/ken.chee/videos/10154042215248722/ I would like to take down notes on what he said first, then followed by my own comments (PLEASE read until the last paragraph).

Below is exactly what the trainer said, not me. Here it goes.

The school teaches us that the income we earned minus the expenses (paying off our bills) and if we manage expenses well, we should have good savings. And this is the wrong concept. Please do not teach that to your children.

+ INCOME

-  EXPENSES

+ SAVING

The key concept is very simple, it is called, “Pay Yourself First”.

We should change the sequence. Whenever we receive the income, we should pay ourselves first. Saving comes first. We should pay ourselves and put the money into an untouchable account (pay myself account). Whatever left over, I then to decide what to pay.

+ INCOME

+ SAVING

- EXPENSES

This is what we called the one degree tweak (one degree difference). You will discover two interesting points after you diligently exercise “pay yourself first”.

Point 1: You will have a sizeable saving in your so called asset account. The money here is able for you to start to deploy at assets. (Asset is anything that generates cash flow).

Point 2: You will form a long term habit in your spending. Once you pay yourself first, you will decide carefully how to spend your remaining, how to stretch your dollars and once you survive, it forms a habit.

Please teach this to your children.

We will use the money in the untouchable account on assets. Once the assets generates cash flow, we deploy the” pay yourself first” rules again and it will become a very powerful compounding machine.

Of course, if you do not know how to invest in the right assets, you also will loss money, that is why you must know how to manage the assets well, then the trainer goes on to invite you to attend his workshop on how to manage the assets, called Value Growth workshop.

 That’ is it.

All right, below are my comments.

As a trainer, you always need to come up with new ideology so that people are attracted at first glance. I am not against it but most of us are already doing it without our notice. It is a nice idea actually. I will teach that to my kid, simply because it sounds logic and it sounds cool too.

Take myself as an example, when I started to work in Singapore, my salary is as well close to S$3,000 per month and yet I have also exercised “pay myself first” concept. When the salary was banked into my saving account, immediately the incomes are automatically deducted (GIRO) to pay my “savings”, which is Investment Linked plan (ILP), Endowment plan (EP) and Whole Life plan (WLP). (For me, I treated these three instruments as my long term saving plan). I have been paying these 3 plans since year 2004. All right, of course, there is argument on how much returns are these plans are worth after 50 years, etc. But that’s not the discussion here. At least I am doing the savings part too!

I also started to pay myself even more 4 years ago by contributing additional S$7,000 into CPF SA account as well as S$15,300 into SRS account (to buy blue chip stocks that generates dividends and good growth). Both attract a sizeable amount of tax savings plus savings with good interest for SA account (4% to 5%).

So literally, my flow would be:

+ INCOME

+ SAVING (ILP, EP, WLP)

+ SAVING (CPF SA)

+ SAVING (SA)

- EXPENSES

+ SAVING (remaining)

Now here comes the interesting part.

1. How to manage the savings in the untouchable account that the trainer is talking about?
    
2. What assets are we choosing?

It can’t run away from stocks (that includes ETF, REITS, warrants etc.), real estate properties (be it Singapore, Malaysia, Australia, UK, etc.), bonds (fixed income assets), GOLD, oil commodities index, etc. And I am sure experts are digging into each asset and tell you how to select the best among the best.

But, life is not always about me, myself and I.

I would like to share one of the revelation I have in recent years. I know you are here for financial information but probably, this is the most important blog that you must read in your life. I started my tithing journey on November 30, 2014. If you do not have revelation, don’t tithe.


Tithing simply means take 10% of our income and give to our mighty God as 100% of ours are from God anyway, don’t you think so?


Offer our 10% to our God and He will sanctify the rest of our money (90%). Our God is faithful and He knows how to give us the best, not only in the heaven but on the earth as well. I am not here to preach you gospel but I am sharing my revelation to you. If you want to know more about it, you should visit our lovely church at the Star, Buana Vista.

 So, my sequence is actually looks like this. It is called, “Pay Jesus First”.

+ INCOME

- JESUS (10%)

+ SAVING (ILP, EP, WLP)

+ SAVING (CPF SA)

+ SAVING (SA)

- EXPENSES

+ SAVING (remaining)

I am more than happy to share more breakthroughs in my life (if any, ha ha..) in the many “revisions” to come and I am anticipating it too! May all the glories go to the mighty one, our lovely God !

“Bring all the tithes into the storehouse, that there may be food in My house, and try Me now in this, “ says the Lord of hosts, “If I will not open for you the windows of heaven and pour out for you such blessing that there will not be room enough to receive it.” Malachi 3:10.