Money mentor reading project

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by rnmcmillin1214
Last updated 6 years ago

Discipline:
Social Studies
Subject:
Economics

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Money mentor reading project

The most important ability that I learned from reading The Money Mentor by Tad Crawford, is the "Pay Yourself First" method.

Most of the money a person earns will go towards bills and housing and food. So when a person saves 10-15% of their gross pay, that is about an hour of work that you are actually working for yourself. So if you want to increase the amount of money you save, increase the amount of time you spend working for yourself.

Money Mentor Reading Projectby: Rachael McMillin

A person should use the "Pay Yourself First" method because they might want to buy a little something for theirself, but if they put away all their money, then there will be no extra spending cash. This method could also be used as an emergency fund incase something happens.

A phrase commonly used in personal finance and retirement planning literature that means to automatically route your specified savings contribution from each paycheck at the time it is received.Because the savings contributions are automatically routed from each paycheck to your investment account, this process is said to be "paying yourself first"; in other words, paying yourself before you begin paying your monthly living expenses and making discretionary purchases.

Impact

In order to be secure later in life and have a successful financial future, paying yourself first, I think, is a must.The earlier a person starts, that means they can earn the most interest for as long as possible. I plan to start paying myself first when I get my first career-professional job, so that way I can have a secure future.

Conclusion

What is the "Pay Youself First" Method?

Why use the Method?

In order to succeed in this method, a person needs to save. There are four easy steps a person can take to make sure they will be financially secure.1. A person must fully decide that they want to pay theirself first.2. Open a retirement account.3. Fund the retirement account with at least 10% of your gross income.4. Make the withdrawl from your paycheck to your retirement fund AUTOMATIC, so you don't have the chance to change your mind on whether or not you want to deposit.

Decide on what class you want to be in and then save that amount from your gross income.Poor: Don't pay yourself firstMiddle: Pay yourself 5-10%Upper Middle: Pay yourself 10-15%Rich: Pay yourself 15-20%Retire Early: Pay yourself at least 20%

The Steps to Success:

Work for Yourself

This video is used to give some visual aid to help people understand what the method of "Pay Yourself First" means and how to connect it to their personal lives. The video was uploaded onto YouTube from the Institute for Financial Literacy.

How much should you pay you?


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