My next guest is Radical FIRE, all the way from The Netherlands. She is on track to reach FI by 35 which is all something we aspire to!
Let’s jump right in and see what tip Radical FIRE shares to help us reach our goal:
Pay Yourself First
The best tip anyone gave me about finances is: paying yourself first. If you want to reach your financial goals, plan for it.
A lot of people are trying to save money every month, but when you’re saving whatever is left it’s really hard to optimize your savings. Your financial goals might seem something that is only attainable in the distant future. Whenever you’re having trouble with saving, paying yourself first could be the solution. It means that every month, at the beginning of the month, you’re transferring an X amount to your saving or investing account.
It makes sure that at the beginning of the month you save or invest an X amount, just as you would pay a bill. The money is transferred from your account into your savings account, where it will not be touched. It’s even more convenient when this happens automatically on the day you receive your salary. In this way, you will save money without even actively thinking about it!
Paying yourself first setts you off on the right foot, it’s easy, and it builds the habit. As with all habits, saving will become easier over time. When you’re watching your wealth grow, this might spill over to other areas of your life.
For me, I got really excited when I was seeing my investment account grow every month. That is where the snowball effect began. I started learning more and more about investing, trying to save additional money and tried to increase my income as much as possible.
If it feels like this is not for you yet, try to start small. Try to transfer only €50 per month towards your financial goals, see how that feels. When it feels good, you can increase the amount. This way you will get closer and closer to your goals every month!
Remember, the most important thing is not that you do it perfectly right away. The most important thing is that you start paying yourself first, when it feels good you can increase and increase this amount. For me, paying myself first increased my savings rate gradually, to currently over 60% of my monthly income.
If I can do it, you can too! Start paying yourself first today, and let me know how it goes!
About the Author
I’m M @ Radical FIRE, a 24-year-old that is passionate about the Financial Independence and Retire Early (FI/RE) movement. I want to empower YOU to be Financially Independent. I am taking you on my journey to be Financially Independent by 35, let’s do it!
Where you can find Radical FIRE
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The “Thrifty Tips” Series is all about advice and tips from the FI community for the FI community!
If you have one piece of advice you wish someone told you, a frugal life hack or anything that will help someone get that bit closer to FI, then get in touch by emailing firstname.lastname@example.org or send a message on Twitter. I would love to hear from you and feature you in a post.