Commandment no. 1: Pay Yourself First

Entrepreneur, buisnessman, financial adviser Francisco Colayco shares his expertise about investing.  This is his1st commandment of 10.  Pay yourself first! 

Income - Savings = Expense
Savings should not be the other way around which is Savings = Income-Expense.  Use the 80/20 Rule and pay yourself first.  Set aside 20% of your monthly income for savings.  This will go a long way.  Use only the remaining 80% for expenses.


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8 comments:

  1. The 80/20 Rule is more commonly known as the Pareto's Principle.

    Income minus Savings = Expense is the ultimate equation to saving and becoming frugal.

    on June 24, 2009 at 9:35 AM  


  2. That is true Millionaire Acts ... thanks for dropping by.

    on June 24, 2009 at 9:57 AM  


  3. This is a good post. People have gone from...

    Savings - Income = Expense
    to
    Savings = Income - Expense
    to
    Expense - Income = DEBT

    Commandment 1, if applied at an early age is almost a SURE shot to wealth!

    on July 4, 2009 at 4:19 PM  


  4. Hi Matt!

    quite true. It's really how much you save that will make you wealthy ^^

    on July 4, 2009 at 11:44 PM  


  5. Anonymous said,

    Is it really saving that makes us rich over investing or both?

    on December 14, 2009 at 11:19 AM  


  6. Hi to the Anonymous commenter.

    Saving is actually a form of investing already. Once you save you are already investing. And Yes, developing a conscious habit to save will eventually make you rich.

    By investing in investment instruments with more risks, the return is also potentially higher but returns are usually not guaranteed - like say investing in
    Mutual Funds and UITFs.

    This post on riding something to wealth might help explain things further ^^

    Ride Something to Wealth

    on December 14, 2009 at 1:03 PM  


  7. Anonymous said,

    Thank you, sir.

    If I save P10,000 in my piggy bank its worth after one year is P10,000.
    If I save P10,000 in my preferred bank at 2% annual interest its worth after one year is P10,200.

    If I invest my P10,000 in buy&sell(trading) with a monthly income of P50, its worth after one year is P10,600.

    on December 14, 2009 at 2:57 PM  


  8. Anonymous said,

    It should be 90/10 rule

    10% as Tithes.

    then from the 90% remove your savings (20% or 10%)

    on January 14, 2012 at 11:11 PM