Money Magnets

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. Millionaire Acts said,

   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. Money Magnets said,

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

   on June 24, 2009 at 9:57 AM  

   
   
3. Matt @ Rid of Debt said,

   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. Money Magnets said,

   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. Money Magnets said,

   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  

   
   

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