The Best (& Most Overlooked) Advice for Building Wealth
I was talking to a friend of mine recently about what we’re working on here at Dobot. Mike had a very successful career and now splits his time between his grandchildren and traveling the world with his wife. We were talking about how saving money and building wealth can be pretty tough, especially early in life when your income is often low or erratic. He made a passing comment about building wealth that really stuck with me:
I was told early on to pay myself first.
Of course, I’d heard that advice before, but I can’t say I’ve followed it 100% of the time – despite the fact that I have a finance degree! I’m sure a lot of people feel that way. As much as saving for your future should be your first priority, when it comes to allocating your hard-earned cash, there’s always someone or something else that seems to take precedence.
The more I thought about it, the more I realized that “pay yourself first” is probably the most profound – and yet most overlooked – piece of financial advice out there. It’s understandable that people would dismiss it so quickly. Pay myself before my landlord? Before my student loan bill? Before I buy groceries? Yeah, that’s not exactly realistic.
In fact, a lot of people feel that saving money is something you do after you’ve done everything else – after you’ve paid your bills and your debts, after you’ve gotten a raise at work, after you’ve splurged one last time on travel or redecorating your home or whatever it is that brings you joy. If anything, many of us pay ourselves last, not first.
But if you want to reach your long-term financial goals, “pay yourself last” isn’t a realistic strategy, either. So how do you fund your future while also meeting more time-sensitive financial obligations today?
First, I think it’s important to recognize that the “pay yourself first” mantra doesn’t specify an amount – and it doesn’t have to be huge. Mike noted that he didn’t save much in those early days – maybe $5-10 a month. But as his career progressed and he made more money, he gave himself raises, as well. In fact, Mike credits saving small amounts early and often with laying the foundation for the wealth he’s built today.
And I think the second key is to be really mindful about your financial values and goals, then aligning your spending to match. For Mike, there’s nothing better than traveling the world and spending time with his family. Over the years, when faced with a choice between funding his future goals or spending that money on something frivolous and forgettable in the moment, there was no contest in his mind. It’s a lot easier to pay yourself first when you’re aware of what you’re paying for.
The Dobot app is a great way to pay yourself first because it addresses both of these points. By transferring small amounts from your checking account to your Dobot savings account on a regular basis, your small efforts add up to something big. And Dobot helps you visualize your financial goals, so you’re not just saving for the sake of saving – you’re actually saving for what matters most to you.
I’m curious – do you think “pay yourself first” is valuable financial advice. Why or why not? And what’s the best financial advice you’ve ever received?