Over the last few weeks I have been trying to sharpen my "financial mind." Human beings should be life-long learners, so we should continue to grow and develop our knowledge regarding money, finances, and investments as well.

Something Keeps Standing Out

One of the common themes I keep seeing over and over is PAY YOURSELF FIRST. In principle, this idea makes a lot of sense. In practice, I think there are a variety of excuses why people will not pay themselves first.

They Don't Know How

Many people are functionally illiterate when it comes to finances. They are either uneducated or undereducated.

I think there are a couple of reasons why this is true:

No one ever took the time to explain basic financial principles to the financially uneducated/undereducated person.
If someone took the time, the speaker did not communicate the principles in a meaningful way so the listener could find daily application.

Without a strong financial foundation (the WHAT) and a short or long-term goal (the WHY), most people will not be able to successfully execute the HOW.

It is absurd to think that someone will pay himself first when he does not even understand how to balance a checkbook, use debt wisely, or develop balanced budget.

They Don't Want To

Delayed gratification is a dying art. I have been noticing a increasingly louder message from commercials. "You deserve it." "Get it NOW!"

People are not willing to pay themselves now (with the hope of a better future) because they prefer to spend, spend, spend instead of save and invest. There is a greater emphasis on the short-term versus the long-term.

Spending gives you a temporary dopamine boost, but that little high does not last long. In order to keep enjoying the same high, you have to keep spending more and more. Stop spending. Stop feeling good.

We don't like that. We want to enjoy the moment. We are told to enjoy the moment. And although I agree that we should live in the moment, sometimes we have to make a temporary sacrifice for a future return. The "I don't want to pay myself" people choose not to exercise financial discipline.

Paying Yourself Seems Selfish

On the other end of the spectrum, there are people who feel bad about "paying themselves." They avoid the "me first" mentality as well, but error on the side of trying to NOT look selfish.

They were taught that money is evil. Instead of using money as a tool, they avoid it (or at least using it in a way that might be perceived as excessive.

Many People Feel They Can't Pay Themselves First

I know that I lot of people choose not to pay themselves, but I have met many people (especially while living overseas) that lived in what I call a "hand-to-mouth" lifestyle.

The money earned for the day is immediately used to purchase and pay for other expenses that same day. This is a vicious cycle, especially for people who are also haunted with poor financial decisions.

One reason why people feel that they "can't" pay themselves is because they are thinking with a "set amount" mindset instead of a "percentage" mindset.

If I have a long-term goal of investing $10 a day, and I only make $10 a day, then I feel defeated before I even begin. On the other hand, if I plan on investing 10% of my income (very reasonable), and I make $10 a day, then I set aside $1 each day for investments. Now as my salary increases and I add other streams of income, once I reach $100 total earnings each day, then I will meet my investing goal.

I highly recommend that people think in terms of percentages when it comes to financial goals. Set a percentage for the following: