What does PYF mean?

PYF means Pay Yourself First! and according to Investopedia it is a financial strategy that is meant to increase and consistently contribute to your savings and investment while also promoting frugality. When you implement it, what you do is that as soon as you get paid, you make sure you save and invest FIRST, and then proceed to take care of bills, before dedicating some money to discretionary purchases.

When I started doing this (right after purchasing my first property) it became incredible how much money I was able to safe up. The next benefit was that once I built the discipline, it became much easier to save more income for other purposes.

I started doing this because by putting a down payment on the property, I depleted all my savings. It felt a bit strange to have had this cash in the bank for so long, and then see it diminished to a meager amount overnight. So I became determined to start saving again. The way I did this was to deposit 10% of each paycheck into a separate account automatically, unspendable, no questions asked. At first it was annoying because it forced me to say no to myself at times when an “opportunity” would show up to go out with friends or something else like that which involved socially spending. Over time though it became apparent that my meager 10% a month had become a bit more, soon enough I had $2,000 sitting in the account and later I was able to relegate that fund as my 6-month emergency fund.

I didn’t start with any goal in mind other than just putting away 10%. After the initial 10, I started depositing 20%. Then I started depositing 20% of EVERY income I’d get including side hustles. This is how it grew.

Suggestions to get this to work for you:

1. Open a second account (Keeping only one account tempts by not being able to identify a clear boundary between moneys)
2. Automate the transfers from your main account to your second one.
3. Commit to a percentage of every piece of income.
4. It is ok to start small. Just start. Even if it’s 5%. Even if it’s $20 per paycheck. (Little secret: $20 x 26 paychecks = $520. For 5 years that would be $2,600)

Benefits:

1. Why do you think in the US they do 401k? Giving up this money first thing means it’s no longer available to be tempted or make mistakes. Pay yourself first!
2. Waiting until the end of the month to save the left overs doesn’t work! You will always spend the money on something.
3. First step towards your own benefit sets you up psychologically for success.
4. There’s no guilt associated with spending the rest of the money you have left (assuming after you paid yourself, you paid off bills.)

If you ask why I’m sharing this? or why you should consider this? I’m sharing it because I care about your future and your ability to establish your own legacy, and I believe you should put a high level of energy into this too. Let’s do this!