My Property Investment Tip #14
Tax yourself!
Ok so the tribe has spoken, another tip cominatchyah! ?
Now this one sounds funny, but stay with me…
Tax yourself!
Now every pay day, the tax man gets his taxes from you. Without fail. Every single time. Regardless of your situation. He gets his money.
How?
Well it’s taken from you before you can touch it. So that the naughty, poorly disciplined version of you doesn’t blow it on other things.
You see you can’t be trusted ? The government doesn’t trust you to pay your taxes. So it forces your employer to pay them for you before you get a chance to touch the money.
Can you imagine what a nightmare it would be for the tax office if everyone got paid their wages in full, and then had to pay their own taxes?! But anyway…
You shouldn’t trust yourself either. You’re busy. You get tempted to buy stuff you shouldn’t. Just be honest with yourself. YOU are your own worst enemy when it comes to saving money for anything.
So what’s the solution?… Tax yourself.
On pay day, tax yourself of the money you need for various things.
I suggest you should be running the following accounts and automatically transferring a fixed amount to each on pay day before you can touch it.
1. Wealth Account. 10% of your net salary (at least). This is the money you ultimately invest. Deposits for investment properties etc. If you’re not doing this, how will you build any wealth? It’s an ancient principle the wealthy teach their kids. Just do it. It’s not optional. Trust me, you will survive. Not only that, within a few years you’ll be thriving! Imagine if you had done this your entire working life so far. How much would you have now? Teach your kids to do it too.
2. Fixed Bills Account. Add up all your known bills for the year and divide that figure by the number of pay days (12, 26 or 52 depending on how you’re paid). That’s how much you transfer each pay day to this account.
3. Xmas/Birthdays Account. Make a list of all the people you want to buy presents for throughout the year, and the budget for each. Then total that up. If there’s travel at xmas to return to family etc, add that on top. Again divide the total by the number of pay days, then transfer that amount.
4. Fun & Travel Account. This is your annual (or more frequent) holiday account. Work out the total budget required for the holiday(s), and again divide by the number of pay days. Then you’re having an awesome holiday every year.
5. Spending Account. This is actually the first account where your money first lands. Whatever is left over once the four auto-transfers are ‘taxed’ out, you can spend. Go crazy and buy whatever you want with it, because everything else has been taken care of.
Now I’m of the view, that your Wealth, Xmas/Birthdays and Holidays accounts should be in a completely different bank and have NO debit cards. The only way you can get that money is to go to the bank and withdraw/transfer it. Even consider NOT setting up online banking.
Get this set up and watch your money grow. You’ll definitely thank me later. Remember, you cannot be trusted with your own money! Haha
– Daimo