Team Tony cultivates, curates and shares Tony Robbins’ stories and core principles, to help others achieve an extraordinary life.
Pay yourself first
Legal Disclosure: Tony Robbins is the Chief of Investor Psychology at Creative Planning, Inc., an SEC Registered Investment Advisor (RIA) with wealth managers serving all 50 states. Mr. Robbins receives compensation for serving in this capacity based on increased business derived by Creative Planning from his services. Accordingly, Mr. Robbins has a financial incentive to refer investors to Creative Planning. This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice.
Most of us are financial traders making the worst trade we could make — we’re trading time for money. It’s what makes us feel like a hamster on a wheel, running and running but never able to make any progress towards our financial goals. We know we cannot earn our way to financial freedom, and yet we can’t get off the wheel.
In order to get off that never-ending cycle, you must make the most important financial decision of your life. You must decide that a part of all that you earn is yours and your family’s to keep — and you’re not giving it away to anyone else — including Michael Kors or Mercedes-Benz.
A percentage of all you earn is going to be set aside specifically for your future, before you pay for anything else. This is called the PYF percentage — or the Pay-Yourself-First percentage. It is up to you to decide what this percentage is; however, in order to gain real momentum, make it at least 10%. If 10% seems impossible now, start lower and increase that number every time you receive a pay increase. But remember that this is your most important investment, as it will determine when you can be free of that hamster wheel.
Resolve to make this decision and take action immediately to harness the power of compounding interest. Remember, this is the percentage that you will pay yourself first – no matter what. Make it a reality by automating it.
If you think there is no way that you can possibly pay yourself first, watch Tony tell Charlie Rose the story of a man who never earned more than $14,000 and yet managed to retire with over $70 million.
To watch the whole interview, go here.
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