How to start your money machine

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money and savingsToday, we live in a debt driven economy. Buy now, pay later. 0% interest for 1 year on our credit cards etc.  If you allow yourself to be seduced by such schemes, you are likely to accumulate a lot of debt.   You need to break the cycle and focus on:  Savings, savings, savings.  This has been the bedrock of capitalism for centuries and it is what you need to start your money machine.

Pay yourself first

“A part of all you earn is yours to keep”, The richest man in Babylon, George Clason.

If you want to be on the road to wealth, you need to pay yourself 1st.  The majority of us pay everyone else first and ourselves last, i.e we pay the rent/mortgage first, we pay transport costs first, we pay our credit cards bills first and only after all of that is done do we look at what is left, and decide what we can save.  Wrong, wrong, wrong.

Do not underestimate how important this first step is.  What does it really mean to pay yourself 1st?  Every month, put as much as you can afford to save into a savings account.  This amount must be at least 10% of your take home pay.  The best way to do this is to setup an automatic transfer of funds at your bank, why ?  So you don’t have to think about it and won’t notice it when the money’s gone !

Congratulations, you have now started your money machine.   Every pound you save is an employee working for you. Any interest earned on your savings are more employees working for you.   Put your dreams, your financial well-being and that of your families before the needs of your utility companies, your employer and your creditors.

Don’t wait until you have money to save

“If only I earned more money or if taxes weren’t so high, I would have enough money to save.”

These words sadly echo much denial or misunderstanding for if we ever want to be in a position to invest or to get on the road to financial freedom, we must cast such thoughts from your minds and settle down the simple and timeless maxim,

“Spend less than you earn and invest the difference”


That’s it I hear you say?  I know it’s not particularly impressive, sexy or exciting but when all is said and done, that is all there is.  Let me put it another way, such philosophies can be traced back thousands of years to ancient Babylon  and personally, if it was good enough for them, it’s good enough for me .

Be consistent

Most of us know this simple maxim and many of us have practised this at some point or another. But how many of you have practised this consistently for a sustained period of time? I struggled with a lack of investment capital for years until I decided to do this consistently.  That means come hell or high water, I have always paid myself first. I had practiced many personal finance strategies for years but never seemed to be making much progress and then one day it hit me.  I had been working hard and ‘trying’ to save but had been hopelessly inconsistent with my saving habits.

When you decide to do something you must stick to it and follow through.  That’s the only way to see measurable progress in a reasonable amount of time.  That in turn will inspire you to ‘keep on keeping on’ with the business of starting your money machine.  I know this can be difficult sometimes when money is tight but if you don’t plan to do this, then you are in effect planning not to have the future of your dreams.  Sad, harsh maybe but true.

There will always be bills to pay, there will always be friends and family members who need help financially but you must develop the ability to manage these things ‘after the fact’ that you have paid yourself first.  That comes before everything after all, how can you help others if you cannot help yourself ?

Soti Coker is the founder and editor of smartMoneytree. Learn more about him here and connect with him on Twitter.

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photo by: 401(K) 2013

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