The reason most of us struggle to save is because we decide to only save once we have some money left over from our pay. And because there is nothing left by the time the next pay day arrives we tell ourselves "I don't earn enough to save any money!" Does this sound familiar? The truth is for most of us we do earn enough, we just aren't using the best system to save.

To back this up please think back to what you were earning 10 years ago? In most cases I bet if you were told then what you are earning now you would be saying WOW! You would also be disappointed that your larger income has not enabled you to significantly reduce your debt or increase your savings. House prices have gone up for most of us however as outlined in the houses section it hasn't helped us much financially. As you have seen in your cash diary and latte factor there is almost certainly surplus money to be committed to your long term wealth.

The system is pay yourself first.

Who else uses the pay yourself first system? The government. The government collects most of it's personal taxes by taking the money from you before you have a chance to spend it. In fact you never have it at all as your employer retains it and forwards it to the tax office on a regular basis. Why does it do this? It knows most people can't budget increasing the chance they won't get paid. They have now introduced this system to the small business sector because it is so successful.

The secret to creating lasting financial changes is to decide to pay yourself first and then make it automatic. Don't rely on yourself to make the necessary transfers, make them automatic via your pay or through your financial institution.

Paying yourself first simply means every pay period putting money away into an investment account or reducing your debts before you have a chance to spend it.

Pick a percentage and then do a little more.

It's easier than you think, you won't miss what you have never had!

Maximise your retirement contribution now.

Over time, money compounds, Over a long time, money compounds dramatically!

You may be asking isn't there more to it? In the setting up and managing side no. What you have to watch out for however is that little voice in your head that says "This won't work", "I can't live on the amount of money left!". Have a go!

Other wealth strategies may advocate paying off all your debts first and then start savings after. At money100 we believe it is best for you to concentrate on getting your debts under control first using our debtonator, but not necessarily paid off, and then commence saving approximately 10% of your net income for your long term benefit. The longer you take to commence saving the less benefit you will gain from compounding interest.

To implement this concept go to the automatic investment plan.

Set up your pay yourself first system now !