Oman family: Save a portion of your salary before spending

In a generation like ours where having a credit card is a more common occurrence than a savings account we should all be asking ourselves a seemingly simple question: "Which master does my money really serve?" This is a seemingly simple question which normally elicits a response to the effect that "my money serves me".Though for some this might be a true statement, in my experience as a financial advisor, for the majority it is not.

Let’s broadly dig a little deeper into this. When your salary gets credited to your account, who is the first person that gets paid? Most likely your landlord for rent, you gotta have somewhere to live right? Next would most likely be your utilities so the lights stay and the water keeps running? Fair enough. Next would most likely be supermarket owners who sell you groceries and food so you can eat? Makes sense. Next would probably be shopkeepers thanks to whom we can enjoy shopping and recreational spending? Can't have all work and no play can we! What (if anything) is left over might be saved or put aside for a rainy day.

If it sounds like a line of mean cartoon villains outside your door snatching your hard earned money from you, it kind of is. Unfortunately in that scenario, you are at the back of the line.
The key to achieving long term success in your financial planning rests in going to the front of this line and the best part? It's totally under your control and just requires a bit of a mentality shift.

A life spent at the back of this "line” will guarantee that everyone else benefits from the fruits of your labour but will not guarantee you a successful financial future. Nor will it allow you to achieve your financial objectives, be they buying a house, starting a business or saving for your children’s education.

There is a common semantic mistake amongst people that "income” and “salary" are the same thing, this misconception is something I am passionate about helping the public change. In my opinion one’s "salary" or "wages" is what goes into your account every month from your employer, whereas your "income" is what is left over after all expenses and costs are paid. Your income is what really counts, it is your monthly net profit for you to do with as you please.
Viewed through that prism, we should all take a serious look in the mirror with regard to our finances and wonder what our income really is? How much of our monthly wages should go towards our long term financial goals as income?

The answer to those questions is very personal and subjective, however the solution is as simple as it is boring. Save a portion of your salary at the beginning of the month i.e. going to the front of the line. Consider it a personal tax which you have imposed on yourself, but this time instead of the "tax" going toward your landlord, utility company, supermarket or every shopkeeper in town the tax is going to a much more important person... You!

Unfortunately the process of saving a portion of your salary bit by bit over the long term is not a glamorous strategy that one can show off to their friends about. The slow and steady attitude is harder than it sounds, which is precisely why so few people do it. Temptations are by definition hard to resist, but for those who manage to delay gratification for any period of time can expect superior financial outcomes than those who are not able to as the Stanford Marshmallow Experiment demonstrated.
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(Taimoor Khan is a banker and financial advisor based in Dubai and the views and opinions expressed in this article are those of the author and do not necessarily reflect that of the publication)