In the world of personal finance, there is one concept that is frequently mentioned but rarely mastered: “Pay yourself first.” Most people misunderstand this; they think paying themselves means buying a gift or a reward after a hard week’s work. In reality, it means setting aside a portion of your income immediately—no matter if it’s your salary or a sudden windfall—into two essential funds: your Retirement Fund and your Emergency Fund.

To me, “Retirement” isn’t about an age; it is a period where you are still breathing but no longer have an active income from work. If someone is 80 but still earns an income, they aren’t retired. An Emergency Fund is your insurance for when life doesn’t go according to plan—job loss, illness, or unexpected crises. At a minimum, this fund must cover 6 months of your expenses. Anything less, and your life is fundamentally unsafe.

The “Savior” Trap and the Futility of Status Games

Taking responsibility for these two funds is yours and yours alone. If you fail to do so, you will inevitably become a burden to others.

I recently read about couples in South Korea who invest everything into a fund called “The Child.” They neglect to pay themselves, instead pouring every cent into expensive schools and an inflated lifestyle, hoping the child will be their “savior” in old age.

But in a hyper-competitive society, when everyone is pouring in the same resources, no one is special. When the child grows up, they have their own burdens. If they can’t even save themselves, the entire family ends up becoming a social problem.

An even less forgivable case is paying yourself by buying “dumbshit”—valueless items that serve no purpose other than maintaining a fake image. People choose to pay for status and social validation because they lack impulse control, IQ, and EQ.

“Care about what other people think and you will always be their prisoner.” — Lao Tzu

The social trend telling you to “go out and live your life” isn’t inherently wrong. But it fails to mention: Before you pay for experiences, you must pay yourself first. Chasing a hollow shell for social media clout while having zero savings isn’t living; it’s being a prisoner of a status game.

You Are Not a Fixed-Capacity Battery

Humans are the only creatures on earth that must “pay” to live. Ultimately, Time = Money.

The difference in wealth between individuals often depends on their Capacity. I view each of us as having a different financial capacity, similar to a battery. A low-capacity battery can only hold so much charge; any extra electricity just overflows. This is why many who receive a windfall lose it all shortly after.

The good news is that we aren’t factory-made batteries with a fixed capacity. We can expand our capacity by understanding how money works and by following these 5 Common Sense Rules:

  1. Don’t spend more than you earn: The most basic rule many still fail to follow.
  2. Avoid “Bad Debt”: Consumer debt and credit cards are the primary destroyers of wealth.
  3. Keep at least 6 months of emergency cash: This is your life’s safety net.
  4. Don’t invest in things you don’t understand: High risk doesn’t always mean high return; the goal is to increase income while closing risk.
  5. Audit your circle: Avoid friends who only lead you to spend and play the status game.

As Warren Buffett said: “In your life, you don’t have to do many things right, as long as you don’t do too many things wrong.”

“Are You Approved?” Confronting the Financial Truth

I used to watch Suze Orman’s show where people asked if they were “Approved” for a purchase. More often than not, the answer was: “YOU ARE DENIED!” Many deep down refuse to acknowledge their financial reality because looking at negative numbers is painful. But avoiding the truth doesn’t change it. In her book The Life-Changing Magic of Tidying Up, Marie Kondo teaches that you must take everything out and pile it up to see the full situation. Solving your finances is no different.

Finally, you must define “What is my happiness?” If you don’t know what makes you happy, you will spend money chasing what others say is happiness.

“Too many people spend money they haven’t earned to buy things they don’t want to impress people they don’t like.” — Will Rogers

Before your next “big” purchase, ask yourself:

  • The 6-Month Rule: If I lost my income today, do I have enough to survive for 6 months without borrowing?
  • The “Dumbshit” Filter: Am I buying this for my utility, or to impress people I don’t even like?
  • The Capacity Check: Have I invested time in learning how money works this month?
  • The Debt Audit: Is this purchase going to create “Bad Debt”?
  • The Suze Orman Test: If I buy this, will it deplete more than 10% of my total emergency savings?

If you checked ‘No’ to any of the first three, you are DENIED.