Pay Yourself First!

“Pay yourself first.”

I like this quote cause it cuts right to the idea.  Make your savings the priority.

It seems so simple to “pay yourself first.”  It is, by far, the easiest and hardest step. It’s hard to save money at the end of the month after you have paid rent, bills, debt, food and other expenses.  It’s very easy at the end of the month or you to have spent all of your potential savings.

How about saving first?

Saving at the beginning of the month is a guaranteed way to save.  Sit down and determine what you would like to place into savings. If your having trouble thinking of an amount try 1% of your monthly income. So if you make 4,000 a month that’s $40. Start there and work your way up by adding another 1% every month.  You’ve worked so hard for this money! You deserve to keep something!

Simplify it by having a direct withdrawal from your checking account to a savings account, retirement account, or HSA.   It gives you more freedom during the month knowing that you’ve put aside money in an account of your choice. You won’t stress about it so much as the month comes to an end.

Simple Dollar’s Holly Johnson says “When you pay yourself first, you don’t have as much money left over to waste. Your savings, investments, and debt repayment obligations were paid already, so you’re forced to actually “live” on the rest.”  

Build your budget around paying yourself first. This can be a critical step in building wealth.  It’s also good to note that when you do this, you can then set your budget up to be as simplistic as you want. You’ve already put your chosen savings back, so it gives you a bit more financial freedom after you pay your bills.  However, always be aware not to overspend your monthly income.

I love the idea of paying yourself first.  It’s an essential step in our family’s savings plan.  We found this to be a huge relief knowing that we can’t “accidentally spend it” or wonder what happened to it.  We choose to automatically set ours aside, putting it in our savings account for our “emergency fund” and our short term financial goals.  

I encourage you to try this method of paying yourself first. Set it aside and forget about it!  Feel the relief!

Questions please leave a comment below or contact me.

Brian Iles

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