Have you ever heard the saying “Pay yourself first“? Basically, what it means is that before you sit down to pay your mortgage, your car payment and your electric bill, you make sure you have paid yourself first. This is a great way to ensure that you hit your savings goals each month.
Too often, families might budget a certain amount of money to go into savings each month, but truthfully how many actually reach that number? Often times, what is left over at the end of each month is either spent on miscellaneous items or, if it is transferred to savings, it’s a small fraction of what it should be.
The idea of paying yourself first means that you work out your budget for each month ahead of time. You set up realistic goals based on your income and your expenses and you decide exactly how much money you have to set aside for savings. Then, when the income starts flowing in for the month, you immediately funnel what is meant for savings into your savings account.
When you pay yourself first, you avoid the temptation to spend a bit more. When you pay yourself first, you don’t have to worry about whether or not emergency funds will be available if something comes up. When you pay yourself first, you are acknowledging that saving money is just as important as paying your mortgage and getting food on the table (and if you don’t want to live paycheck to paycheck, saving money SHOULD be at least that important to you).
Sit down this month and decide how much you want to save and how aggressively you want to go about it. Work out a realistic budget and expect that you might have to tweak it until you get the numbers right. Then, when you get your next paycheck, don’t even buy a stick of gum until you have transferred what you have allotted for savings into your savings account.
Do you already pay yourself first? Share your story below!
