Pay Yourself First
From GreenPath Debt Solutions
If there’s one personal finance lesson or skill that everybody should learn as early in life as possible, it’s this one — pay yourself first. The “Pay Yourself First” concept is by no means a novel one. It has been touted by many financial experts and personal finance advisers as an effective strategy to staying out of debt and building assets. Simply put, paying yourself first means regularly setting aside a portion of your income for savings even before you even start to tackle the bills. While this may seem like a tall order for those who just live from paycheck-to-paycheck, paying one-self first has actually worked successfully for many households.
Why Should I Pay Myself First?
- It makes “you” a priority. You are the most important thing in your life.
- You get in the habit of saving.
- It keeps your options open. When you set aside money for you, you build freedom - the freedom to not worry about unexpected financial emergencies.
An Easy Tip
Establish a budget based upon only 90% of your available income. Thus, you are removing 10% of it off the top. This amount should be placed aside in some sort of savings or investments plan. With time, this amount will grow larger and eventually grow to an amount you can allocate to some type of investment. This money should be exclusive of any money going into a regular retirement or investment plan.
