Pay Yourself First
Candlefocus EditorWhen most of us get paid, we are typically tempted to spend the money on things that we need or things that may bring us pleasure. However, by paying yourself first, you prioritize your future self and put yourself in a secure financial position. This does not mean that you necessarily have to put every dollar of your salary into a savings or retirement account; you can allocate a portion each month and still have plenty left that you can use for daily expenses.
So what are the benefits of "paying yourself first"? One, you are actively making an effort to save money, which allows you to eventually reach the goal of total financial independence. Two, you are helping to ensure that you will have enough set aside for retirement, giving you comfort in knowing that you won't have to worry when you are no longer able to work. Three, you are making it easier to build an emergency fund in the event of a financial setback. Four, you are incentivizing yourself to remain frugal with your spending, as what is left after you've paid yourself is not as much as you may think.
The idea behind "Paying Yourself First" is straightforward, but it can be difficult to carry out consistently. The key for success is to track and monitor your spending and savings habits so that you can effectively plan for the future. Setting up automatic transfers from your checking account to a savings account is one way to help make sending yourself money each month a priority.
No matter what your income level, "Paying Yourself First" is an invaluable tool for protecting and growing your wealth over time. Taking a small amount from each paycheck and investing in yourself is a surefire way to build a secure financial future.