Do you pay yourself first? If you don’t, you’re not saving your money the correct way. The vast majority of Americans have little to no savings, and it’s often because they have the wrong mindset about money. You have expenses, and you pay them every month. However, you don’t consider yourself an expense, and you live with the mindset you will pay your expenses, live your life and save what’s left. The problem is that there isn’t much, if anything, left to save at the end of the month.
This is why it’s vital you learn to pay yourself first. You are your most important investment. By changing your mindset about money, you can save significantly and still live the same life you’ve always enjoyed. It’s a simple concept, and it’s time you learn more about how this one simple savings method can change your financial future. Even if you’re sitting here reading this and thinking to yourself that you have nothing left to save, you’re wrong. You have money to save, and these tips will help you find that money so you can invest in yourself every month of the year.
What Does It Mean To "Pay Yourself First?"
It’s a simple concept that means exactly what it sounds like. Every month when you’re writing out your checks and scheduling automatic payments for your expenses, make yourself the first expense you pay. For example, your list of monthly expenses should look something like this:
What you save each month is personal to your financial situation. If you can afford to save 10 percent of your income, start there. If you can only afford to save $$ per month, save that. It’s more than you were saving before. The point here is that you’re paying yourself before you pay anything else. You will pay you, the rest of your expenses, and you’ll use what's left over to live on. This guarantees there's money for you to save every month, which is where you’re going with this savings plan.
The Benefits Of Setting Financial Goals
Setting financial goals is one of the most important things you can do for your financial future. Goals give you something to work for, and learning to pay yourself first is one of the best goals you can implement in your financial life. The hardest part about making the concept of ‘pay yourself first’ a reality in your life is merely getting started. Of course, the hardest part of any new situation in life is getting started. Once you make it happen, you’ll wonder why you didn’t implement the pay yourself first rule much sooner.
Setting Financial Goals Makes Them More Attainable
All you need to do is set a goal to pay yourself first, and you’ll be able to make it a reality. When you put a goal on paper, it’s easier to achieve that goal. Let’s say your financial goal is to save $$$ per year. That’s the big goal, and it might seem overwhelming. That’s a lot of money. If you had an additional $$$ per year, you’d be in a much better place financially, right?
Now break that goal down into more attainable goals. Saving $$$ per year equates to approximately $$ per month you need to save. That’s $$ per week. That’s only $ per day. Look at your spending habits. Do you have $ per day you can put into savings? If you give up your $ coffee every morning, you only need to find another $ to save each day. If you give up going out to lunch and spending $ on that every day, you only need to find another $ per day. You can do that. It’s actually quite easy.
Setting Financial Goals Gets You Excited About Saving
Few people are excited about saving. Financial issues are always a point of contention for many people, and saving more money only makes life feel more stressful, right? This is an incorrect misconception. Learning to pay yourself first makes you excited about saving, and it can make your life feel a lot more enjoyable. The first time you pay yourself first, you see money go into an account that’s all yours. The second time you pay yourself first, you see that number grow. The third time you pay yourself first, you see a significant change in your attitude about saving. You are excited to see that account grow.
Setting Financial Goals Eases Your Worry And Stress
Imagine how much the simple concept of paying yourself first can relieve a great deal of stress. Does that make it seem more exciting and less terrifying? We don’t know about you, but we think there is a good chance you might find yourself more excited to try this if you have a mindset that you can get rid of stress. Having money put aside for emergencies, for fun vacations, and for anything else you feel it’s important to save for can ease your stress. You won’t worry so much about things going wrong and throwing a wrench into your plans.
Setting Goals Prevents Regret
Remember that time you went away for the weekend and spent a bunch of money you didn’t have only to come home and realize that now you cannot afford to buy those shoes you’ve been coveting for months that just went on mega-sale? That’s called regret. You wanted those shoes for so long, and you swore you’d buy them when they went on sale for less than a certain dollar amount. However, you spent all your money on something else, and now you can’t buy them.
When you learn to pay yourself first and set financial goals, you don’t live with that kind of regret. You might always regret spending money and not having enough left over, but do you think you’ll ever regret having money in the bank and savings? Chances are you won't.
Why You Need To Pay Yourself First
Learning to pay yourself first is imperative, and here’s why. You can save money and build a balance that makes you feel better about life, closer to your financial goals, and more comfortable in general. It’s easy to save money when you put it away correctly and efficiently. Imagine spending your life paying yourself first and never worrying about surprise expenses again. Imagine never being in a situation where you cannot afford to go somewhere or do something again. You have the money; you just have to put it away and make it a priority.
What Happens When You Pay Yourself First
Something beautiful happens when you pay yourself first. Let’s say you decide to take $100 out of each paycheck you earn and put it to savings before you pay any other expenses or have any fun. It’s hard at first. You want that $100 to buy something fun or go towards doing something fun. The second time you do it, you feel good that you’re growing a balance. The third time you do it, you might not even notice it anymore other than to see that account grow.
Each time you pay yourself first, you learn not to miss that money from your everyday life. For one, it’s still your money and it's still in your pocket. However, you learn not to need that money. You stop missing it, and you realize that it’s a habit to save that money each pay period. Eventually, you’ll get a raise and say to yourself, “I don’t need that money to live, so I’m going to add it to my savings each month,” and you’ll live by the rule that you can’t miss what you never had.
You Are Your Most Important Investment
You are the most important investment you can make. Your financial future is more important than that expensive bottle of wine or that movie date. Most of what you spend your money on mindlessly throughout the month is unimportant and provides you with only momentary joy before it fills you with regret. It’s time to break that cycle, save money, and improve your financial life.
Pay yourself first. It’s a financial habit you won't regret. Imagine taking $ out of every paycheck before you pay anything else, and imagine putting it into a savings account. If you and your spouse are both paid every two weeks, you’re putting $$$ per year into your savings account annually. Once that becomes a habit, you can add a little more to your own personal paycheck. Adding an additional $ per check to your savings every few months is something you won’t even notice. However, it adds another $ per month to your savings. That’s another $$ you add to savings annually. Learning to pay yourself first pays off in a major way, and it’s always worth making it a financial goal and priority. Make this your habit, and see how fast your life changes for the better.