Everyone can benefit from paying yourself first. Just a few short weeks of deducting money from yourself and placing it in a savings account can form a positive money habit. It can also help you to see the progress that is being made toward your goals and increase your confidence.
I'll tell you a little secret. I never paid myself first because when I tried in the beginning, it failed dramatically. I put too much aside without figuring out if this could really fit inside of my non-existent budget, and whether my lifestyle choices were equipped to handle this new found money saving tactic.
I placed paying myself first on the back burner for months, and even closed my savings account because I was not educated on how to use it properly. It's not hard to automate your savings, but it will take a bit of work on your end if you don't have a lot of funds in the first place or if you are living outside of your means.
You'll be investing in your happiness long term but it means deciding if what you usually purchase when you go to the store is worth it. In a lot of cases retail therapy isn't due to actually needing what we purchase but more for the feeling it gives us.
So, don't be discouraged at the idea of giving up weekly trips to Walmart and Tj Maxx. Keep reading to find out why you should pay yourself first and what a few benefits are.
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What is paying yourself first
It's the act of deducting an amount or percent from the income that you get as soon as it's deposited into your account. This is before you pay bills or decide that the remainder after bills and other expenses is spending money.
Let's say you get paid once a week, you'll pay for groceries, utility bills, hang out with your friends, replace items in the house, and just before you get paid the following week, you transfer over the remaining $40. This would be the opposite of paying yourself first because there was at least $10 you spent that could have been saved.
Why shouldn't you pay yourself last?
There was at least one item you bought during the week that was purchased only because you could buy it. Opting in for shrimp instead of chicken, spending $100 instead of doing your nails at home for cheaper, even falling victim to marketing ads, can make the amount you dedicate to your own future less.
When you pay yourself last you aren't allowing yourself to truly see what you can cut out of your daily spending, or how you can adapt your habits to ones that would fit your desired lifestyle.
Does paying yourself first work?
You shape your life and spending around the amount that is left. As long as you stick with it then you will be sure to reap the benefits.
But what if my pay is irregular?
You don't have to automate the same amount every check.
Everything should be tweaked. Someone who you follow on Instagram that transfers the same amount every week has a different set of circumstances.