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.
You can find me on Instagram here!
No one has the same life as another individual, even if they seem similar, because our feelings, thoughts, and perceptions make every experience unique. Be kind to yourself and do what you can without judgement.
Now what are the benefits?
It takes strength to know that you were struggling to live paycheck to paycheck but still put $20 aside. To accept that in order to save money, it means taking public transportation or bringing your own lunch a few days a week.
It takes discipline to set boundaries with yourself and say wow "I wish I had to the money to [do an activity or buy something]" and disregard that there money is in your savings.
Decide if you need more income
Some saving goals will take a very long time if we do it based on the income we have now.
For example, transferring $50 every check into a savings account may be the only way that I am able to commit to putting money aside. And while this works out great if I were trying to maintain and start a Christmas fund, it doesn't work well if I was saving for an apartment, car, vacation, or home renovations, that would cost thousands of dollars.
In a world full of side hustles, you have to decide what you are willing to do. Not everyone has the time or space for taking on more projects.
Forms the habit of budgeting
Whether you're keeping track of your expenses, categorizing them, or simply using all of the money after bills as spending money, you are budgeting.
Taking control of your finances and increasing your financial awareness is a powerful move.
It can assist you in making bigger goals and increase the belief that you can achieve a lot of the things that you thought were out of your reach.
It feels nice
You work hard for your money and you deserve to see it work in your favor. There is nothing worse than slaving over a 9am-5pm job, allowing it to deprive you of happiness and health, only to have your entire check go into the house and on bills
You deserve to have a hefty savings. Something with a nice cushion to fall back on.
It's a positive habit
Making it through a pay period where you spent too much money or you didn't have a comfortable amount, is hard.
Knowing that you did not dip not only ties back in with discipline, but it helps you to see that you're doing something right.
"Right" in the sense that your budget and lifestyle is maintained, and that the decisions you are making are benefiting you.
You secure your own future
Traditional society tells you to aspire for marriage, a stable career, a baby, a retirement fund etc. and that all of this has to be done way before the age of 30. That if you have a family or partner to lean on your life will always be peachy and you are considered a success.
But the real, economically unstable, coronavirus filled, isolating 2020, tells you to ensure your own security in the form of an emergency savings or sinking fund, because nothing is guaranteed. Have a plan B [to your plan B] and save your money in any way you can.
Related Post: This Is Why You Can't Save Money
In conclusion paying yourself first is the first step of many in the right direction. If you have trouble in the beginning, go back to your budget and try again.You will get the hang of it and soon your money troubles will becomes less as control over your finances increases.
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