Pay Yourself First

Imagine you have a once in a lifetime opportunity to invest in a sure thing, but lo and behold you only have $100 in your savings account.  Let’s get a little more serious.  Let’s say one of your loved one’s needs a life-saving operation that insurance only covers partially.  Again, you look into your savings and it’s barely enough to cover a quality first aid kit.  Where did things go wrong?

With these scenarios, we are assuming that you’re employed and make a fairly decent living.  At least enough to have a few bucks left over after the bills are paid each month.  With all this being said, the logical answer to the question, “where did things go wrong” is simple.  You didn’t pay yourself first.

“The problem is likely that by the time you’ve paid for everything else—rent, groceries, utilities, etc., you often don’t have enough left to add to savings … at least not until your next paycheck. And so the cycle goes.”

So what do I mean by, “pay yourself first”?  No, I’m not talking about paying the cable bill or your car note at the last possible moment.  Although that is another way of paying yourself first, that usually doesn’t work out too well. 

Paying a bill late is sometimes necessary when other priorities take precedence, but if you’re doing that all the time you need to start budgeting and or make some more money.  You probably already know this, but believe it or not it helps to hear it from someone else and depending on what state mind you’re in while reading this I might just be hitting you in the right place at the right time.

I took to the well-respected guys and gals at Forbes to help me out today.  Simply put,  “Paying yourself first means saving before you do anything else.”  While you may initially think this sounds like something that can be implemented into your weekly/bi-weekly routine easily, this may prove for many something that is easier said than done.

“Paying yourself first takes a long time to develop [as a habit], because there isn’t immediate gratification,”

Right this moment there are people repeatedly swiping down on their timeline, itching for a response to their latest selfie.  As if that isn’t bad enough, our attention spans have also been sacrificed in the name of technology.  We need fast cars, fast money, fast internet, fast food, I could go on for hours, but that would take too long!  How are we going to fix this without giving up our need for speed? You have to pay yourself first.

Most financial “experts” will suggest you use payroll deductions to contribute money to a retirement fund, but that isn’t for everyone.  Personally, I don’t like being penalized if I need to get a hold of MY OWN MONEY.  Also based on what I just mentioned earlier,  we’re living in the fast lane.  Who’s trying to wait until we’re almost dead before we can enjoy the money we busted our butts to save up?

So to recap; we want to be able to pay ourselves first, receive instant gratification when doing so, and not be penalized by Uncle Sam when and if we need to dip into the cookie jar.  My solution is online banking and discipline.

All you need here is a checking account, a savings account, and a little imagination.  If you haven’t already done so, set-up direct deposit for your paycheck to go directly to your checking account.  Most banks now have the option for you to automatically deduct a set amount from your checking account weekly, bi-weekly or monthly and send it to your savings.  This is something you can instantly look at and feel good about. 

“Hey look I have $100 more in savings.  I’m getting closer to my goal.”  If you need that money you can go get it.  NO PENALTIES.  But, you don’t want to go into the cookie jar unless you absolutely have to.  Emergencies ONLY.

The hankering for expensive, overpriced coffee every day is not an emergency.  A bacon, egg, and cheese sandwich from the Mom & Pop on the way to work every day is not an emergency.  A bottle of frigging water priced anywhere above $0.00 is NOT AN EMERGENCY.  In other words, pinpoint all the crap you can do without and that’s how much you can put in savings every pay period.

Make your own damn breakfast, lunch, and dinner.  Make your own coffee.  Get a Brita water filter and a reusable water bottle and call it a day.  Who doesn’t have a water cooler at their job these days or access to one nearby?  FILL IT UP.  I have a handle for all your objections, trust me. 

So stop with the excuses.  Do this for just a month and you’ll not only have enough money to treat yourself to something nice, but you’ll feel confident that it’s not breaking the bank.  Pay yourself, first people.  You deserve it.

P.S.  In addition to the benefits mentioned above, paying yourself first is a great way of reminding yourself that you are in control of your life.  Even if you can only afford to save $20 a month, just the feeling of taking care of YOU before anyone else is something money CAN buy.

So what do you think of the mantra, “pay yourself first”? Let me know. Leave a reply in the comment box below.

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