Pay Yourself First: The Secret to Smart Saving
About twice a month, after payday, I go through a list of upcoming bills neatly marked on my calendar. There’s little colored dots on different days, to remind me what comes out of autopay, how much, and what it goes towards. Scanning over the detailed list, I realize there’s something missing…my savings budget. It’s easy to get lost in the shuffle of paying the bills, but putting some money away is one of the most important favors you can do for your future self. This straightforward method of saving is called “Paying Yourself First”.
What Does It Mean to Pay Yourself First?
Paying yourself first is not the same as spending money on yourself. It’s the practice of saving money for a rainy day, an emergency fund, and/or future financial goals like buying a house.
How Can I Get Started With a “Paying Myself First” Budget?
While it’s not realistic to abandon your current expenses, especially if they’re your basic necessities, you can review your budget and see where savings can come from.
· Spend a little less. Meal prep, walk a little more instead of driving everywhere, find clothes from second hand stores, or develop some hobbies that don’t involve spending a lot of money, like volunteering.
· Set savings goals. Are you planning to buy a house or upgrade to a newer car? Down payments are usually costs we easily forget and then feel surprised when we hear how much is needed upfront. Setting a savings goal for those eventual stepping stones in life can relieve stress for when the day comes to spend that money and it feels rewarding to hit those target goals in your savings account.
· Don’t go for broke. Understand that saving is important, but keep funds available for unlisted expenses like gas money or one night out to dinner with the family. Even if you’re only able to dedicate a few dollars to your savings each paycheck, start with something small and gradually build your nest egg.
It’s Never too Early to Start Saving
Installing a financial safety net for your future will help for any unforeseen event. Check out your credit union’s saving account options today to start paying yourself first.