You may not know this but, a basic winning concept of personal finance is pay yourself first. It’s all about building your savings and healthy money management. Let us explain.
Many of us face a familiar situation from time to time, and that is the promise to yourself or your loved one that you will put more aside for the future. But life takes over, and you find that there’s never enough to put into savings after all the bills get paid. There goes another promise, and so the cycle continues.
First, let’s get the confusion out of the way. Many people consider the phrase, pay yourself first, confusing because it assumes that you’re self-employed when most people get paid by someone else.
Why Pay Yourself First?
Pay yourself first means to save money before spending it. It means you should pay that retirement account or savings account before any other bills or expenses are paid.
Another great way to pay yourself first is paying more on your debts without adding more.
You Can Do This
Sometimes you may have to trick yourself into paying yourself first. When the time comes to pay your bills, put your retirement or savings accounts on the top of the heap and pay them first.
When you start treating these expenses like you would any other typical bill, you won’t set them aside for later because that’s not what you do with bills. They get paid when they’re due.
Don’t fall into the trap everyone else does. Many people say there isn’t enough money at the end of the month to commit to savings or retirement. Train yourself into thinking that saving is more important than any other bill, and it gets paid every month without fail.
It’s a change in the way you think about saving and paying bills. Adding to your savings is just as important as the mortgage, light bill, or phone bill. If you left one of those unpaid in a single month, think of all the things that could happen—your service could be at risk of shutting off, you get charged a late fee and you have the shame of not being able to meet your monthly obligation, to name a few.
Experts agree to pay yourself first is a self-driven commitment. After it becomes an unbreakable habit, people get very resourceful and find extra money where it’s needed. More work, fewer bills; It’s a simple formula that works.
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