The concept of paying yourself first is not a new phenomenon. We all know that self-care is critical, and one of the best forms of self-care is taking care of your finances.
Most people are in the habit of paying for needs, spending on wants, and then saving or investing money last. When you do this, not much emphasis is on saving and investing. The result is that our future wealthy self suffers because we are not taking care of our future finances.
We all have goals and dreams that we want to accomplish, but many of us are unable to do so because we do not know how to prioritize our money.
My mission is for everyone to be wealthy. To achieve this, you must understand how money works and how to manage and multiply your money.
What does it mean to “pay yourself first”?
Essentially, you have to prioritise putting aside money into a savings or investing account as soon as you get paid before spending that money on anything else.
This account should be separate from the account you use to pay your bills and other living expenses. Paying yourself first makes saving or investing for your future self before you spend money a top priority.
There are several ways that you can pay yourself first. The main concept is that you pay yourself like you pay a bill – treat your savings and investments as if they were each a bill.
In the same way that you can’t miss a light bill or your electricity will be disconnected, you can’t miss paying yourself, or you will be struggling with money forever.
One of the easiest ways to pay yourself first is through your employer.
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You can do this by setting up a standing order of a certain percentage from your salary to more than one account; or by contributing a percentage of your salary to a retirement plan.
Paying yourself first can be successful by following these suggested tips:
Automate your savings: This reduces the temptation to spend the money you have set aside for saving and can be used for emergencies and short-term needs mainly.Automate your investing: Saving money is no longer enough to build wealth. Therefore, assigning money for investing is vital. For long-term goals such as retirement, investing is a better option for building wealth over time. Investing is how you build lasting wealth.Assign names to your account: This practice will help minimise temptation or dipping into the accounts. Having a “vacation” account or “splurge” account will help you to know how much money you have available to enjoy the luxuries of life and can also motivate you to keep putting aside money in these accounts.Use refunds or bonuses to help enhance your savings and investment accounts. Any and every excess cash you receive should be put to work. Idle money is the worst type of money to have.
I want you to know that money is possible. Follow these steps to pay yourself first, and you will be well on your way to a brighter and richer financial future.
Keisha Bailey is an experienced investment strategist who teaches people how to earn passive income, create wealth, and reclaim time and reach financial freedom by investing. She works with investors to develop highly profitable portfolios so they can build wealth faster. If you want to learn how to level up your money, she can be reached at [email protected]