Pay yourself first

Paying yourself first makes savings your top priority. You are setting aside money now, so you can use it later. In your spending plan, it means making sure your savings goals come before impulsive spending.

In time, continued practice with paying yourself first becomes routine and your savings grow. When you meet your initial savings goals, your well-developed savings habit can be put to work toward other goals.

It sounds easy: As soon as you are paid, set aside a certain amount for savings before doing anything else. It takes a realistic spending plan to ensure that you have enough to cover basic and necessary expenses. It also takes discipline not to spend the money.

Here are some other tips for paying yourself first:

• Make saving a priority. Make it a line item on your spending plan. Decide it can be done and commit to it.
• Put unexpected income into savings. This includes birthday money, rebates, tax refunds, inheritance or that extra $20 that Aunt Maddie slipped you.
• Sign up for automatic deposits or transfers into savings. Have part of your paycheck deposited to a savings account.

 

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