Looking to save some money but you keep battling the bad saving habits of the make money.Spend it today problem! So much going around in the space of a month, delaying and pressure with all those bills coming your way. If you are having issues saving, why not pay yourself first to make sure you have enough money in your pocket to start saving and living life.
When thinking about paying yourself first you maybe saying:
- What about my bills
- My budget
- Gas for the car (need to travel less maybe?)
- Car note
- and more…
It is a scary taught because you may say, that you will not have enough money at the end of the month to pay your mortgage per example. We have to be force in a situation to take action,why not avoid those kind of bad events and prevent.
How to prevent?
To have a system in place to help you pay yourself first, even before paying anything. I’m not saying pay yourself by 50% but start wtih a 5% and upscale from there… It is challenging enough just to understand how to work with our money on a daily basis, simplicity is key over here.
Pay Yourself, how?
It means to have money going toward a debt or a saving account right after receiving a form of payment or salary. Once the money goes onto your bank account. The next action should be saving or paying a debt and after working on regular activities like.
- Paying your mortgage-appartment
- Credits (credit cards, credit line)
- Car loan
- Taxes (water, garbage,house,mortgage,city)
- and more…
This is the best thing you could do, is to have some sort of automated system that will force the saving or have your debt paid everytime you have available money. I think this is one of the best way to get started on paying yourself first.
Save Money, Spend less.
Easy to say right! Just save more money and this will give you the habit of spending less… I think there is two school of taught around this topic.
- By saving more money it is logic in a way that you will not spend that much on any extra items or activities you may think about. But if you are in a situation of major debt or even facing bankrupcy, you may not think about saving but about paying your debt as soon as possible.
- Also by saving more money, your putting less money toward your debt, in the end it could be a bad situation coming your way. The creditors are not your friend they are here to make money so you have to be really careful.
Why be careful?
Here is a example:
John and Sara have a house ,paid about 300k five years ago. They have put a cash down of about 50k and did pay for any extra fees at the notary to avoid any issues after. This year, John lost is job and Sara was a stay at home mom!
Imagine the scenario, they lost the house because they couldn’t keep up with the mortage payment, the car note, the bills, the creditors and much more…
Why am i telling you this?
Because they put 50K down five years ago, they pay the mortgage for five years ,the result is… They lost probably close to 100k of their own blood and sweat money and this is really frustrating. This could happen to any of us, always be careful on your purchase and think of a plan B in case of bad missfortune.
What you Need – What you Want.
It is important to know what we need to have and what we want. It is easy to get caught up in a “mumbo jumbo” and lose focus once we are in the process of saving money. Or paying ourself first!
What you need?
Is it better to drive a Toyota or a Ford car for now and once i’m ready to purchase my luxury car, will do it.
What you want?
Will go at the dealer tomorrow and purchase the Range Rover Sport that i saw, i’m abble to pay for it, just got a raise. The problem is your budget will be compromise by the actual money diverted to non essential items.
We are not perfect and we do make mistakes, it is a good exercise to put in place. when the time arrive to purchase a item of your choice.There is no good or bad answers just by taking the time to analyze the situation. Will give you all the chances to succeed in paying yourself first.
Avoid the word :Difficult.
Don’t focus on what could be difficult to do in order to start paying yourself first ,why not establish a routine. This will help you start taking the right decisions and avoid any missdirections.
Here is some tips to help:
- Have a tracking system in place to help you understand your spending habits. How much money are you spending per month versus what you have left at the end of the month. Once you have a clear picture, try to organise your priority and focus on one item or project at a time. By have more focus you have less chances of failling.
- Have a automated system in place: Once you have your paycheck or your revenue hitting your bank account, it should be tranfered right away onto a different bank accout. The money that you don’t see could not be spend, it is one of the best option to pay yourself first without much action.
- Just need to be setup properly the first time , getting use to the process and let the money accumulate without much effort from your end. Of course you need to keep a eye because you never know what could happen, didn’t get paid, issue with the bank and other out of your control situations.
By using those 3 tips, it should remove any pressure on your back to have money taken away from your account every month to put toward your next project.
Stay on the route of simplicity, i’m a big advocate of the simple life ,simple living. Don’t over complicate things, do it in a way that is simple for you to understand.
Focus on what you think is good for you at this moment in your life, maybe you want to save more money or put more money on your debts.
It is better to take simple actions than to go crazy and stop the race while running. I encourage you to take time to analyze your actual situation and see what is best for you.
Keep dreaming, keep rocking.
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