We are all trying to save for something, maybe a trip, new car, retirement or our kid’s college. However, one thing most of us have a problem with is the actual savings part. We have great intentions, but sometimes we just fall short. What happens each week? We get our paycheck, we pay the bills, buy our food and maybe a coffee and then what were out of money until the next pay period. So how do we save for us, for our items we want or need? Pay Yourself First! Plain and simple.
Finances can be one of our biggest obstacles in life. One way to do this is pay your self first. Yes, instead of paying bills make sure you pay yourself first. I know what your thinking. If I pay myself first, I won’t be able to keep my lights on or pay for my heat. Well, that is what I thought at first also. If you give it a try you will see there is more than enough money to go around.
For our family, we always try to pay our self 10%. It doesn’t matter if we get a pay check, money back from a credit card or any form of income, we always take out 10%. It has been amazing how we have been able to save up money. Now you don’t have to do 10%, do what you feel comfortable with. There are times when it has been tough for us so maybe we only did 2% or 5%. The point being is that we put away money first before we did anything else.
If the money is direct deposit into our checking account, we move 10% to our savings account. If I get cash, we put 10% into an envelope and then deposit it into the bank every month.
We keep an Excel file and a break down how the money was supposed to be divided up such as a vacation, new kitchen, emergency fund and a couple other items. Now don’t get me wrong, we are still a long way from getting these things and getting each account to where we want it. The point is we are getting something saved up and are getting closer to our goals.
When you put yourself first, you will be able to save money. A little here and a little there adds up over the long term. When you pay yourself first, you are forced to budget your money. It also makes you understand the fact that there are needs and wants. Now I am not saying you should never buy anything on a want because you have to save for the future, but it does force you to rethink how you spend your money. Maybe you’re a coffee junky and you hit Starbucks every day. When you pay yourself first, you may realize that you can’t hit Starbucks every day. Now you still need to enjoy life, but instead of hitting Starbucks every day, you might only do it three times a week and the rest of the time you make coffee at home.
It also makes you understand the fact that there are needs and wants. Now I am not saying you should never buy anything based on a want, but it does force you to rethink how you spend your money. You will start to see how many things in life are a want and not a need.
Maybe you’re a coffee junky and you hit Starbucks every day. When you pay yourself first, you may realize that you can’t hit Starbucks every day. Now you still need to enjoy life because life is short, but instead of hitting Starbucks every day, maybe you only do it 3 times per week. The rest of the time you make coffee at home.
So when do you start? I say the best time to start is at your next income payment. When you get paid, try taking 10% out and sticking it either in an envelope or savings account. You will see that your savings goals will become more realistic and you will still be able to pay your bills and enjoy life. If 10% is too much of a drain, then do 2% or 5%. The idea is to start today and give it a shot. Grab a pen and paper and start writing your saving goals down on a piece of paper. Seriously, who cares if you can only put $3 a month towards that new sofa you have wanted, it’s $3 closer then you were last month.